Looking at the recent economic news, we can officially say we have made it through the toughest economic downturn since the Great Depression. Consumer confidence is up, unemployment rate is going down and markets are returning to pre-2008 levels.
In the October 2008 issue of BRAKE & FRONT END, I did a commentary on the relatively new economic downturn. At that time, dealerships were closing, credit markets were effectively shut down and the scope of the recession was starting to sink in.
In that column, I made a reference to the bound volumes of BRAKE & FRONT END in my office as being an indicator of the economy in terms of their thickness. Looking at the volumes, you could see the overall economic health of the aftermarket during a given period of time. Wars, recessions and booms are reflected in the spines of the bound volumes.
Looking at the past four years, it is possible to see a nice recovery happening over the past year in the bound 2011 volume and the past three issues.
This is a time to celebrate and capitalize on new growth. But, it is also the time to look back and analyze what happened and figure out what can be learned.
Since becoming editor in 2003, I have always made it a point to ask shop owners and technicians, “how’s business?” The response over the past year has been very positive. Responses have changed from “holding our own” to “we are beating our own expectations.”
Probing deeper, I try to find out what are their top-of-mind concerns. In the past year, the main concerns for shops have been changes in people, cars and parts.
According to a lot of shops, the seasonal cycles have changed. Some shop owners said they are no longer subjected to the cycles of summer vacation spikes, back-to-school dull-drums and pre/post holiday blues. Many shops complained they couldn’t predict day-to-day and month-to-month trends on when they would be busy. They also said the mix between maintenance and repair was constantly changing. This being the trend, many shops have gotten serious about scheduling in the past three years to help leverage labor assets.
One topic I hear more and more about is what cars their customers are driving. Most shops say customers are driving their vehicles longer, and when they do make a purchase, it is typically a used car. Most of them like this trend, because they are not fighting a warranty.
R.L. POLK has confirmed this trend. Based on data collected in the third quarter of 2011, new vehicle owners kept them an average of 71.4 months, or nearly six years, the longest in the eight years Polk has done the survey, and nearly two years longer than the average life of ownership in 2003.
The trend was similar for used vehicles, which consumers kept an average of 49.9 months, also a record, and up from 32.2 months in early 2003.
The parts supply chain has changed in the past four years. In 2007 when gas prices spiked, many “hot shot” deliveries were curtailed. Most jobbers took a long and hard look at their fleet and decided to be more efficient. In the end, it has worked out for jobbers and shops.
Another complaint I have been hearing about is inventory levels. One reader made the comment that the he was hearing “tomorrow by three” more and more from his suppliers. He even said it was worse from some new car dealer parts departments. Some say it is due to the credit markets and parts suppliers not wanting to tie up cash in their inventory.
When I wrote my original column in 2008, I took some heat for inducing panic due to a few delinquent sub-prime mortgages and high gas prices. Today, it is clear the recent recession has changed our businesses and customers. These changes will reverberate for years. But, let’s enjoy these good times while they last.