Job Instability, War Fears Contribute to U.S. Aftermarket Drop

U.S. consumers’ uncertainty over job stability and the effects of the war in Iraq have contributed to a drop in the Aftermarket Activity Index, a measurement of overall automotive aftermarket sales researched by the Automotive Aftermarket Suppliers Association (AASA).
While it does not appear that the conflict is having the same effect on the Canadian market–there is no data but anecdotal evidence indicates steady if not robust activity–the evidence of its effect on the U.S. market is demonstrable according to the research.
“People appear to be putting off aftermarket products purchases and are doing fewer repairs,” said Frank Hampshire, MEMA director of market research. He noted that January traditionally has shown a slump in aftermarket activity, with slow sales reported three of the last five years. In addition to employment and war pressures, aftermarket sales this year have been slowed by severe winter storms, a plunging stock market and rising gas prices.
The Installer Liquidity Index, AASA’s index of financial health at the jobber and installer level, is closely following the major decline in aftermarket activity, Hampshire noted.
“Installers seem to be having greater difficulty paying their short-term bills, as their fixed costs — such as shop heating and employee health insurance — have increased,” he said. Profits from aftermarket sales have been lower and costs have been higher. “When aftermarket activity is down, the number of days it takes for them to make payments to automotive aftermarket product providers goes up, as installers struggle to meet their bills,” Hampshire added.