March update: More miles, more sales
Despite rising gas prices, consumers drove more miles in March compared to 12 months prior. That was just one of the positive signs for the automotive aftermarket and tire dealers, according to the "Northcoast Research Miles Driven Index."
The monthly data series, which is similar to the Federal Highway Administration’s "Vehicle-Miles Driven" and "Traffic Volume Trends," is designed to exclude the impact of medium and heavy-duty trucks and is available six to seven weeks ahead of the governmental data. Here are some highlights.
* The number of miles driven by consumers was up in March "as the headwind from the harsh winter weather disappeared," says industry analyst Nick Mitchell, senior vice president of research for Northcoast Research Partners LLC. "The recent gain follows two consecutive declines, which snapped a streak of seven straight positive readings that started last June. Specifically, our proprietary index increased 4.3% in March, which is a meaningful improvement from the 1% decline seen in February and the 1.2% drop recorded in January."
* Consumers have seen gas prices rise sequentially from the beginning of the year, says Mitchell. "Indeed, the average retail price of gasoline across the country increased 1% in January, 1.2% in February, and 5% in March, which combined to move the average price at the pump up $0.25 to $3.61. That said, prices during the same period were flat to down on a year-over-year basis, which helped support driving trends."
* "The two-year stacked rate remained in positive territory, and that trend continued in March," he says. "We believe that the increases in January and February amidst a challenging backdrop combined with the acceleration in March suggest that the underlying health of miles driven trends is improving."
Mitchell adds that the recent improvement in the underlying traffic volume trends "should provide a slight boost to the intermediate demand trends across the automotive aftermarket and tire industries."
As a result, Northcoast Research is maintaining its "Buy" rating on Goodyear Tire & Rubber Co. and its "Neutral" ratings on Cooper Tire & Rubber Co. and Monro Muffler Brake Inc.