Lower fuel prices, full employment and an aging vehicle population aren’t the only tailwinds lining up behind the automotive aftermarket.
During Genuine Parts Co.’s (GPC) Feb. 19 conference call, President and CEO Paul Donahue said “generally favorable weather conditions” helped NAPA’s parent company finish 2018 with a strong fourth quarter, and the weather “drove improved demand for much of the year.”
“Following a cold winter in early 2018, the U.S. experienced a hot summer and warmer-than-average temps for most of the third quarter,” Donahue said during the call. “This was followed by an early cold snap in October and November, producing the coldest November in 27-plus years, while December was impacted by warmer-than-normal temps and heavy rainfall in many regions of the U.S.”
Extreme weather conditions tend to drive business for auto parts retailers, and GPC was no exception. The company reported record full-year sales of $18.7 billion for 2018, up 15 percent from 2017. Full-year sales for the Automotive Group – GPC’s largest division – were $10.5 billion, up from $8.6 billion in 2017.
While Donahue was hesitant to get into too much detail about the first quarter of 2019, he said extreme weather patterns such as the polar vortex that blasted much of the nation in January “bode well for the automotive parts business.”
“And I think what we’re now experiencing is back-to-back normalized winters,” Donahue added. “And as we have said many times in these calls through the years, that’s what this business needs. Our business, like our peer group, generally performs much better when we’re in those kind of normalized weather patterns.”
While GPC’s business in the Midwest, the Northeast and the Plains regions would be the most likely to benefit from harsh winter conditions, Donahue said the company is seeing “a nice spike” in its Mountain region, which includes Colorado, Wyoming and Seattle. “That business has gotten off to a good start in 2019.”
With that said, Donahue emphasized that GPC is focusing on factors within its control, such as its “Retail Impact” project that the company is implementing at its independently owned NAPA stores.
“We have a number of initiatives going on in all of our geographical regions outside of weather impact that will influence our performance in those particular divisions,” Donahue said.