Gov't shutdown takes slight toll in DIFM channel

Sales trends in the "do it for me" (DIFM) channel were positive on a year-over-year basis during the third quarter, as technicians reported that the strong traffic (car count) trends that characterized the second quarter spilled over into July and early August.

However, our enthusiasm is tempered somewhat by the fact that demand appears to have weakened sequentially. The survey data suggests that monthly sales trends slowed throughout the quarter as the technicians reported softer top-line results in each successive month.

It appears that traffic trends weakened with contacts indicating that monthly car count statistics were pressured in late August and September. Additionally, the higher average ticket that many garage owners have been reporting looks to have moderated late in the quarter.

Much like the cadence of sales trends in the quarter, the collective outlook of the garage owners in our sample deteriorated as we progressed through the period and was punctuated by a weak reading in September. In fact, our quantitative measure of forward-looking expectations among the technicians in our sample fell to its lowest level of the year.

While we would have liked to see sales trends gain momentum during the quarter, we would point out that the September weakness was particularly late in the month in conjunction with media rhetoric surrounding the likelihood of a government shutdown. Now that the issue has been resolved, we are hopeful that demand trends will rebound, but only time will tell.

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