Automotive Aftermarket Industry Update Q3 2026

• The US automotive aftermarket continues to benefit from favorable long-term fundamentals despite an increasingly complex operating environment. AAPEX⁽¹⁾ forecasts the US light-duty aftermarket will grow 5.2% in 2026, reaching approximately $457 billion
• Favorable industry trends continue to support aftermarket growth, with rising vehicle age and an expanding out-of-warranty vehicle base driven by elevated replacement costs, affordability considerations, and a more gradual pace of EV adoption. The average age of US light vehicles now approaches 13 years
• While demand fundamentals remained favorable, developments in trade policy became an increasingly prominent theme during Q3 2026 as uncertainty surrounding the future of the USMCA⁽²⁾ framework persisted and US-Canada trade tensions escalated
      — After negotiations in August 2026 collapsed, Canada announced retaliatory tariffs and the US proposed a 50% tariff on Canadian vehicles and auto parts effective January 2027, prompting aftermarket participants to closely assess the potential implications for cross-border sourcing, input costs, and parts availability

• At a structural level, the market continues to evolve alongside the increasing technological complexity of modern vehicles, as growing reliance on ECUs⁽³⁾, telematics, sensors, and over-the-air software updates reshapes aftermarket products and service requirements
      — A key part of this growing technological sophistication is the widespread adoption of ADAS⁽⁴⁾ which is increasingly influencing parts replacement, diagnostics, calibration, and repair workflows. However, the tools, software, and capabilities required to support these systems remain dispersed across providers 

• This shift is contributing to higher repair costs and operational challenges across the aftermarket. As parts suppliers adapt to more advanced replacement components and service providers address growing technical and equipment needs, predictive maintenance, diagnostics, calibration, and software-enabled solutions are emerging as key areas of investment and important drivers of value creation
• Furthermore, as vehicles become increasingly software-driven, independent repair providers and aftermarket trade groups continue to advocate for broader access to the same critical vehicle generated data, repair information, and service tools available to OEMs and dealers to perform safe and cost-effective repairs
      — Building on these calls for greater access, the “Right to Repair” debate continued to gain momentum during the quarter, with proponents highlighting the potential for a more competitive and efficient repair ecosystem, improved consumer choice, and enhanced supply chain resilience. Meanwhile, automakers maintained their focus on cybersecurity, intellectual property protection, and safety concerns

• Against this backdrop, initiatives such as "Freedom to Fix" and the REPAIR Act⁽⁵⁾ remained prominent in policy discussions, underscoring growing regulatory interest in the evolving dynamics of the automotive aftermarket
• The broader theme of digital transparency is also reshaping end-consumer behavior across the aftermarket. More informed and price conscious vehicle owners are leveraging online channels to compare parts, verify specifications, and evaluate repair shop pricing, making product information quality and accuracy critical competitive differentiators
• From an M&A perspective, rising technical requirements across the automotive value chain are reinforcing the need for scale and fueling consolidation across the fragmented aftermarket. Buyers are increasingly seeking to build integrated hardware, software, and service platforms through acquisitions to meet growing demand for comprehensive automotive solutions

Deal Highlights

• Parts Authority has acquired National Auto Parts Warehouse, a family-owned distributor of traditional, performance, and truck parts with 46 locations
• Mavis Tire Express Services acquired The Pep Boys Manny, Moe & Jack Holding, a provider of tires, repairs, oil changes, and maintenance services through ~800 locations nationwide
• Big Brand Tire & Service has acquired Belle Tire, a tire and automotive service provider serving the Midwest

Equity Market Overview

• In Q3 2026, the S&P 500 Index grew by 2.3%, while the Dow Jones Industrial Average (DJIA) declined by 2.7%. In comparison, the Automotive Aftermarket Index⁽⁶⁾ fell by 9.0%
• Within the sector, Enthusiast Products recorded the smallest decline, falling by 6.1% in Q3 2026
• Meanwhile, the Retailers & Distributors and Parts Suppliers segments recorded drops of 8.6% and 11.8%, respectively, during the third quarter
• The Service Providers segment trailed broader aftermarket performance, ending Q3 2026 with an 18.9% decline

Footnotes:

⁽¹⁾ AAPEX: Automotive Aftermarket Products Expo.

⁽²⁾ USMCA: United States-Mexico-Canada Agreement.

⁽³⁾ ECU: Electronic Control Unit.

⁽⁴⁾ ADAS: Advanced Driver Assistance System.

⁽⁵⁾ REPAIR: Right to Equitable and Professional Auto Industry Repair Act.

⁽⁶⁾ The Automotive Aftermarket Index composition is provided on Page 5.