Trends warm in March, but April has stormy start

Recent weather means the aftermarket's seasonal demand is slow to materialize.

To determine how operating trends progressed in March and into April, we polled a sample base of 100 automotive parts retailers across the United States. The survey indicates that March was the best month of the first quarter.

On a national basis, 48 percent of respondents observe a stronger performance in March than February, and only 8 percent report weaker results. We think it's important to note that these strengthening trends occurred at the same time gas prices started to increase, possibly indicating much less "shock factor" at the pump than last year.

The region indicating the greatest strength in March is the Midwest, as 56 percent note that trends were stronger than expected, while just 8 percent note that trends were weaker than expected. This is followed by the West, with 52 percent indicating that March was stronger than expected, and 8 percent noting weaker-than-expected trends.

The South experienced the weakest performance, as only 36 percent of respondents indicate stronger-than-expected performance, and 12 percent note weaker-than-expected performance. The Northeast fared a bit better, with 48 percent reporting stronger performance, and 4 percent stating that March was weaker than they anticipated.

We think the survey results reflect what has been a challenging several months in the southern states, possibly driven by a weakness in the housing market and greater than normal levels of precipitation. April results to date do not appear to be as strong as March. On a national basis, 41 percent of respondents note a stronger-than-expected performance thus far. However, 30 percent indicate trends in April actually are below expectation.

From a weather standpoint, January precipitation was below average, but temperatures were above average, setting a negative tone for the start of the quarter. A more "normal" winter settled in later in February and March, which we suspect boosted the demand for automotive parts and services.

O'Reilly Automotive Inc. and Genuine Parts Co. (NAPA) both have reported first quarter results. O'Reilly posted SSS growth of 6.8 percent in the first quarter, compared to our estimated comp of 4.2 percent. And for Genuine Parts, its core NAPA operations were up 4 percent and its company-owned NAPA stores had revenue growth of 6 percent. Both companies note April trends being somewhat sluggish due to unfavorable weather through the first three weeks.