Job instability, war fears contribute to aftermarket drop

Motor, May 2003 by Nash, Tom

Consumers' uncertainly over job stability and the effects of the war in Iraq have contributed to a drop in the Aftermarket Activity Index, a measurement of overall automotive altermarket sales researched by the Automotive Aftermarket Suppliers Association (AASA).

"People appear to be putting off aftermarket product purchases and are doing fewer repairs," said Frank Hampshire, Motor Equipment Manufacturers Association (MEMA) director of market research. He noted that January traditionally has shown a slump in aftermarket activity, with slow sales reported in that month three of the last five years. In addition to employment and war pressures, aftermarket sales this year have been slowed by severe winter storms, a plunging stock market and rising gas prices.

The Installer Liquidity Index, AASA's index of financial health at the jobber and installer levels, is closely following the major decline in aftermarket activity, Hampshire noted.

"Installers seem to be having greater difficulty paying their short-term bills, as their fixed costs-such as shop heating and employee health insurance-have increased," he said. Profits from aftermarket sales have been lower and costs higher. "When aftermarket activity is down, the number of days it takes for them to make payments to automotive aftermarket product providers goes up, as installers struggle to meet their bills," Hampshire added. M