2021 Automotive Aftermarket Outlook and Trends

This year’s digital SEMA Show – SEMA360 – revealed much more than creative vehicle builds, hot new products, and trends for 2021. It confirmed that, while we may be eager to leave 2020 firmly planted in the rearview, the challenges of the past year don’t just evaporate on January 1.

New vehicle sales remain low, and the overall economy shows clear signs of slowing down. The long-term outlook is fuzzy at best. The aftermarket, however, continues to grip the wheel of optimism tightly at 10 and 2. So, what’s fueling the positive outlook?

Simply put: you.

Enthusiasts have proven that car culture is bigger than COVID. And while we may need to stick a pin in viable economic predictions, no such hesitation exists where automotive passion is concerned. Additionally, the aftermarket is as flexible as it is resilient – continuing to exceed expectations in the face of changing consumer interest, stifling government regulation, and a nerve-wracking ICE-to-EV paradigm shift. (Honestly, a global pandemic feels like child’s play by comparison.)

“This year the auto industry recovered from a seemingly impossible collapse in the immediate aftermath of the pandemic. The industry has brought back nearly 80% of the jobs lost this year, far better than most other sectors of the economy. Production and sales both recovered sharply, quickly making up lost ground.” – SEMA Industry Indicators Report December 2020

As the automotive aftermarket gets back to business, let’s take a closer look at 2020 so we can safely plan for 2021.

SEMA360

With COVID putting the squeeze on in-person events this year, the 2020 SEMA Show moved 100% online. The five-day, trade-only event serves as an annual springboard for industry professionals to launch new aftermarket products and establish fresh trends for the road ahead.

Replacing the traditional week in Las Vegas with a virtual format was certainly a bummer. However, it did present some unique opportunities. In addition to saving everyone a lot of money on travel, lodging, and exhibition expenses, the shift also welcomed a broader audience.

In fact, SEMA data shows that 22% of the media attendees at SEMA360 hailed from nations outside the United States – most notably Canada, Australia, the U.K., Japan, and Mexico. For segments with distinct international flavor — like the tuner market — such universal attention encourages manufacturers to take the hobby more seriously, translating to exciting new parts and accessories.

Moving SEMA online also provided attendees with access to on-demand educational content and group chats with industry experts. And while each seminar and roundtable had unique insight to offer, one major takeaway prevailed…

Consumers are adapting.

For each disruption COVID provokes, enthusiasts continue to find a creative workaround. Vehicle use is up (especially in the powersports segment). Aftermarket retail spending holds steady as automotive tinkerers find they finally have time to finish that project car languishing in the garage. And despite current economic woes, SEMA data shows many consumers are still managing to pad their savings reserves.

To that end, SEMA data also shows that while value and price remain major motivators when shopping, availability was king in 2020. As such, shoppers “showed increased flexibility toward trying new retailers or brands when their favored outlets and products were short of stock—meaning that consumer loyalty was especially up for grabs.”

Exciting New Rides

Unsurprisingly, new vehicle sales (both retail and non-retail) finished the year down nearly 15%, according to J.D. Power and LMC Automotive. However, December posted positive retail numbers and the average new vehicle list price eclipsed $40,000 for the first time.

Similarly, while the used car market continues to boom as consumers reevaluate their budgets, the auto industry has a bevy of new and redesigned vehicle platforms hitting the market in the next few years. From the resurrected Ford Bronco, new RAM TRX, and V8 Wrangler Rubicon 392 to the next-gen Honda Civic and Subaru BRZ to the unprecedented Hummer EV and Mustang Mach-E, there is plenty on the docket to capture the imagination. Not to mention the influx of exciting new products hitting the aftermarket for models like the current Supra, C8 Corvette, and Jeep Gladiator.

Speaking of exciting aftermarket swag, let’s check in with some of the industry’s most lucrative segments, unpack some observed trends, and see if we can’t make a prediction or two for 2021.

