But, what about dealer sales to end-customers? This week Automotive News talked about owners spending less on service; so far in 2011 owners are spending $169 vs. $176 in 2010. A modest 4% decline. No problem; it’s just a single digit fraction. Charles Child wrote the article and leaned on J.D. Power data: he thought that the decline in spend was surprising given that the average odometer tallied to 78,000 in 2011 – about a 28% increase from the pre-recession 2008 average odometer. So, vehicles in dealer service bays seem to be older and have higher mileage. Of course.
Wow, Americans really have a tough time with simple math. 2011 is three years into the recessionary equivalent of the Dutch Elm disease – new car sales swung from 16.5 million units annually to 10 to 11 million. http://ccsparethoughts.blogspot.com/2011/03/2013-light-vehicle-parts-market.html
There are simply not as many young cars out there. The higher odometer average is more a consequence of this simple math than of the spate of aberrant behaviors that Child’s lists in his article.
After reading Child’s article several times in an effort to separate the facts from the bad analysis, I’m stuck on the startling implications of 2011’s $169 a vehicle spend for an older vehicle vs. 2010’s $176 spend for a younger vehicle. Older cars cost more to repair and maintain, and
Bottom line: It might be wise to prepare for tougher market conditions in 2012 and 2013. Maybe it’s time for the OEMs to watch the Godfather again. “No, no, no! No more! Not this time, Consigliary. No more meetin’s, no more discussions, no more … tricks. You give 'em one message: … it's all-out war: we go to the mattresses.”