National Automotive Service Task Force
General Meeting
Las Vegas Nevada
November 03, 2009
Steve Handschuh
Automotive Aftermarket Suppliers Association
© 2009 Automotive Aftermarket Suppliers Association
Topics to be Addressed
• Key Issues for the 2009/2010
U.S. Automotive Aftermarket
• Aftermarket Trends and
Measures
Key Factors Driving the 2009/2010
US Automotive Aftermarket
•
•
•
•
•
•
Dealership Closings
New Vehicle Sales/Age Profile
Miles Driven
Unemployment
Lack of Credit
Recession - Economic Outlook
Dealer Closings
• As many as 3,000 by end of 2010
• Independent Aftermarket (IAM) Impact:
• Roughly $23 billion of wholesale parts
into IAM through OE dealers; $2-2.5
billion available due to closings
• As much as $5 billion in service
work available to the IAM
5
New Light Vehicle Sales by Year
20,000
18,000
16,000
14,000
Light Trucks
12,000
10,000
8,000
6,000
4,000
Passenger Cars
2,000
0
1998
1999
2000
2001
2002
Source: Wards Automotive, * - Year to Date SAAR
2003
2004
2005
2006
2007
2008
2009*
Aftermarket Sweet Spot
Vehicles From 5 to 10 Years Old
100,000,000
90,000,000
80,000,000
70,000,000
60,000,000
50,000,000
40,000,000
30,000,000
20,000,000
10,000,000
0
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
DIFM Repair/Maintenance Cost
by Vehicle Age
1050
950
850
750
650
550
450
350
Source: IMR Inc. Continuing Consumer Auto Maintenance Tracking Study
U.S. Automotive Aftermarket by
Vehicle Age
$18,000,000,000
$16,000,000,000
$14,000,000,000
$12,000,000,000
$10,000,000,000
$8,000,000,000
$6,000,000,000
$4,000,000,000
$2,000,000,000
$0
Source: Maintenance Data - IMR Inc. and Registration Data - R.L. Polk
Average Age of Light Vehicles in
Use (Years)
9.6
9.4
9.2
9.0
8.8
8.6
8.4
8.2
8.0
2002
2003
Source: Registration Data © R.L. Polk & Company
2004
2005
2006
2007
2008
U.S. Light Vehicles in Use
245
240
235
230
Millions
225
220
Light
Vehicles in
Use in the
U.S.
215
210
205
200
195
2001
2002
Source: R.L. Polk & Co.
2003
2004
2005
2006
2007
242,081,704 light vehicles in use in 2008
2008
Vehicle Miles of Travel
Billions (Annual Rate)
3,250
3,000
2,750
2,500
2,250
2,000
1,750
1,500
Source: US DOT
Every 1% decline in miles driven reduces
aftermarket volume by approximately
$500 million
U.S. Unemployment Rate
11
10
9
8
7
6
5
4
3
2
1
0
Source: Bureau of Labor Statistics, US Department of Labor
Economic Outlook
Thousands , seasonally adjusted annual rate.
New Privately-Owned Housing Units Started
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
Source: U.S. Census Bureau
U.S. Aftermarket Growth
•
•
•
•
•
•
2008
2009F
2010F
2011F
2012F
2013F
-2.0%
+1.8%
+3.1%
+3.3%
+4.0%
+5.0%
15
Size of the
U.S. Automotive Aftermarket
$250,000
Millions
$200,000
$150,000
$100,000
$50,000
$0
*= AASA Forecast
Source: AASA Automotive Aftermarket Status Report
U.S. Automotive Aftermarket
Five Year Outlook
By Vehicle Age
$250,000
Millions
$200,000
$150,000
$100,000
$50,000
$0
New to 5 Year
6 to 10 Year
Source: AASA Automotive Aftermarket Status Report
Over 10 Year
Primary Components of the U.S.
