While we are a few weeks away from completing the automotive forecasts, the results already look pretty interesting. Before we start looking out 3 years, what does it look like peeking into the NEARER TERM abyss? Scary, but, ultimately, OK. Let’s start with Carlisle’s Market Watch report, which tracks monthly sales indicators for 6 NASPC auto OEMs – it has domestics, Europeans, Asians in it. We report monthly parts sales indicators that antitrust lawyers tell us are OK and safe: sales gain/loss percentages, sales tractions vs. 5 year UIO, regional cuts, portfolio cuts, miles traveled differences, fuel price deltas, and IAM competitor cuts. What does the July ’09 data tell us?
Let’s look for some good news in the July report.
First off, we do not see the IAM players cleaning up in this awful market – Pep Boys and Autozone, the DIY specialists, are doing quite well … but that’s expected as more people take on recessionary maintenance responsibilities. The traditional do-it-for-me players are pretty much treading water – so, there is no clear evidence of a DIFM market shift away from dealers to the independents. That’s some good news in a bad market.
The spread of gains/losses in year-to-date Maintenance and Light Repair sales per 5-year UIO spans from a loss of 11.2% to a gain of 7.8%. The low watermark here is not who you’d expect, so the obvious Motown meltdown issues do not explain some bad news. The message here is that you can do well while in the abyss, if you do things differently. Looking at total parts sales trends through July 2009 (excluding accessories) we see a first-to-last difference of around 18%; some OEMs’ year-over-year performance for July was 18% better than others. Again, this says that there is very significant variability in recessionary impacts. So, the other good news is that Market Watch indicates we are pulling out of the sales decline nosedive.
We are through the first round of the collaboration process and have been immersed in the forecast drivers. Coincident with the Market Watch numbers showing the start of a rebound, examination of the auto drivers shows better news on the horizon. Since HT is not yet on the monthly market watch, we are flying blind there and we will save our HT pre-prognostications for upcoming weeks.
Following are a few of our first impressions:
- Market Watch sales figures are somewhat trailing what we see and hear regarding increases in consumer confidence. Ours is not the only industry that this is happening to. We are still trapped in the Keynesian Paradox of Thrift, and there is a lag effect associated with the need to loosen one’s belt. We need to keep our game face on for another six months.
- The sheer variability of the results in Market Watch tells me that there is a lot of slack in the system – that OEMs can have different (and better) results by doing things differently. We need to adopt a “no excuses” attitude about our businesses.
- There has not been a fundamental and sustainable shift in repair behaviors by vehicle owners – otherwise, we’d see it in the press and the IAM numbers. There has been a temporary shift to DIY simply because of the “Paradox.” Don’t read too much into that. We need to focus on growth, not panic about threats, around every corner.
- 2010 auto parts sales vs. 2009 auto parts sales will represent year-over-year growth.
- We suspect that the growth leaders next year will be the ones doing the best this year in 5-year-UIO growth for M&R parts.