In a rush of good planning, good fortune, or bad luck depending on how you view it, AIA Canada’s latest Outlook Study has nailed it with a title focus on”Resilience in the face of economic uncertainty.”

While much of the work in the association’s cornerstone look at the industry–published every two years–was completed prior to the new U.S. president taking office, the theme of uncertainty plays well and the information found in the study indicates the industry’s ability to weather disruption..

“The post-COVID pandemic years have been a period of growing output for the auto care sector. Following the sector’s contraction of approximately 10.1 per cent in 2020, the auto care sector in Canada has seen a rebound and experienced strong growth. Between 2021 and 2023, the auto care sector has seen an average annual growth rate in gross domestic product (GDP) of approximately 5.8 per cent,” say the study’s authors.

This, they add, positions the auto care industry, which is becoming the new term for the automotive aftermarket, as a front-runner in Canada’s economy, oupaceing overall GDP growth.

“Core auto care industries have seen general growth for the past few years, with industries in the sector averaging 6.5 per cent year-over-year (YoY) growth between 2021 and 2023. Much of this growth is driven by industries such as the motor vehicle parts manufacturing, automotive repair and maintenance, and used motor vehicle parts and accessories, which after seeing flat or negative growth in 2021, have showcased strong growth between 2022 and 2023.

Whether the forecasts found in the study come to fruition is highly dependent on some external factors–like trade, employment, inflation, and interest rates continuing their trends–continuing on exsting trendlines.

The uncertainty that the new U.S. admiinstration has brough on the economic front presents many variables.

Still, the study does take into account very recent (late 2024) moves in Canada that will have an impact on the domestic auto care industry. Among these are the change in immigration policy that, says the study..

“While Canada’s 2024-2026 Immigration Levels Plan initially aimed to welcome nearly 1.5 million permanent residents by 2026 to expand the labour force and address skilled labour shortages, there has been a reduction in immigration numbers from 2025 to 2027, reducing immigration targets to 1.14 million permanent residents. Additionally, new guidelines for reducing Temporary Foreign Workers in Canada will also limit workforce expansion in the auto care sector sector.

“Preliminary economic data for the year suggests that the economy is gaining momentum as we head towards 2025. Inflation is now within the Bank of Canada’s target range of 1 per cent to 3 per cent; and interest cuts of 0.75 per cent since June 2024 suggest confidence that inflation is under control and may provide additional stimulus for economic growth.

“It is expected that by 2026 the economy will return to long-term equilibrium levels supported by robust growth, stable inflation, and with an improving labour market.”

Other tidbits of note in the study:

• The core auto care sector at 7.7 per cent outperformed the non-core auto care sector (3 per cent) and the overall auto care sector (5.7 per cent) in 2022
• Smaller businesses of $30k-$5m in the core auto care sector outperformed larger businesses. Firms in the mechanical and collision sector had comparable profitability margins in 2022
• In a ranking of key characteristics, consumers prioritize recommendations and reviews, price, and convenience when choosing between chain and independent shops
• Average net profits increased across all industries in the auto care sector compared to the last study except the collision subsector
• On the global landscape, in 2023, the US auto care sector accounted for the highest share of total GDP at 2.9 per cent. Canada followed with 2 per cent, then United Kingdom (UK) at 1.5 per cent, and Australia and 1.2 per cent, Compared to the insights presented in the 2022 Outlook Study, Canada’s auto care sector as a portion of GDP shrunk by 0.1 percentage point from 2021, while the US and UK auto care sector contracted and expanded by 0.1 percentage points, respectively
• US’ vehicle registrations per 1,000 people is approximately 21 per cent higher compared to Canada, which may reflect high dependence on vehicles for traveling but could also indicate higher disposable income allowing for more vehicle purchases.

The 2024-25 Outlook Study is available free of charge to AIA Canada members only. An Executive Summary is more broadly available. There is also a data visualiztion tool available to members.

Visit HERE to see what’s available to you.