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2010 Could Be a Good Year for the Aftermarket, Says Global Firm


7/8/2009

BB&T Capital Markets assesses the impact of dealership closings.
 
In 2009, the consumer attitude has primarily been focused on the DIY market, as cash-strapped consumers perform their own maintenance and choose to hold on to their current vehicles. But that will begin to change in the coming year, according to BB&T Capital Markets.

In its most recent research note, BB&T says it believes that 2010 will be the year the automotive aftermarket begins to see additional business wins as the pace of dealership closings picks up.

BB&T predicts that it will be difficult for dealers that have lost their franchise agreements to find a replacement in the near-term, leaving them with the difficult decision to either exit the business entirely or focus only on selling used cars. The financial services firm said in the short-term it expects most of the displaced dealers to turn to selling used cars until they can find a replacement franchise agreement.

In the parts distribution sector, BB&T anticipates that wholesale distributors (Advance, O’Reilly, NAPA and AutoZone, for example) will likely be the greatest beneficiaries of the dealership closures, as the displaced dealerships will now have to turn to the independent aftermarket to buy parts.

BB&T say the closures will be a boon for service shops and technicians as well, but warns that it is important to keep in mind that independent repair shops are likely to only pick up business from those dealerships that leave the business entirely. BB&T predicts this will be about one-third of all dealerships that see their franchise agreements terminated.














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