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The Pulse: Northcoast Research Miles Driven Index November 2011
January 20, 2012
By aftermarketNews staff
The Northcoast Research Miles Driven Index is designed to capture/estimate the trend of year-over-year changes in the number of miles driven by the light vehicles in the United States. Northcoast's data series is similar to the Federal Highway Administration's Vehicle-Miles Driven and Traffic Volume Trends reports, with the noted differences being that this index is designed to exclude the impact of medium- and heavy-duty trucks and is available six to seven weeks ahead of the governmental data.

Year-over-year miles driven trends remained under pressure in November as the Northcoast Research Miles Driven Index decreased 3 percent. The drop came on the heels of a 3.5 percent decline in October and a 1.2 percent contraction in September.
On a 2-year stacked basis, the index finished down 320 bps in November. This performance compared to decreases of 310 bps and 60 bps in October and September, respectively, and an 80 bp increase in August. The deterioration comes despite easing comparisons relative to those experienced in the late spring and summer, according to the Cleveland-based firm.
"Looking ahead, we are not overly optimistic that miles driven trends will reverse given the negative momentum and our concerns surrounding the pressures on low-income and middle-income consumers as a result of higher year-over-year gas and food prices. As of the second week of December, our preliminary work suggests that miles driven over the trailing four weeks are down 4.2 percent," Northcoast Research stated in its most recent note.
"While we acknowledge the fact that there is a delay between changes in miles driven and the impact on the industry, and that numerous other demand variables impact one's ability to truly quantify/understand the real correlation between changes in demand and the trend in miles driven, we continue to believe a reduction in miles driven will negatively impact intermediate demand trends and investor sentiment in the space. While we continue to appreciate the opportunity that the national automotive parts retailers have to gain market share in the DIFM channel, current valuations are not attractive enough for us to dip our toes back into the water. Furthermore, we have growing concerns over what a changing mix of automobiles in the nation's light vehicle fleet could mean for demand trends over the next four to five years. As a result, we are maintaining our NEUTRAL ratings on Advance Auto Parts, AutoZone and O'Reilly Automotive."
Northcoast Research is an independent, full-service institutional equity research and trading firm headquartered in Cleveland, Ohio. Founded in 2009, the company’s mission is to add value in each phase of the investment process by aligning the company’s goals with those of its clients. Northcoast aims to provide unbiased, proprietary and actionable fundamental research on select industry verticals and companies, underpinned by comprehensive channel checks across a broad array of industry contacts. The company’s core research verticals are Consumer, Health care, Industrial and Business Services.