Aftermarket Insider Issue 73 - (Page 20)

MA R K E T I N T E L L I G E N C E DATA POWER AAIA Market Intelligence: Don’t Do Business Without It! Overview of November AAIA Industry Indicators Report (IIR) The U.S. economy continues to show signs of an uncertain future. By looking at a select few pieces of data, one would come to the logical conclusion that the U.S. economy is on its way to a strong and healthy recovery. Such data includes industrial production, capacity utilization and disposable income figures which are all trending upward. Perhaps the largest encouraging factor of late was the October stock market performance. In October the Dow soared 1,300 points (12.2 percent) which was its best one month performance in more than 20 years. Although most of it was given back in November, it has since bounced back in early December. Concentrating on different metrics could lead one to the opposite conclusion: a future dominated by a second recession and struggling U.S. producers, consumers and investors. Metrics like rising inflation, which has remained north of 3.5 percent since April, and plummeting consumer confidence, which in October reached its lowest level since March 2009, both signal a second recession. Furthermore, the second estimate for third quarter GDP came in at 2.0 percent, which was downwardly revised from the advance estimate of 2.5 percent. With GDP being outpaced by Industry Indicators Assessment Summaries as of Oct. 2011 Auto Retail Report Favorable condition for automotive aftermarket = ˜ 6 Indeterminate trend-should monitor = ž 9 Unfavorable condition for automotive aftermarket = ™ 8 Data not available = na 0 Auto Parts Manufacturing Report 9 6 8 0 July Aug. Sept. 10 4 9 0 Favorable condition for automotive aftermarket = ˜ 6 Indeterminate trend-should monitor = ž 8 Unfavorable condition for automotive aftermarket = ™ 9 Data not available = na 0 Heavy Duty Aftermarket Report July Aug. Sept. 11 3 9 0 10 4 9 0 Favorable condition for automotive aftermarket = ˜ 6 Indeterminate trend-should monitor = ž 5 July Aug. Sept. 8 2 7 4 Unfavorable condition for automotive aftermarket = ™ 11 Data not available = na 0 12 0 11 0 inflation, serious red flags are raised. While the purchasing managers index remains above 50, and thus continues to give a positive outlook, it is down nearly 17 percent from the beginning of the year and has flirted with dropping below 50 over the last several months. With conflicting data such as this the need for careful and thorough analysis is paramount. A key indicator for the economy and the robustness of the automotive aftermarket is miles driven. In September 2011, miles driven decreased 7.1 percent relative to August 2011 and by 1.4 percent relative to September 2010. This is the seventh straight month miles driven has decreased relative to the same month of the previous year — a very pessimistic trend for the automotive aftermarket. Perhaps a positive side, however, is this: miles driven is expected By Dr. Timothy G. Nash to slide at this time of year and last year between August and September miles driven slipped over 7.3 percent while gas prices were under $3.00 a gallon. This is a steeper fall than the current one in 2011 even though today gas prices are still averaging over $3.50 a gallon around the nation. In general, the report clearly demonstrates a decrease in conditions favorable to the automotive aftermarket from 10 to nine. It also shows a decrease in conditions unfavorable from nine to eight from August to September. While there was a decrease in the number of conditions favorable, the number of conditions unfavorable also decreased in September. For this reason we maintain our position of“uncertain” for the outlook of the U.S. economy and the automotive aftermarket. The Industry Indicators Report gathers and summarizes key automotive aftermarket data and divides it into the following three categories: automotive retail, automotive parts manufacturing and the heavy duty aftermarket. The purpose of this monthly overview is to provide a quick synopsis of the U.S. while taking some of the data in the Industry Indicators Report and applying it for thoughtful discussion and decision making. Dr. Timothy G. Nash is a vice president and the Fry Chair in Free Market Economics at Northwood University. The Industry Indicators Report is prepared monthly under Dr. Nash’s supervision with assistance from Northwood University economics major Adam Matzke, and funded by AAIA’s Northwood Scholarship program. The Industry Indicators Report is an AAIA member-only benefit. Research is posted in the Knowledge Center on the AAIA website at, and is accessible through AAIA username and password. For assistance, contact the AAIA membership department at 301-654-6664. 20 | AFTERMARKET INSIDER | VOLUME 73

Table of Contents for the Digital Edition of Aftermarket Insider Issue 73

Aftermarket Insider Issue 73
President's Message
Success Happens When YOU ARE HERE!
AAPEX 2011: A Show to Remember
Member Profile
Toolbox: What’s Your Sign?
Association News
Market Intelligence
Segment News
Technology Update
Hot Dates

Aftermarket Insider Issue 73