The Aftermarket & The Economy – UnderhoodService

The Aftermarket & The Economy

ImportCar Advisory Board Shares Thoughts & Projections

Last month, we discussed the state of the economy with the ImportCar Advisory Board, providing the results of one of several questions below. Look for more input from the ImportCar Advisory Board in future issues, as they share best practices and provide insight on how to best get through these tough economic times.

How was business in the fourth quarter of 2008, and what are your expectations for 2009? Respondents:

  • Chris Klinger, co-owner, Precision Inc., Tucson, AZ;

  • Mitch Schneider, co-owner, Schneider’s Automotive, Simi Valley, CA;

  • Bob Dowie, owner, Village Auto, Chester, NY; and

  • Steve Louden, president, Louden Motorcar Services, Dallas.

Klinger: Sales dollars were identical from 2007 to 2008 for the two fourth quarters. Car count was down slightly in 2008, but ’08’s higher labor rates have balanced the sales levels between the two years. I expect 2009 to be a declining year in both car count and gross sales.

Schneider: We were down about 7% quarter to quarter (Q3 to Q4 2008), but ahead for the calendar year by almost the same amount in revenue experienced earlier in the year. We’ve also managed to lose almost 2% in gross profit — not especially something to be proud of! But…

2008 would have been a record breaker if not for the total collapse of the housing, credit and financial markets, and the “Not-So-Big Three” imploding.

My expectations for 2009 are “cautiously optimistic.” We are working hard to keep the numbers as high as we can, and recover or control expenses as much as possible. If I hadn’t started working on controlling expenses more aggressively two years ago and resisted the urge to grow or expand too quickly, I’d be in deep trouble! As it turns out, it looks like we’ll be able to hold on. If I’m successful in properly positioning our business over the next six months (more aggressive marketing) we should be ready to kick @#$%^ over the summer!

Dowie: We’re up about 10% over 2007. Some of this increase is the result of price increases; the rest I believe is the result of more careful scheduling and job choices. I do believe the poor economy has made me more aware of the bottom line.

Louden: We have had a roller coaster year. Great sales one month and bad sales the next. The North Texas economy is better than in other parts of the country, i.e.: Phoenix and Las Vegas. Home prices and foreclosures are about even with last year and people are still moving into the Dallas/Fort Worth market.

However, our upscale customer base is reeling from a decrease in what was called the “wealth effect.” They may still have their jobs, but their stock portfolios and 401K values are down 30-50%, which gives them reasons for concern. They still have money, but are more selective in how they spend it. Last year, a typical customer may have repaired all eight items on our estimate. Today, it’s maybe six out of eight.

I think a large factor in the success of a shop today is the age of the business and its customer base. A new business has yet to build that all-important customer base which will carry it through tough economic times. OEM dealers call it “units in operation” or UIO. Very important.

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