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 May 2012.
According to the results of Northcoast’s survey, sales trends in the DIFM channel during May continued to be somewhat weak, as the Current Sales Index rose 13 percent in May to close at 47.3.
"With last month’s reading coming in below 50.0, the index has now been in contraction territory for four of the past five months. In our view, this strongly suggests that the DIFM channel is experiencing demand pressure relative to recent quarters," Northcoast Research wrote in its May report.
"The sales weakness appears to have been a function of soft traffic trends at the garages, which has been a recurring theme for several months now. This dynamic offset the benefit of a year-over-year gain in the average ticket.
"Furthermore, respondents noted that the environment continued to be very promotional, which we believe is symptomatic of the underlying weakness in industry demand.
"According to our contacts, sales and traffic trends during May were inhibited by consumers deferring preventative maintenance; however, the magnitude was not as severe as was the case in April.
"The Three Month Outlook Index rose 5.8 percent to close the month at 65.0, as there was a sequential increase in the number of respondents who anticipate year-over-year sales gains during the next three months (June, July and August)."
Northcoast Research also indicated it has 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. It is maintaining its NEUTRAL ratings on Advance Auto Parts, AutoZone, and O’Reilly Automotive.
To read the full report on Northcoast Research’s May 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.