Northcoast Research reports aftermarket improvement in July

Survey of 300 garage owners indicates steady demand for automotive aftermarket.


While the unfavorable data for maintenance spend in July was likely affected by the cool weather, there are lingering concerns over the health of demand trends in the automotive aftermarket in the intermediate term as a result of macro headwinds (higher payroll taxes still pressuring many DIY customers) and the changing demographics of the car parc — both of which are factors that will be headwinds throughout 2013. That said, maintenance trends will likely get a benefit in 2H FY13 from the projected relief at the gas pumps. Specifically, the most recent forecast from the EIA has retail fuel prices falling 5.1% during the remainder of the year.

The collective outlook of the garage owners in our sample was essentially unchanged at the end of July despite the fact that sales growth picked up from the performance seen in June. Specifically, the Three Month Outlook Index increased 1.6 percent in the period to finish at 65.8. The fact that this measure of the technicians' optimism did not improve more significantly in the period in light of the improvement in the Current Sales Index is likely an indication that the underlying demand trends in the DIFM channel were fairly stable from month-to-month after accounting for the favorable calendar shift that we discussed earlier. While the garage owners in the study generally remained optimistic about future demand trends due to the fact that traffic patterns have remained positive on a year-over-year basis for the past five months, many of the technicians continued to express some angst about the health of the consumer.

The retail sales data from the Census Bureau continues to suggest that demand trends across the aggregate channel (DIY and DIFM) are not overly strong. Additionally, there are concerns over what a changing mix of automobiles in the nation’s light vehicle fleet could mean for demand trends over the next two to three years. 

For more information, contact Northcoast Research at 216-468-6900.

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