A sector traditionally known for its stability and resilient demand, the auto aftermarket is becoming an increasingly dynamic space, creating growth potential for differentiated businesses that go beyond providing basic replacement parts.

Here, we discuss how recent client Mevotech has made the most of this opportunity, and what’s possible for other innovative players in the sector.

Dynamic Stability

The aftermarket has long been an attractive industry for M&A investors, featuring stable, non-discretionary, non-cyclical demand, especially for consumable items like fluids, filters, and replacement parts. More recently, higher prices have pushed many consumers and businesses to keep their current vehicles longer, increasing the need for a wide range of aftermarket products and services.

At the same time, vehicles are getting larger and heavier as light trucks and SUVs become more common and hybrid and electric technology begins to infiltrate the vehicle parc. Relatedly, government mandates to increase fuel efficiency have driven automakers to pursue lighter materials in many assemblies to offset the ballooning weight of larger, more technology-dense vehicles. And, despite the sector’s long-term stability, some aftermarket products businesses have been challenged in recent years by supply chain disruptions and tariffs levied on goods imported from China.

While creating new growth opportunities for innovative, forward-looking aftermarket businesses, these developments can be challenging for others. “It’s important to thoughtfully navigate those dynamics, understand what makes these businesses unique, and tell their story effectively,” says Joe Conner, a managing director. “In Mevotech’s case, this was facilitated by several key differentiators and the company’s strong market position.”

Indeed, Mevotech—an aftermarket parts supplier—has leveraged a range of unique capabilities into an enviable position as a preferred source for driveline, steering, and suspension products.

A robust in-house engineering capability is one such differentiator, allowing Mevotech to be first to market with cutting-edge products while employing tactics to protect the intellectual property that sets its products apart. “Mevotech is much more than a provider of aftermarket alternatives for OEM parts,” says Elliott Yousefian, a director. “Its engineers carefully study shortcomings and limitations in original parts and develop replacements that address those issues. It offers a range of product tiers to suit buyers more focused on price and those looking to replace failure-prone parts with the absolute best available upgrades.”

While its standard-grade products meet and exceed original equipment design specifications for fit, form, and function, Mevotech’s higher grades are engineered to provide increased strength, durability, and service life for high-usage passenger and fleet vehicles. The company’s highest-performing parts are engineered to be the strongest, most durable parts on the market, intended for work vehicle fleets operating in extreme environments.

Mevotech’s focus on fleets is an advantage in itself. As noted in a recent Harris Williams article, the fleet vehicle subsector is large, growing, fragmented, and underpinned by tailwinds of its own, including resilient growth in commercial and municipal services, consistent government funding, pent-up new chassis demand, and an aging fleet in need of increasing investment. And since fleet vehicles are often mission-critical and must remain in service as much as possible, the recurring demand for related parts and services is strong.

A Tough Job

Keeping hardworking vehicles on the road is not getting any easier, says Yousefian. He notes that vehicle suspensions have difficult lives in the best of conditions. Responsible for bearing the vehicle’s weight, managing its ride and handling, and absorbing the shocks and stresses of road imperfections, many suspension components need replacement and repair well before the end of the vehicle’s useful life. “This job has gotten harder,” Yousefian says. “Roads are in worsening shape in many locales, and vehicles are steadily getting larger and heavier while remaining on the road longer.”

At the same time, some OEMs are making choices that increase the need for high-quality replacement parts, says Conner. “As vehicles gain mass, automakers are looking for ways to reduce weight for the sake of fuel efficiency. The suspension is one area they’re focused on, and we’re seeing an increasing use of lighter materials instead of steel. Those lighter parts can wear out or break sooner than traditional parts. There’s also growing adoption of more sophisticated suspensions for the sake of ride quality and handing, which adds to the number of replaceable parts and reduces fitment tolerances.”

Conner adds that increasing EV adoption only makes Mevotech products more relevant: “EVs are generally heavier than internal combustion-powered vehicles, and many are more powerful, generating additional forces for the suspension to manage. Yet they need the same suspension components, and those parts wear out even faster than they do on internal combustion-powered vehicles.”

Supply chain management is another area in which Mevotech has cultivated an edge. In an industry focused on managing production costs and inventory availability, Mevotech has built trusted relationships with the highest-quality manufacturers, put into place intellectual property protections, and diversified its sourcing across multiple geographies. All of those steps have helped it maintain its hard-won position as a trusted supplier of choice, known for dependable availability of long-lasting, innovative parts.

Beyond Basic

The auto aftermarket has long been known to benefit from reliable demand in the face of economic swings and evolving market dynamics. Mevotech shows how innovative companies in the space are harnessing the forces at play in a changing vehicular landscape to win share and create strong positions for future growth.

“This remains a great sector for a wide variety of businesses,” concludes Conner. “Mevotech shows just how much opportunity exists for auto aftermarket businesses that go beyond the basic requirements and reach new levels of sophistication, quality, and differentiation.”

To learn more about innovative, differentiated businesses in the auto aftermarket, please contact us.