For this week’s "The Pulse," TLG Research offers a quarter-to-quarter analysis of pricing in the automotive aftermarket.
OVERVIEW FROM TLG
From a linear perspective, the march to higher pricing expected continues, albeit at a slightly slower pace than the past two quarters, according to TLG, but still on a 4 percent-plus rate annualized in 2012.
"The reasons for the march are the same … Higher raw material prices, high oil prices (though down a bit from Q1) all leading to higher build burdens and distribution costs. Going against a strong inflation growth is the still high unemployment rate, weakening consumer spending, minimal wage increases and relief in the oil pricing structure. Supporting a strong inflation pattern is what is seen as a strong pent-up demand for higher wages, and record low interest rates making borrowing attractive, if available and manufacturers that must upgrade equipment and facilities in light of a three- to four-year hiatus in spending. Likely the one factor helping to hold the line at all on manufactured goods other than food has been the soft international economy, which reduces the demand for raw materials and has mitigated the pricing pressure somewhat.
"Overall, we still expect a 4 percent-plus increase in parts pricing overall this year, with a similar increase in service pricing."
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 its 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.
