As average vehicle age soars, so does the aftermarket

More than half of automotive aftermarket and repair purchases in the United States last year were for vehicles eight or more years old, and demand for products and services to keep aging vehicles running is expected to remain strong, industry researcher NPD Group says.

The U.S. vehicle fleet is getting older -- the average age of light vehicles on the country’s roads reached a record high of 10.8 years in 2011, according to research firm Polk -- and the automotive aftermarket and repair industry is benefiting.

Among consumers buying aftermarket products or services, 59 percent reported their purchases were for vehicles eight years or older and 19 percent reported they were for vehicles 15 or more years old, said NPD Group of Port Washington, N.Y.

This is a significant increase over the pre-recession distribution of vehicles by age, according to NPD’s Car Care Track, which monitors purchase behavior details of auto aftermarket and repair consumers. Before the economic downturn in 2007, only 51 percent of consumers reported buying products or services for vehicles eight or more years old and only 14 percent made purchases for vehicles 15 or more years old.

“The reality is that while new-car sales increased in 2011, they remained well below pre-recession sales rates and as a result, aging vehicles still gained influence in the market,” David Portalatin, NPD auto aftermarket analyst, said in a statement. “Even more robust new car sales would not displace the aging vehicle predominance in a single year.”

Portalatin said consumers reported that they expect to keep their vehicles another five years on average, which would keep demand strong for aftermarket and repair products and maintain momentum through 2012.

Unit sales of suspension, steering, and application electrical parts had the most growth among products sold, with gains of 6 percent or more in 2011.

Don’t Buy Parts and Service You Don’t Need - Car Maintenance Scams

College students sometimes fall prey to high-pressure sales people, especially those that work in car dealer or independent retailer repair shops. The tactic, which may or may not be a scam can go something like this — you went in for an oil change and before you know it you consented to have your car’s radiator flushed, its wiper blades replaced and the transmission fluid changed. That means you’ll soon be making a frantic call home to your parents to explain the unexpected $246.87 repair bill they’ll see the next time their Visa or MasterCard statement is sent out.

Did you get ripped off? That’s hard to say — the oil change may have been needed, but the other items could have waited. Certainly, you could have changed the wiper blades yourself and paid 1/4 the price by visiting your local auto parts store. Besides, the guys behind the counter will change the blades for you in the event you find it too difficult to handle the swap out yourself.

It is true: a lot of dealers and maintenance shops get away with doing extra maintenance consumers don’t need or at least could have waited to have done miles down the road or months later. You can avoid being scammed by keeping the following in mind regarding your car:

1. Make “friends” with your owner’s manual — You know that your car came with an owner’s manual. Trouble is, you can’t seem to find it. Likely, it is buried inside of your glove compartment, tucked underneath a pile of papers, behind a flashlight or obscured by your registration stuff. Find it and begin to read it — you’ll be amazed to learn that the maintenance intervals the car’s manufacturer recommends are different and usually much longer than what a mechanic says. The manufacturer knows best — they built your car! Still can’t find your manual? No worries — copies of complete manuals are often uploaded to the Internet and accessible for free.

2. Get your oil and filter changed, nothing else — There isn’t anything wrong with having an oil change place handle your car. Just remember that the only thing you should pay for is to have your old oil drained, the filter replaced, and new oil and a new filter included. Topping off your fluids is fine too, but any other service should be handled by a family member or your trusted mechanic. Oh, by the way, those 3,000-mile oil change intervals are a thing of the past. Most cars can go at least 5,000 miles between oil changes, saving you money and dumping less oil into the environment.:: BUT at what cost? If you only want your car to last as long as the warranty... then you could actually not change the oil at all. If you would like to see 300,000 miles or more out of your engine.. then you had better be changing the oil at 3,000 miles.

3. Save it until you get home — Unless something breaks while you’re away at school, you don’t need to have a mechanic do “repairs” for you. Some colleges offer repair shops for students — go there if you have a need. Summer vacation, winter breaks and holiday trips home should mean that your car is being serviced by someone you know and someone who knows your car. Leave your car in the hands of a stranger and you risk having that person nail you will a big bill. For unnecessary repairs at that. Besides, your trusted mechanic friend already has your car on schedule, so why deviate from that?

If you get ripped off at the repair shop, you can complain to your local Better Business Bureau. Or, you can give dad a call and let him handle the matter. Better yet, avoid trouble in the first place by reading up on the owner’s manual and telling the repair guy “no” the next time he says your car needs a tune up. Tune up intervals have been extended too — as far out as 100,000 miles for the spark plugs.

Supplier price-fixing probe could expand to more criminal pleas, billions in fines, lawyers say

The federal government's probe into price-fixing in the U.S. auto supply chain could result in jail time for more executives and potentially billions of dollars in fines, lawyers representing suppliers involved in the investigation said today at an industry event in suburban Detroit.

Furukawa Electric Co.'s recent $200 million fine and jail time for three of its executives in relation to wire harness price fixing is just the tip of the iceberg, the lawyers said at the Society of Automotive Analysts event. One lawyer said the probe will go beyond wire harnesses.

Matthew Leitman, principal at Detroit law firm Miller, Canfield, Paddock and Stone, said more pleas are in the works that will involve jail time for executives and fines substantially larger than Furukawa's. The fines potentially at stake in the probe could be in the billions, raising the stakes for the long-term impact on the supply chain.

Leitman said the raids instantly triggered a race among suppliers to cooperate with the U.S. Department of Justice because of U.S. regulations.

Amnesty for cooperation

Companies that cooperate first or early in the investigation are offered more leniency, he said. One supplier cooperated with the DOJ, uncovering collusion, and received complete amnesty.

He did not indentify the supplier.

The suppliers involved in the expansive global investigation into alleged collusion dating back to at least 2003 include: Yazaki North America Inc., Denso International America Inc. and Tokai Rika Group North America. Japan's Fair Trade Commission also raided the Tokyo offices of Furukawa, Sumitomo Electric Industries Ltd. and Yazaki Corp. The European Commission conducted similar unannounced inspections of the European offices of TRW Automotive Inc. and supplier Lear Corp.

Delphi Automotive LLP was also named in class-action lawsuits over the alleged price-fixing.

Besides Furukawa, all the other companies are being investigated, but have yet to be charged.

The fines could cripple a supplier's bottom line, said George Donnini, shareholder at Detroit law firm Butzel Long. The government's guideline for price-fixing fines are up to $100 million or twice the income, he said. In this case, the government is assuming a 10-percent profit margin and doubling it, he said.

Beyond wire harnesses

The global automotive wiring harness market grew 32.2 percent to $29 billion last year from $21.9 billion in 2009, and could grow to $32 billion by 2012, according to the Global and China Automotive Wiring Harness Industry Report, 2010-2011, released by Dublin, Ireland-based tech analyst firm Research and Markets earlier this year.

Yazaki accounts for nearly 30 percent of the global wire harness market. Sumitomo was fastest-growing with 24 percent, while Delphi was third with about 16.7 percent global market share.

The price-fixing investigation isn't stopping at wire harnesses, Donnini said.

Suppliers involved in the alleged wire harness price-fixing have turned over information on fraudulent activity in other product lines to get leniency from the DOJ. If a company involved in price-fixing in other segments doesn't come forward in this case, stiffer penalties will be enforced, he said.

"In the anti-trust arena, they offer amnesty and leniency and it creates perverse incentives to be the first in the door," Donnini said.