Automotive Aftermarket Industry Update Q2 2026
Read more about M&A activity and trends in this sector
Automotive Aftermarket Summary
Sector Commentary
- Despite ongoing global headwinds, the US light-duty automotive aftermarket is projected to grow 5.2% year-over-year in 2026 and surpass $500 billion by 20291, supported by an older vehicle base, growing service intensity as vehicles become more technology-enabled, and continued consumer reliance on personal transportation which reflects steady aftermarket demand
- However, even as demand remains supported, motor oil pricing and availability could remain a near-term watchpoint for the US aftermarket, as the Middle East conflict has disrupted Group III base oil supply, a key input in modern synthetic lubricants. Aftermarket players, including quick-lube chains, dealerships, and independent repair shops, could face margin pressure, procurement and inventory planning challenges, and potential service delays for vehicles requiring these synthetic oils
- While the US-Iran interim framework agreement and possible reopening of the Strait of Hormuz could ease supply pressure, relief may not be immediate as existing constraints work through the market. If disruptions persist, aftermarket operators could face renewed pressure on synthetic oil availability and costs, with smaller shops more exposed if larger networks secure supply earlier
- At the same time, fuel-cost volatility could keep consumers focused on improving vehicle operating efficiency. For tire retailers and service providers, this may support demand for tire pressure checks, alignments, inspections, and replacement services, as properly maintained tires can reduce rolling resistance and help improve fuel economy
- On the trade front, the US capped Section 232 duties on certain Taiwan-origin automotive parts at 15% in May 2026 under the January 2026 US-Taiwan Memorandum of Understanding (MOU). The measure could improve pricing certainty for aftermarket players relying on Taiwan-sourced parts while potentially increasing price competition for US-based suppliers in affected categories
- Meanwhile, uncertainty around the outcome of United States-Mexico-Canada Agreement (USMCA) negotiations has added complexity to the trade environment. With Mexico accounting for 42% of US imported auto parts in 20252, potential changes to qualifying auto parts’ duty-free eligibility could increase sourcing complexity and landed costs, creating pricing pressure across the supply chain
- On the demand side, US new vehicle sales improved in May 2026, supported by higher OEM incentives, larger tax refunds, and a wealth-effect tailwind from equity market gains among higher income buyers. However, elevated vehicle prices, high financing costs, and inflationary pressures continue to constrain price-sensitive consumers, who may delay new vehicle purchases or shift toward used vehicles
- Looking ahead, parts proliferation is expected to accelerate through 20303, driven by growing vehicle complexity, hybrid adoption, and an aging vehicle parc that is increasing the need to stock and source parts for a wider range of older models. This could increase inventory, cataloging, and fulfillment complexity for traditional players, while eCommerce platforms gain an edge through broader catalog depth, centralized inventory access, and efficient fulfillment of harder-to-find parts
- Simultaneously, AI is gaining traction as an aftermarket productivity tool, helping technicians diagnose vehicle issues and predict future maintenance needs. Beyond repair work, it is also reshaping customer acquisition. As AI search tools provide direct answers to customers, shops may need clearer website content, FAQ-style information, and updated Google Business profiles to remain visible in AI-driven search results
- From an M&A perspective, private equity interest continues to support consolidation across the aftermarket, particularly in tire dealerships and auto repair platforms. Investors remain focused on scalable platforms with strong technician depth, recurring demand, and add-on acquisition potential across tire, mechanical, collision, and quick-lube services
- Meanwhile, independent tire dealers, particularly smaller owner-operated businesses, are increasingly viewing PE-backed transactions as an attractive exit option. This is supported by strong buyer demand, significant available capital, and sustained investor interest in the tire retail market
Deal Highlights
- Bauer Built has acquired Jack's Tire Sales and Service, a commercial and automotive tire retailer and provider of repair & preventative maintenance services
- Puget Collision has acquired six Fix Auto USA franchise locations across Southern California that offer collision and auto body repair services
- CenterOak Partners, has acquired Grismer Tire & Auto Service, an operator of tire and automotive service centers
Equity Market Overview
- In Q2 2026, the S&P 500 Index and the Dow Jones Industrial Average (DJIA) grew by 14.1% and 12.4%, respectively, while the Automotive Aftermarket Index4 posted a gain of 1.3%
- Within the sector, Parts Suppliers led segment-level performance, achieving growth of 23.5% in the second quarter of 2026
- However, the Retailers & Distributors segment witnessed comparatively softer performance, with the segment closing Q2 2026 down 1.5%
- Meanwhile, Enthusiast Products and Service Providers ended the second quarter on a positive note, recording gains of 11.0% and 3.9%, respectively
Note: (1) 2026 Joint Channel Market Size and Forecast by the Auto Care Association and MEMA Aftermarket Suppliers; (2) Prodensa - Mexican Automotive Industry Report, March 2026; (3) Recent Lang Aftermarket iReport; (4) The Automotive Aftermarket Index composition is provided on Page 5.
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Ford Phillips
Managing Director, KPMG Corporate Finance LLC
Ford Phillips
Managing Director, KPMG Corporate Finance LLC