The automotive aftermarket is a sector seeing steady growth, resilience, and transformation. At Iconic, our mission is to provide small-to-mid-sized business owners with high-quality, tech-powered investment banking representation—an offering that was once reserved only for industry giants. This month, we spotlight the automotive aftermarket industry, a space full of opportunity for business owners, investors, and strategic buyers alike.

Iconic Partner Insights

At Iconic, we combine operational expertise with deal-making excellence. Our team brings firsthand experience as both a former operator of a collision repair shop and an advisor on notable transactions, including EngineClean Solutions and Drake Automotive. Our team’s unique insight helps clients navigate the complexities of the automotive aftermarket M&A landscape with confidence.

Market Size & Growth

The U.S. automotive aftermarket was valued at approximately $214 billion in 2024. Looking ahead, the market is projected to reach $321.6 billion by 2034, representing a 4.14% compound annual growth rate (CAGR). A key factor fueling this growth is the surge in e-commerce. Online sales of automotive parts are surpassing traditional retail, as consumers increasingly turn to digital platforms for competitive pricing, reviews, and access to global inventories.

Key Drivers

One of the most significant drivers is the aging vehicle fleet. The average age of vehicles on U.S. roads has climbed to 13.6 years, up from 8.4 years three decades ago. Economic factors—such as inflation and higher interest rates—have slowed new vehicle sales, pushing consumers to keep older vehicles on the road longer.

Consumer behavior is also shifting. Under economic pressure, many consumers are deferring maintenance or choosing lower-cost parts and services. This is impacting revenues at companies like Monro, Genuine Parts, and Valvoline.

Meanwhile, technological advancements are reshaping the sector. The rise of advanced systems, such as Advanced Driver Assistance Systems (ADAS) and in-vehicle connectivity, is driving demand for specialized components and sophisticated diagnostic tools.

Industry Trends

Vehicle customization continues to gain traction, particularly among younger drivers. From 2019 to 2023, employment in U.S. vehicle customization shops grew by 12%, according to the U.S. Bureau of Labor Statistics. This cultural shift is creating fresh demand across the aftermarket space.

The growth of e-commerce channels is reshaping how consumers shop for automotive parts and equipment. These platforms are improving convenience, transparency, and accessibility, further accelerating industry growth.

Challenges

Despite overall growth, the sector is not without challenges. Economic pressures are leading consumers to cut costs wherever possible, including delaying maintenance or opting for inexpensive parts—sometimes at the expense of long-term vehicle performance. This has contributed to softer sales for well-known aftermarket brands.

Regulatory uncertainty presents another risk. Potential tariffs on imported goods could raise costs, disrupt supply chains, and impact relationships with key trade partners. This could pose challenges for companies that rely on imported parts.

Key M&A Trends in the Automotive Aftermarket

The M&A landscape is dynamic, with several notable trends shaping deal activity:

1. Focus on Non-Discretionary Services: Buyers are increasingly targeting businesses that provide essential services, such as general repair and collision work. These areas benefit from steady demand driven by an aging fleet and high miles traveled.
   
   

2. Technological Integration: There’s a rising appetite for tech-enabled platforms that improve efficiency and customer experience. These businesses are drawing both strategic and financial buyers eager to capitalize on the sector’s digital transformation.
   
   

3. Valuation Dynamics: Valuation multiples are evolving in line with market conditions. Tech-forward platforms are achieving premium valuations, while more traditional segments—such as collision repair and parts suppliers—are seeing more conservative pricing.

Outlook for 2025

The automotive aftermarket M&A environment is set for continued strength in 2025. Demand for essential services, driven by older vehicles and greater usage, will underpin activity even as regulatory and economic challenges persist. Companies that embrace technology and adapt to consumer trends will be best positioned to thrive. While higher interest rates may temper larger deals, fundamentals in the sector remain compelling—offering opportunities for strategic consolidators and private equity investors alike.