RESEARCH TRIANGLE PARK, N.C. The Automotive Aftermarket Suppliers Association (AASA) reports that the automotive aftermarket may be Experiencing what it describes as a “growth recession.” The association based this assessment on responses it received to its most recent to the “Aftermarket Supplier Barometer” survey, which is conducted quarterly.
“Several factors measured in this quarterly analysis are still showing a positive trend with a majority indicating growth or expansion. However, when looking at a time series analysis of the data, we find that this growth trend is on the decline,” said Steve Handschuh, AASA president and COO. “Responses to the second quarter survey indicated conditions that might be called a ‘growth recession’ growth [that] is positive but below potential.”
Although many suppliers responding to the AASA Barometer survey said that the industry outlook is negative, their investments reflect optimism more than concern, noted Paul McCarthy, AASA vice president, industry analysis, planning and member services.
“For example, the majority of respondents said capacity is up and their companies are hiring. While a slight majority of suppliers still saw sales growth in the second quarter, more than one in five experienced a decline a warning sign,” McCarthy explained. “This raises the question whether supplier investments are too positive for current market conditions.”
The AASA Second Quarter Barometer Aftermarket Supplier Sentiment Index declined in the second quarter of 2012, after reaching its highest point since 2010 in the first quarter of 2012. However, this decline aligns the Index with other key indicators, the association points out:
The NAM/Industry Week Survey of Manufacturers business outlook dropped several percentage points from the first quarter.
The U.S. Bureau of Economic Analysis (BEA) reported demand for manufactured goods dropped in May for the third straight month.
The Conference Board Consumer Confidence Index declined from 64.4 in May to 62.0 in June, driven mostly by lower expectations.
“The key question aftermarket suppliers are facing is whether the soft market seen in the second quarter is an exception due to overhang from warm weather and slower job creation, or a signal of weaker future demand,” McCarthy said. “Strong market drivers, such as age of vehicles (which Experian noted has reached 11 years), lower gas prices and signs of life in miles driven all point to continued aftermarket growth, but the pace of that growth is in question.”
The “AASA Aftermarket Supplier Barometer” is a quarterly survey of AASA full service supplier members on key indicators and market trends. The full survey report is an exclusive AASA member benefit and is available only to member companies that participate in the survey.