Truck & Off-Road

The war of ever-increasing towing capacities wages on, as automakers — specifically Detroit’s Big 3 — continue to one-up each other with new and improved truck offerings. Things got particularly interesting this past year however, with the debut of the aforementioned RAM TRX. Designed to compete with the Ford Raptor, the HEMI-powered truck boasting 702 HP and 650 lb-ft of torque seems more prepared to eat the competition than outperform it.

Capable off-roaders dominate the mid-size segment as well, with the Toyota Tacoma, Jeep Gladiator, Ford Ranger, and Colorado ZR2 Bison all capturing consumer attention. The Bronco should shake more than a few customers loose in this market — especially when the Bronco Raptor and Bronco pickup land on the scene.

Sales of heavy-duty haulers are up as well, proving that a 35,500-pound max towing capacity isn’t just for dirty jobs.

Aftermarket Trends

Light trucks will account for nearly 69% of all new-vehicle sales by 2025. From 2019–2025, new-truck sales are estimated to rise 10% overall. That translates to some serious aftermarket potential! Additionally, as automakers’ lineups swell with multiple trims, packages, and special editions — effectively creating a vehicle for every conceivable customer — you can expect the aftermarket to adopt a similar custom-is-king mentality.

— Lift kits, wheel & tire packages, replacement bumpers, side steps, and running boards continue to be top upgrades for truck and off-road enthusiasts. Restylers at SEMA360 also noted an uptick in blacked-out accessories. From leather interiors to rooftop cargo carriers, customers want a “murdered out” look.

— Tech-friendly recovery equipment, including smartphone-controlled items, are expected to grow in popularity, ensuring “off-road” doesn’t necessarily mean “off-grid.”

— LED-integration continues to dominate, as brands like Westin, Rugged Ridge, Go Rhino, N-FAB, and Addictive Desert Designs find innovative ways to incorporate off-road lighting into bumpers, roof racks, running boards, and more.

— Off-road applications present an opportunity for consumers to go beyond the subdued black-white-silver color lineup. For example, the new Bronco wears an exterior palette inspired by earth tones. Designers at SEMA360 said the colors were chosen to bring the vehicle’s heritage forward and evoke the emotion of being outdoors.

SEMA360 Takeaway: Off-roading is the hot rodding of the new generation. It’s a tool for freedom. And while 2020 helped bring more people into the adventure lifestyle, 2021 will focus on keeping them there.

Time to say goodbye to squat and hello to Air Lift! Air Lift air springs are custom-engineered to level a vehicle’s load, providing the ultimate air ride for towing and hauling with safety and comfort. Now available for Jeep Gladiators, these tough molded polyurethane springs can handle up to 1,000 pounds of load-leveling capacity! Easy to install, Air Lift springs are compatible with new compressor systems— including wireless air.

Overlanding

The global adventure tourism market—which includes camping, hiking, mountain biking, kayaking, and rafting—is forecast to grow in value from $586 billion in 2019 to $1.63 trillion in 2026, according to Allied Global Insights. While no metric exists to track the total number of overlanders specifically, trade show attendance can provide some insight. Overland Expo West, probably the most well-known overlanding event, saw attendance jump from 5,000 in 2015 to more than 22,000 in 2019. (The 2020 show was held virtually.)

Show organizers also noted a 30% bump in exhibitor registration for 2019. Overland Expo attendee demographics show a solid base of high-earning professionals who travel frequently, and spend the time and resources to learn the skills and acquire the equipment they need. This makes for a highly desirable customer base of well-educated and well-funded shoppers.

Aftermarket Trends

Overlanding enthusiasts are quick to point out the ideological differences between themselves and traditional off-roaders. But whether you’re hitting the road-less-traveled to test your survival skills or your Jeep’s suspension, you’ll use many of the same products along the way. It’s when you arrive at your destination that your aftermarket needs may change.

— Much like the off-roading segment, overlanding places a premium on vehicle modifications that ensure enthusiasts can safely reach their destination of choice. Suspension upgrades, wheels & tires, body armor, auxiliary lighting, and recovery gear present some of the greatest crossover sales for the aftermarket.

