Each month, Northcoast Research publishes the Northcoast Research Mechanic Index, based on the results of a survey of approximately 50 independent repair shops operating in the top 10 states (based on the light vehicle fleet population), plus Advance Auto Parts’, AutoZone’s and O’Reilly’s aggregate store count.
Below are highlights from the results of Northcoast Research’s Independent Automotive Repair Garage Survey for November 2012.
"According to the survey responses of nearly 250 independent garage owners, demand trends in the DIFM channel remained severely pressured in November 2012 relative to the prior year. In fact, our Current Sales Index finished the month at 35.8, which represented the lowest level we have recorded.
"Lackluster traffic patterns continued to be the major impediment to sales trends across the channel. In fact, the quantitative data that we have on traffic suggests that November was the worst month that we have seen from a car count perspective since April 2012.
"While it is still early in the winter selling season, numerous respondents indicated that their suppliers are offering extremely sharp prices on winter-weather related products, such as wipers, antifreeze and batteries.
"These promotions appear to be a function of weak demand trends, the lack of significant snowfall thus far, and the warmer-than-expected temperatures that many regions have experienced thus far in December.
"In short, our work suggests that sales in November were extremely soft. Moreover, the weak demand trends appear to have carried over into the first part of December. While we are maintaining our estimates until we gain insight into how the last two weeks of the year finish out, all indications at this time suggest that there is downside risk to our current same-store sales estimates.
" While we continue to appreciate the opportunity that the publicly traded players in the automotive aftermarket have to gain market share in the DIFM channel, current valuations are not attractive enough to pique our interest, especially given the recent deterioration in sales trends and signs that the industry remains under some pressure. Furthermore, we continue to have 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, Monro Muffler Brake and O’Reilly Automotive."
To read the full report on Northcoast Research’s November 2012 Independent Garage Survey, click here.
ABOUT NORTHCOAST RESEARCH
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.