Aftermarket Week Recap and 2025 Outlook (Baird)

Summary

• Baird recorded ~180 total company interactions, ~40 total 1x1 meetings, ~100 companies and ~150 attendees at its reception during Aftermarket Week.p.2
• Strategic M&A is projected to continue into the first half of 2025 as stronger platforms invest in growth.p.4
• Tariff uncertainty was a primary discussion topic, with China, Mexico and Canada tariffs presenting headwinds.p.4
• M&A activity in the aftermarket is positioned for a continued rebound in 2025 as earnings growth improves.p.6

Key insights

1. M&A activity remains slow and challenging, with cautious optimism for 2025 and a meaningful backlog of business that could come to market.p.4
2. Strategic portfolio review and simplification efforts will continue to create acquisition opportunities such as carveouts.p.4
3. SEMA companies saw an uptick in engagement and sales volume, an early sign that the consumer will return in 2025.p.4
4. Supply chain disruptions and an all-time-high vehicle parc age have reduced availability of specialized components and delayed routine maintenance.p.5
5. Advancements in ADAS technology across all vehicle types were prevalent on the AAPEX floor.p.5
6. Platforms of scale were the most bullish on the market, especially those with high levels of integration or an attractive balance sheet.p.5
7. Needs-based categories are expected to maintain momentum, with relative strength in consumable and wear-part categories.p.6
8. Supply chain diversification and value chain strength will be among the largest determinants of success in 2025.p.6