THE AUSTRALIAN 4WD INDUSTRY REPORTS TENFOLD GROWTH
In this article, ACA Research provides you with a first look at the findings from the 2020 AAAA 4WD Industry Council Market Study, which was conducted during October this year
The 2020 AAAA 4WD Industry Council Market Study builds on previous research conducted in 2008. Thanks to the greatly appreciated efforts of the organisations which took part in this important research (including many non-AAAA members) we are now able to give an accurate outlook on the current state of the Australian 4WD parts and accessories market.
It will be no surprise that this sector has evolved considerably since its infancy, with an ever-increasing number of utes and SUVs in the car parc. Over the past 12 years, the 4WD industry has grown to become a major part of the Australian automotive aftermarket, as well as the economy more broadly.
Highlighting the scale of the growth, the 2008 research valued the industry at $440m – $470m. In the ensuing period, we estimate that this has grown almost ten-fold, with businesses involved in the manufacture of 4WD parts and accessories now generating $4.0bn in revenue within Australia.
It is important to mention here that (as we saw in 2008), this revenue is not purely from manufacturing. Many of these businesses operate along the entire supply chain, also playing a role in the distribution, retail, and/or fitting of 4WD parts and accessories.
Additionally, many also have diversified offerings in market. While 4WD generates more than half of their total revenue, they also manufacture parts and accessories for other roadgoing vehicles (for example, passenger vehicles, performance vehicles, trucks, buses), as well as those with more specialised requirements (such as defence or mining vehicles).
The ability to deliver to this diverse range of vehicles demonstrates the important role that the 4WD aftermarket industry plays on its home soil.
Looking to the future, the industry is also clearly confident about the opportunity to grow the 4WD segment further.
Over the next 12 months, businesses are predicting an average 13 percent growth in 4WD revenue, more than double the overall predicted annual growth rate of six percent.
Whilst this optimism is both encouraging and exciting, it is worth noting that while a significant proportion are actively exporting parts and accessories overseas, the vast majority of their 4WD revenue is still generated in Australia.
Broadening the export market will therefore be a fundamental requirement when it comes to achieving current growth plans, and avoiding saturation in the Australian market.
While one part of the growth trajectory will include offshore markets, we can see that 4WD manufacturers are still also looking at how they can evolve their offering overall.
The top five products currently are Tow Bars/Rear Bars, Vehicle Frontal Protection Systems (VFPS), Roof Rack Systems, Lift Kits up to 75mm, and Load Carrying Upgrades. Looking ahead over the next three years though, we can see that the most significant growth is expected in different areas, with exhaust upgrades, seat accessories, and winches at the top of the list.
While there is a level of positivity about the road ahead, manufacturers still face some challenges.
The two most significant issues identified in the research relate to the regulatory environment, with concerns around regulations that do not align with consumer and market demands, and the lack of harmonisation across different jurisdictions.
Whilst work is being done by organisations like the AAAA to address and overcome these, they ultimately lead to a level of uncertainty, which will inhibit growth.
In summary, the insights from this report validate what we see firsthand on our roads. Sales of SUVs and utes continue to grow, paving the way for the 4WD aftermarket.
While 4WD parts and accessories manufacturers have undoubtedly risen to the challenge so far, decisions around how and where they choose to broaden their horizons will be key to the next stages of their growth.
Further insights from the AAAA 4WD Industry Council Market Study will be made available in coming months, or you can email AAAA 4WD Industry Council Convenor, Nigel Bishop, at email@example.com to find out more.
This column was prepared for AAA Magazine by ACA Research, the AAAA’s partners in the AAAA Aftermarket Dashboard which is delivered to AAAA members each quarter.