|More than Half of Consumer Car Parts and Service Purchases are for Vehicles 8 Years or Older, NPD Reports|
HOUSTON — Despite an increase in new car sales, the post-recession trend of consumers keeping their cars longer continues, a trend that bodes well for the automotive aftermarket and repair industry, according to The NPD Group. NPD's car care research finds that among consumers purchasing automotive products or repair services, 59 percent report their purchase was for a car eight years or older and 19 percent purchased for a car 15 years and older.
According to NPD’s Car Care Track, which monitors purchase behavior details of the “do-it-yourself” and “do-it-for-me” auto aftermarket and repair consumer, this is a significant increase over the pre-recession distribution of vehicles by age. In 2007, before the economic downturn, only 51 percent of consumers reported having a car eight or more years old. NPD finds that the biggest gap over that time has been among consumers with cars 15 years and older, which now make up 19 percent of the market, compared with only 14 percent in 2007.
“Conventional wisdom in years past was that these oldest of vehicles were on the waning end of consumer willingness to invest in repairs,” says David Portalatin, NPD auto aftermarket industry analyst. “That notion is changing as more consumers today are opting to keep their 15-plus-year-old car on the road.”
The effect of this shift in vehicle age is a continuation of rising sales on application parts categories, NPD says. In 2011, application parts led all categories in the auto parts channel in unit volume growth increasing 1.6 percent over a year ago and generating a 5 percent gain in dollar volume, according to NPD. Unit sales of suspension, steering and application electrical parts all saw gains of 6 percent or more.
“The reality is that while new car sales increased in 2011, they remained well below pre-recession sales rates and as a result, aging vehicles still gained influence in the market. Even more robust new car sales would not displace the aging vehicle predominance in a single year,” said Portalatin. “In response to our 2012 Aftermarket Outlook Survey, consumers reported that they expect to keep their current vehicle another five years on average, which would mean that the demand for the parts consumers need to keep older cars going strong will maintain momentum in 2012.”
|Latest AASA Special Report Examines ‘What Else Is in the Box? Beyond Aftermarket Replacement Parts’|
RESEARCH TRIANGLE PARK, N.C. – In the latest of its “Special Report” series addressing aftermarket replacement parts quality, the Automotive Aftermarket Suppliers Association (AASA) examines the many processes and services which accompany quality products in, “What Else Is in the Box? Beyond Aftermarket Replacement Parts.”
“There are many resources, including other AASA “Special Reports” that address the basic question of ‘what’s in the box,’” said Steve Handschuh, president and COO of AASA. “In our report, we address the broader question, “What else is in the box?” – those vital intangibles that go into producing and standing behind high quality replacement parts.”
“When it comes to choosing the right part for the job, technicians often ask, ‘What’s in the box?’ Simply looking at a part or even comparing it to the component being replaced is not enough,” noted Jack Cameron, AASA vice president and author of the report. “Parts that appear the same on the outside do not always perform as well as what was installed when the car was built.”
“What Else Is in the Box?” examines the important processes and services which accompany quality products, Cameron noted. Divided into three broad categories, these are incorporated prior to, during and even after the quality product is manufactured.
The processes and services provided by full service aftermarket suppliers include:
“When it comes to full service manufacturers’ products, there is far more in the box than the part. That is the basis of the Know Your Parts® slogan, ‘It’s What’s Inside That Counts,’” Cameron explained. “Just as the knowledge, experience, training and reputation of the professional technician who installs a part makes all the difference, so too, are the parts themselves. That’s why it is so important to remember what else is in the box when selecting a manufacturer,” he added.