Automotive Aftermarket
Purchased Labor
25%
Aftermarket
Parts
54%
Tires
12%
Specialty
Equipment
9%
2007
2008
Source: AASA Automotive Aftermarket Status Report
Primary Channels of the U.S.
Automotive Aftermarket
OE Service
30%
2007
Independent
Aftermarket
70%
2008
Source: AASA Automotive Aftermarket Status Report and NADA Data
National Average Retail Price One Gallon of Regular Gasoline
All Formulations
$4.25
Every one penny change in prices at the
pump moves $1 Billion into or out of
vehicle owners’ pockets.
$4.00
$3.75
$3.50
$3.25
$3.00
$2.75
$2.50
$2.25
$2.00
$1.75
Source: Energy Information Administration
Sep-09
Jul-09
May-09
Mar-09
Jan-09
Nov-08
Sep-08
Jul-08
May-08
Mar-08
Jan-08
Nov-07
Sep-07
Jul-07
May-07
Mar-07
Jan-07
Nov-06
Sep-06
Jul-06
May-06
Mar-06
Jan-06
Nov-05
Sep-05
Jul-05
May-05
Mar-05
Jan-05
Nov-04
Sep-04
Jul-04
May-04
Mar-04
Jan-04
$1.50
Average Gasoline Expenditures
Percent of Median Household Income
8.5%
7.65%
8.0%
7.5%
6.71%
7.0%
6.5%
6.91%
6.0%
5.5%
5.07%
5.0%
4.5%
4.0%
5.27%
4.98%
4.44%
4.32%
4.93%
6.42%
4.77%
4.33%
4.63%
3.5%
3.0%
2.5%
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: US Department of Labor, Bureau of Labor Statistics
Indexed Aftermarket Comparable
SSS vs. Gas Prices
7.5%
$4.00
$3.80
6.0%
$3.60
$3.40
4.5%
3.0%
$3.00
$2.80
1.5%
$2.60
$2.40
0.0%
$2.20
-1.5%
$2.00
$1.80
-3.0%
$1.60
SSS - Parts Retailers
Source: BLS, Company filings, BB&T Capital Markets
SSS - Professional Installers
Avg. gasoline price
Q2'09
Q1'09
Q4'08
Q3'08
Q2'08
Q1'08
Q4'07
Q3'07
Q2'07
Q1'07
Q4'06
Q3'06
Q2'06
Q1'06
Q4'05
Q3'05
Q2'05
Q1'05
Q4'04
Q3'04
Q2'04
Q1'04
Q4'03
Q3'03
Q2'03
$1.40
Q1'03
-4.5%
Avg. gasoline price
Yr/Yr Change - SSS
$3.20
Average Number of Repair
Orders Each Month
80
75
70
65
60
55
50
45
40
Source: IMR Inc.
Merger & Acquisition Activity
M&A Deal Volumes
100
90
80
70
60
50
40
30
20
10
0
YTD '05
YTD '06
YTD '07
Source – Capstone Financial Group, Data through September
YTD '08
YTD '09
Aftermarket M&A Deals
(Strategic vs. Financial)
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2005
2006
2007
Financial
Strategic
Source – Capstone Financial Group, Data through September
2008
2009 ytd
Aftermarket M&A
by type of business
80%
70%
60%
50%
40%
30%
20%
10%
0%
Manufacturing
Wholesale/Retail
2007
2008
Source – Capstone Financial Group, Data through September
2009 ytd
Service/Repair
Issues Impacting Vehicle Repair
•
•
•
•
•
•
•
•
•
•
Economy, unemployment=decrease in spending
Improved vehicle reliability and longer service intervals
Owners relying on vehicle service reminders rather than
scheduled maintenance
Service model: break-down repairs vs. preventive
maintenance
Increasing vehicle complexity requiring increased
investments in tools, information and training
Competent and qualified technicians
Access to diagnostic and repair information
Remote vehicle diagnostics
Regulatory (environment, business) compliance
Increased focus on ROI
Thank You!