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 October as the Northcoast Research Miles Driven Index decreased 3.5 percent. The Cleveland-based firm says this drop came on the heels of a 1.2 percent decline in September and a 1.6 percent contraction in August.
On a two-year stacked basis, the index was down 310 bps in October, according to Northcoast Research. This performance compared to a 60 bp decrease in September and an 80 bp increase in August. The deterioration comes despite easing comparisons relative to those experienced in the late spring and summer.
"Given the ongoing weakness in miles driven trends and the choppy economic backdrop, we continue to have a bearish outlook on the year-over-year growth prospects for aggregate miles driven over the next 6 to 12 months," Northcoast Research states. "As of the second week of November, our preliminary work suggests that miles driven over the trailing 4 weeks are down 5.2 percent.
"In our opinion, further weakness would clearly have negative implications for intermediate demand trends in the DIFM and DIY channels, and more importantly, it could serve as a psychological overhang on the stocks 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 and we like many of the macro trends at work in the space – including the aging of the nation’s light vehicle fleet and the ability for consumers to fund vehicle repairs if gas prices do not trump year-over-year gains on the employment front – current valuations are not attractive enough for us to dip our toes back into the water, especially given the challenging sales comparisons that still persist in 4Q CY11. 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.