The AASA Special Report, “What Else Is in the Box? Beyond Aftermarket Replacement Parts,” is available through the AASA Web site. AASA has many other resources and publications detailing the contributions of full service aftermarket suppliers, including its “Supplier Evaluation Standards.” For more information about the AASA Know Your Parts campaign, visit www.KnowYourParts.com
AASA (www.aftermarketsuppliers.org) exclusively serves manufacturers of aftermarket components, tools and equipment, and related products. It is a recognized industry change agent – promoting a collaborative industry environment, providing a forum to address issues and serving as a valued resource for members. AASA is an affiliate of the Motor & Equipment Manufacturers Association (MEMA). “AASA, The Voice for the Automotive Aftermarket Supplier Industry”
|Spending Outpaces Income Gains|
Wall Street Journal
U.S. consumers stepped up their spending in February even as incomes rose only modestly, partly reflecting higher energy costs and lower savings.
Personal spending jumped 0.8 percent last month, the best gain since July, while incomes increased 0.2 percent, the Commerce Department said Friday. In January, expenditures rose 0.4 percent, and incomes were up 0.2 percent, according to newly revised figures.
Economists surveyed by Dow Jones Newswires were expecting spending to grow 0.6 percent last month and incomes to rise 0.4 percent.
While they are spending more, consumers are also facing higher prices at the pump. Energy costs rose 3.6 percent in February, the largest gain in nearly a year.
The price index for personal consumption expenditures increased 2.3 percent on a year-over-year basis in February. That's above the Federal Reserve's long-term annual inflation target of 2.0 percent.
On a monthly basis, the PCE price gauge rose 0.3 percent, the largest gain since August. In January, the index rose 0.2 percent.
Earlier this month, Federal Reserve officials said the recent increase in oil and gasoline costs would "push up inflation temporarily" but they anticipated a return to their long-term target.
The core PCE index, which excludes volatile food and energy prices, moved up 1.9 percent on a year-over-year basis in February. The measure rose 0.1 percent last month. Core prices were up a monthly 0.2 percent in January.
Economists had expected core prices to climb 0.1 percent in February.
Meanwhile, the personal savings rate fell to 3.7 percent in February, it's lowest level since August 2009. The rate was 4.3 percent the prior month.
Incomes have been mild the past two months, even as the economy steadily added jobs. Nonfarm payrolls grew by 227,000 in February and the economy has added an average 245,000 jobs over the past three months. However, the unemployment rate remained elevated at 8.3 percent. The March payroll report is due out next week.
|No Relief in Sight at Pump|
Wall Street Journal
U.S. gasoline prices jumped 6 percent in February, and market experts predict they will climb higher because critical refining operations in the Northeast are shutting down.
From New York to Philadelphia, refineries that turn oil into gasoline have been idled or shut permanently because their owners are losing money on them. Sunoco Inc. is expected to close the region's largest refinery in July, taking another 335,000 barrels per day in production capacity off the market.
The East Coast refineries are getting squeezed by the soaring cost of crude oil, the major component in gasoline. The cost of oil has jumped in the past year due to global economic growth and rising tensions between Western nations and Iran, a major producer. Refineries haven't been able to increase their own prices enough to compensate.
The government said on March 16 that the increase in gas prices had contributed to a 0.4 percent overall increase in consumer prices in February. Prices at the pump averaged $3.831 a gallon on March 16, according to AAA.
Rising gas prices pose a risk to the economic recovery, which is showing signs of gaining steam after faltering last year.
The surge is putting pressure on President Barack Obama to take steps to tamp down prices, and it threatens to erode credit he may get for an improving jobs market. On March 15, U.K. Prime Minister David Cameron said he and Obama had discussed tapping their nations' strategic oil reserves to help alleviate tight oil supplies world-wide. In a speech on March 15, Obama said "there is no quick fix" for high gasoline prices.
Still, analysts said tapping reserves may do little to resolve the pricing pressure, which is likely to get worse as summer approaches and vacationing Americans hit the highways. Gas usage typically is 3 percent higher in the summer.
Commodities markets are forecasting rising prices. Gasoline futures on the New York Mercantile Exchange are up 22 percent this year, and settled Friday at a 10-month high of $3.3569 a gallon. Average pump prices tend to follow futures by a few weeks, averaging about 70 cents a gallon more, after taxes and transport costs. Based on futures, retail prices should average above $4 a gallon soon.
