For this week’s "The Pulse," TLG Research offers a quarter-to-quarter analysis of pricing in the automotive aftermarket.
It would appear we are well on our way to the 3.8 percent to 4 percent price increase range for 2012. There are limited reports of occasional deeper discounts for volume or inventoried parts, but they seem sporadic and not significantly different from those in the past. The factors driving the rather unstable pricing environment:
Pushing Increases
1. Higher oil prices and a variety of issues globally affecting output
2. Higher food prices and structural consumer inflation pushing wages, along with stretched productivity in some cases
3. Fear of impending inflation due to loose monetary policy and easing of credit
Holding Down Increases
1. Continuing high unemployment which tempers demand and thus inflation
2. Fear of new recession … Political season notwithstanding, the U.S. GDP was an annualized 1.7 percent in the last reporting quarter, well below the historical average of 3.4 percent over the past history of GDP, and off the high in this year of about 3 percent in the first quarter. It has fallen each quarter this year. It is not unusual to see an anemic growth prior to what will eventually become an apparent recession since they are generally reported six months after actual inception due to definition. This level of growth, and weak job creation reports of late, are fueling consumer sentiments about spending money. As a result, [this] weakens demand and related price inflation for the time being.
Summing up, all of the manufacturers, distributors and technicians alike are taking price increases in what would appear to be a reaction to flat pricing of the past three years and in anticipation of our current inflationary policies kicking in once demand begins building again.
To view the previous quarter-to-quarter report from TLGR, click here.
Definitions:
Parts Category
1. Based on reported pricing of parts to service repair centers
2. Represents change of current quarter over the prior quarter
Service Category
1. Represents total job repair order price to prior quarter
Methodology for Pricing Calculations:
The pricing is based on changes in the current quarter relative to the prior quarter. The data is collected from service repair centers with additional service repair center level pricing information provided by Nu-Way Automotive. The "Parts Categories" includes only the parts. The "Service Categories" include both parts and labor and is based on the average reported. Pricing is collected in percent change, and is averaged across the U.S. Where needed, the data is weighted in order to represent the entire market.
ABOUT TLG RESEARCH
Focused exclusively on all segments of the global automotive industry, TLG Research (TLGR) offers clients a unique approach to obtaining and keeping a global competitive advantage. Recognized as the “Parts Problem Solvers,” TLGR provides information quickly and cost effectively. Founded in 1992 by Thomas Langer, a 30-year industry veteran, TLGR, through it proprietary database, provides a unique "menu driven" approach to offer services such as price comparisons and strategies, product/market data, channel information, competitive analysis, surveys, new product strategies and technical writing.
