Auto service and repair shops had a slow start this year, says BB&T Capital

March 20, 2006

Many tire dealers have been asking if they are alone in having a slow start for 2006. A recent study by BB&T Capital indicates they are not.

BB&T officials say the automotive aftermarket in general got off to a rough start this year.

"Colder weather, particularly extremes, is more desirable in January and February due to severe driving conditions that result in more wear and tear on parts and a higher number of visits to repair shops.

"However, as weather has been warmer than expected for most regions, January was a tough month and February did not appear to fare much better until the latter weeks."

Business appears to be picking up, according to BB&T officials.

"For companies such as Monro Muffler Brake Inc., Midas Inc. and Pep Boys, the survey’s results indicate an improving operating environment," they say.

"In an effort to gauge the impact of an unseasonably warm start to (the first quarter), we polled a sample base of 182 national automotive service and repair shops across the southern, northeastern, eastern and midwestern regions of the U.S.

"We wanted to identify business trends in February and early March."

BB&T asked four questions as part of its study, and obtained the following feedback:

1. How did February finish: stronger, weaker or as expected? "Overall, 75% of the shops indicated that February was stronger than expected. Roughly 19% of the respondents indicated that February finished as expected, and 6% indicated that February was weaker than expected."

2. Compared to February, has March business accelerated, softened or flattened? "Overall, 71% of shops surveyed indicated that the momentum in February had continued into the early weeks of March as sales accelerated sequentially.

"Roughly 29% of respondents indicated that early March momentum has been about the same as February’s, and none indicated that early March had experienced softness relative to February."

3. Do you think that customers/consumers have fully adjusted to higher gas prices? "In total, 99% of survey respondents felt that customers/consumers had adjusted to higher fuel prices and 1% indicated that they were unsure whether consumers had adjusted."

4. Has mix of business shifted away from higher ticket items such as brakes/tires to more maintenance/flushes/oil changes, etc.? "Overall, 97% of survey respondents indicated that business mix had not shifted much from higher ticket items to lower-margin maintenance services.

"Two-percent of respondents indicated that some mix shift had been realized and 1% did not respond to this question."