Refineries in the Northeast are under financial pressure for two reasons. They have limited access to cheaper, high-grade crude oil produced in the middle of the U.S. because there are not enough pipelines, which is forcing them to pay more for oil from elsewhere, most of it from overseas. And many of their facilities aren't set up to process lower-grade crude that is cheaper.
As Northeastern refining capacity declines, it will force distributors in the region to buy gasoline from elsewhere, pushing up prices across the country and increasing the likelihood of price spikes, government officials and analysts warn.
"There's now going to be a question if we can get enough gasoline into the East Coast for summer," said David Greely, an energy analyst at Goldman Sachs Group Inc. The U.S. Energy Department has warned a shortfall could develop as early as July.
Prices could head to record levels, potentially as high as $5 a gallon in coming months, said Ed Morse, global head of commodities research at Citigroup Inc.
Oil and fuel products come into New York by tanker and pipeline. Much of the oil originates in the Atlantic basin from places like Nigeria and the North Sea. It is then refined into gasoline. The East Coast imports gasoline, too, although that is expensive.
Gasoline production in the Northeast is expected to decline to 350,000 barrels a day in 2013, from 580,000 barrels a day in 2011, according to government estimates. By 2013, the government estimates, motorists in the Northeast will be using 240,000 barrels more each day than refineries and imports are providing right now.
There are plenty of refineries around the world to keep the U.S. well supplied with gasoline and other fuels over the long term. But the drop in refining capacity over the past year means the industry hasn't had time to reconfigure its supply routes from areas such as the Gulf Coast and Europe.
"The global refining system is ample enough to replace those lost barrels. The problem is they're not in the right place," said Morse of Citigroup.
Mark Routt, a consultant for KBC Advanced Technologies, said the industry will figure out a way to easily and cheaply get gasoline to the East Coast, from the Gulf Coast and the Midwest, but it will take time.
Colonial Pipeline Co. this week announced plans to expand its pipeline system to increase shipments to the Northeast, but that won't be completed until 2014.
At the beginning of 2010, the East Coast had 12 refineries. Since then, four have closed for good or have been idled, according to the U.S. Energy Information Administration.
ConocoPhillips's Trainer refinery and Sunoco's Marcus Hook refinery, both in Pennsylvania, were idled in December.
Philadelphia-based Sunoco, which refines and sells fuel, said it will shut its plant in that city by July if it doesn't find a buyer. Known in the industry as "Sunoco Philly," the refinery is the oldest and biggest on the East Coast. It first turned crude into fuel in 1870, 38 years before Henry Ford sold his first Model T.
Sunoco spokesman Thomas Golembeski said high oil prices and falling demand destroyed profit margins. "Our Northeast refining business has lost nearly a billion dollars in the past three years, and those losses have threatened Sunoco's very existence as a company," he said.
He said Sunoco has taken steps to make sure there are adequate supplies for customers this summer, even if the refinery is closed.
Some analysts doubt that gas prices will continue to rise for long. For one, overall demand has fallen in the U.S. and is expected to hit an 11-year low this year, due both to increasing vehicle fuel efficiency and high gas prices. Typically, as demand falls, so do prices.
Alan Gelder, head of oils research at consulting firm Wood Mackenzie, said prices are already high enough to support additional shipments from refineries in Europe or the Gulf Coast, so "supplies are not a concern."
But John Woods, an independent trader, said hedge funds and other large speculators are making bullish bets on gasoline. Such bets have risen in number by 51 percent since the beginning of the year, according to data from the Commodity Futures Trading Commission.
"The smart money is doing it now, because you get more of a jump on it," Woods said.
|NiCopp Bending Challenge|
Here is a short video of a contestant in the AGS NiCopp Brake Line Bending Challenge. Commercial sales people at Napa Balkamp had the chance to 'install' a 60 inch NiCopp brake line and try to do it in the fastest time. The grand prize was $250, the second place prize was $100, and 3 $25 gift cards were drawn at random from the remaining top times. The promotion was very successful and the extreme bend-ability of the NiCopp tubing was easily demonstrated. Thanks to all who participated.
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