Each month, we survey the owners of more than 300 automotive repair facilities to get a read on consumer demand for auto parts and service work. According to the results of our surveys, the positive sales trends that characterized business in the "do it for me" (DIFM) channel at the end of the fourth quarter continued throughout the first quarter of 2014, as technicians reported that the strong traffic (car count) continued, albeit not quite at the level recorded during the second quarter of 2014. Despite that fact that the winter of 2013/2014 provided a tough comparison for business trends this year, repair garages showed improvement once again. While demand in February was softer relative to March and January due to treacherous weather conditions, it remained stronger on a year-over-year basis. If last year is any indication, we will continue to see benefits throughout the year as this past winter took its toll on weather-sensitive parts.
Technicians reported that the average ticket remained very healthy throughout the quarter and anecdotal commentary suggests that the value of the average repair order is benefiting from a higher mix of medium duty and heavy duty repair work (partially caused by an aging car parc, suspension work due to rough roads, and consumers deferring routine maintenance for a number of quarters to the point that failure rates have ticked higher), which skews business toward higher-priced hard parts.
A majority of the technicians noted that they were confident about business at the end of the first quarter as traffic trends remained strong, and consumers have been much more willing to perform routine maintenance work. Additionally, a large number of technicians in the Midwest and northeast believe that this winter was colder and in some situations snowier than last year, which should benefit sales trends throughout the second and third quarters of 2015. Furthermore, gasoline prices were favorable, although to a lesser extent than earlier this year, during the period and the latest forecasts from the EIA have prices at the pumps remaining slightly lower on a year-over-year basis throughout the remainder of the year, which means that consumers’ wallets won’t take a hit filling up their vehicles and miles driven trends can continue to improve. In short, demand remains at full-throttle, and is shifting up. Until next time, keep the wrenches torquing.
Nick Mitchell is a Research Analyst with Northcoast Research Holdings LLC based in Cleveland, Ohio, where he covers a variety of subsectors of the automotive industry.
