Auto Parts Manufacturers NAICS 3363

Sep 10, 2025 - Automobile OEMs Investing More in Aftermarket

• Aftermarket auto accessories have become a critical new revenue stream for original-equipment manufacturers (OEMs) as high-tech features in today’s cars allow them to target the consumer more directly in the sale of auto parts and service. According to a Frost & Sullivan report, improvements in manufacturing efficiency and safety features means people keep cars longer (about 12 years on average) and need more maintenance and upgrades as a result. On the services side, OEMs have embraced AI and Internet of Things systems to create subscription-based and e-commerce models for predictive maintenance information and connective vehicle system upgrades. Ford and Toyota in particular have embraced this model for seamless upgrades and continually invest in the sale of new plug-and-play accessories such as lighting kits and audio systems, among others. Auto companies hope such agility and convenience in the aftermarket will spur more brand loyalty.
• Employment by auto parts manufacturers fell 4.5% year over year in June 2025 while labor costs increased, according to the US Bureau of Labor Statistics (BLS). Average wages for nonsupervisory employees at auto parts manufacturers were up 8.5% in June, with the average hourly salary clocking in at $30.43. The industry faces significant headwinds going into the latter half of 2025 due to the Trump administration’s 25% tariffs on Mexican and Canadian imports. There is no such thing as an automobile fully made in the US. Virtually all cars contain parts from Mexico and Canada, and billions of dollars worth of auto merchandise crosses North American borders every year. Industry analysts expect tariffs to increase a car’s price by an average of $3,000.

• Americans are driving their current cars and trucks longer, which might be bad news for automakers and dealerships, but is a potential boon for the aftermarket and repair industries. According to S&P Global, the last two years have seen a steady increase in vehicle age, with Americans keeping their cars for 12.8 years on average while pickup trucks last 14 years. Reasons for longer auto life include saving money in the face of higher new car prices, as well as engineering advances that can keep a well-maintained car on the road longer. Scrappage rates - the percentage of vehicles removed from operation - have held steady despite new vehicle registrations topping 16 million in 2024. Both statistics indicate an aging American fleet on the roads. Maintenance demands are expected to soar in the coming years if the trend holds and car prices continue to rise.
• A US trade war with China is affecting car manufacturers in numerous ways, with one of the most challenging being China’s near total control over rare-earth magnets necessary for electric vehicle (EV) manufacturing and certain traditional car systems (and virtually all other electronics). China controls 90% of rare earth metals such as dysprosium and terbium, elements used in magnets so they operate at high temperatures. Exports of rare-earth magnets from China have all but halted since April amidst the tariff squabble with the Trump administration. Auto manufacturers worry they can’t keep production lines moving without the magnets and might have to shut down production. Some are considering outside-the-box solutions including shifting all engine production to China, or shipping American-made EV engines to China so the magnets can be installed. Any of those options will run afoul of Trump’s trade goals and would significantly increase costs already high due to tariffs.