While the group will not be without volatility, we are just not seeing new vehicle sales recover at a fast enough clip to halt the accelerated aging of the fleet that, in our opinion, has been a sizable catalyst to industry outperformance. Whether or not the “mindset” of the consumer has been forever changed with respect to vehicle ownership, we think the overhang from weak new unit sales will be felt for several years to come. While elevated gas prices will likely place downward pressure on near-term results and create volatility in the share prices, we think higher rates of failure on critical parts along with an industry that has less discretion associated with repairs in general should keep same store sales (SSS) trends at or above historical rates for the foreseeable future.
About BB&T Capital Markets:
BB&T Capital Markets is a full-service investment-banking firm that focuses on specific industries, including the Automotive Aftermarket. BB&T Capital Markets is a division of Scott & Stringfellow, LLC, member NYSE/FINRA/SIPC. Scott & Stringfellow is a wholly owned nonbank subsidiary of BB&T Corporation, one of the nation’s largest financial holding companies with $155 billion in assets. Securities and insurance products or annuities sold, offered or recommended by Scott & Stringfellow are not a deposit, not FDIC insured, not guaranteed by a bank, not insured by any federal agency and may lose value.