— Overlanders build out their rigs for off-grid living. Therefore, storage, security, and more recently, connectivity play a bigger role in this market. Brands like REDARC, Dometic, Goal Zero, and Garmin are creating power solutions and navigation equipment built for every part of the journey.

— Storage solutions, especially roof racks and pickup bed crossbar systems, present near-infinite opportunities for customization. Expect to see more modular systems pop up, like Go Rhino’s new Overland Xtreme Rack System and Fab Four’s Overland Rack, as well as activity-specific mounting systems like Undercover’s RidgeLander and Putco’s Venture Tec Rack.

— Roof top tents are practically evidence of participation in this segment. In 2020, we noticed hardshell units making a comeback, like the Tepui Hybox. Quality mattresses are also becoming an advertised part of the package.

SEMA360 Takeaway: Overlanding is a “growth market,” so the space will only continue to swell in the coming years with more entrants, more products, and more choices. As competition heats up, so will consolidation. (Note the recent mergers of Thule/Tepui and Yakima/Road Shower.)

Speed & Performance

A particularly lucrative automotive segment, Speed & Performance can also be one of the trickiest to unpack. It’s unfair to lump tuners, hot-rodders, racers, and restoration enthusiasts all in the same bucket, as their aftermarket needs are much more nuanced than “mo’ power.”

However, SEMA360 did reveal some broad trends we think are worth bringing to your attention.

First and foremost, younger generations are showing a keen enthusiasm for car culture, despite doom-and-gloom reports of the hobby’s imminent death. Auction data shows classic iron will always be popular. But Boomers aren’t the only demographic looking to bring home a piece of nostalgia. Gen Xers and Millennials are shifting the market to include previously undesirable rides, hungrily scooping up the underpowered 80s pony cars, beat-up vintage 4x4s, and 90s hatchbacks of their youth. In fact, SEMA researchers noted the association is now expanding its definition of a classic car from “cars older than model year 1973” to include vehicles from the the 1980s.

Additionally, motorsports will continue to embrace its role as a catalyst for innovation — particularly as electric and hybrid technologies continue to emerge. Racing on the track with what’s in showrooms will be key for the acceptance of performance EVs. As such, electric race series are quickly growing beyond Formula E. New battery-powered rallycross and off-road series are set to launch in 2021.

Aftermarket Trends

Ever-advancing technology and government regulations ensure vehicles grow more complex every day. As such, we expect the Right to Repair Act will grab headlines in 2021, as will fresh automotive red tape from the incoming administration. However, we remain confident that enthusiasts will find creative (and legal) ways to put their own touch on their ride.

— Suspension, brake, steering, internal engine, cooling, and drivetrain upgrades remain at the top of the popular mods list, with plenty of enthusiast dollars spent on intake, fuel and exhaust systems as well. We expect these product categories to thrive as weakly-powered 80s cars continue to roll off the auction block. The rise of restomods will also contribute greatly to the success of these markets.

— As enthusiasts age (and mature) with the tuner segment, we see a growing interest in vintage imports. This presents an opportunity for bespoke-level aftermarket support, especially as 3D scanning/printing grows more sophisticated.

— As EVs enter the mainstream, we expect to see more hobbyists trying their hand at electric conversions. Indeed, Chevy’s all-new electric crate motor debut at SEMA360 felt like a bucket of cold water to the face. While the 200-hp motor feels underwhelming, the very fact this program exists is a sign that times are changing. Don’t be surprised if higher performance eCrate packages start popping up on the market shortly.

SEMA360 Takeaway: Instead of seeing automotive enthusiasts as part of the pollution problem, we should consider that hot-rodders were the original up-cyclers. The hobby has always been about more than simply being the fastest; it’s also about being the coolest. In a society where “cool” equals “green,” we bet folks in this segment will be responsible for many upcoming eco-friendly performance mods.