This week brought some disappointment for the majority of the automotive aftermarket, which has shown strong opposition for the proposed “Cash for Clunkers” bill that aims to remove vehicles getting less than 18 mpg from the nation’s roadways by offering motorists a $3,500 to $4,500 voucher to trade them in for more fuel-efficient vehicles. The measure on Tuesday was passed in the U.S. House of Representatives by a vote of 298-119. The bill is up for vote in the Senate.
Just today it was announced that House and Senate negotiators reached agreement late yesterday to include “Cash for Clunkers” in a $106 billion wartime spending bill, including $1 billion for "Cash for Clunkers." While the news is concerning to the automotive aftermarket, the Specialty Equipment Manufacturers Association believes it has minimized some of the impact that the legislation will have on its members by convincing Congress to place a 25-year limit on vehicles eligible for trade-in. This amendment helps safeguard older vehicles that may possess historic or aesthetic value and are irreplaceable to hobbyists as a source of restoration parts. It also allows all parts but the engine to be recycled.
Another highly read news item in our weekly round-up provided a more optimistic picture for the future of the aftermarket industry — our exclusive Executive Interview with Frank Ordonez, president of Delphi Product & Service Solutions. In the interview, Ordonez talks about the future for Delphi as it prepares to emerge from Chapter 11 bankruptcy protection. Delphi Product & Service Solutions, the parts supplier’s aftermarket arm, has established itself as a thought-leader when it comes to the new vehicle technologies that will be introduced in the next few years. The division embraces these technologies through its “safe, green and connected” strategy that has been in place for several years now.
Auto parts retailer and service provider Pep Boys twice made it to our most-read list this week after announcing that it will hold Open Buying Days later this month. The program will give suppliers the opportunity to pitch "hot products" or new data on previously pitched items for on-the-spot buying consideration. Pep Boys said it plans to make buying commitments during the two days it will schedule meetings with suppliers.
Pep Boys also reported this week that its net earnings for the first quarter of 2009 went up 133 percent. Net Earnings increased to $10.9 million (21 cents per share – basic and diluted) for the first quarter of fiscal 2009 from the $4.7 million (9 cents per share – basic and diluted) recorded in same period last year. Sales for the 13 weeks ended May 2 were down only slightly, at $496.5 million, compared to $498 million for the 13 weeks ended May 3, 2008.
Things are looking up for Chrysler this week as well, with the news that its merger with Italian carmaker Fiat Group is now official. The deal closed Wednesday morning after the U.S. Supreme Court denied a request by three Indiana pension funds to put a halt to the sale. The transfer of most of Chrysler’s assets and some of its liabilities to the Fiat-led group occurred Wednesday, according to the New York Times. Unwanted assets, mostly idled plants and surplus properties, will remain in Chapter 11 to be sold or wound down, the newspaper added.
