“Several factors measured in this quarterly analysis are still showing a positive trend with a majority indicating growth or expansion. However, when looking at a time series analysis of the data, we find that this growth trend is on the decline,” says Steve Handschuh, AASA president and COO. “Responses to the Q2 survey indicated conditions which might be called a ‘growth recession’ – growth is positive but below potential.”
However, although many suppliers responding to the AASA Barometer survey say that the industry outlook is negative, their investments reflect optimism more than concern, noted Paul McCarthy, AASA vice president, industry analysis, planning and member services.
“For example, the majority of respondents said capacity is up and their companies are hiring. While a slight majority of suppliers still saw sales growth in Q2, more than 1 in 5 experienced a decline – a warning sign,” McCarthy explains. “This raises the question whether supplier investments are too positive for current market conditions.”
The AASA 2Q Barometer Aftermarket Supplier Sentiment Index declined in the second quarter of 2012, after reaching its highest point since 2010 in 1Q 2012. However, this decline aligns the Index with other key indicators:
- The NAM/Industry Week Survey of Manufacturers business outlook dropped several percentage points from the first quarter.
- The U.S. Bureau of Economic Analysis (BEA) reported demand for manufactured goods dropped in May for the third straight month.
- The Conference Board Consumer Confidence Index declined from 64.4 in May to 62.0 in June, driven mostly by lower expectations.
“The key question aftermarket suppliers are facing is whether the soft market seen in Q2 is an exception due to overhang from warm weather and slower job creation, or a signal of weaker future demand,” McCarthy says. “Strong market drivers, such as age of vehicles (which Experian noted has reached 11 years), lower gas prices, and signs of life in miles driven all point to continued aftermarket growth, but the pace of that growth is in question.”
The “AASA Aftermarket Supplier Barometer” is a quarterly survey of AASA full service supplier members on key indicators and market trends. The full survey report is an exclusive AASA member benefit and is available only to member companies which participate in the survey.
For more information about the AASA Aftermarket Supplier Barometer and other AASA industry analysis offerings, contact Paul McCarthy of AASA at [email protected] or 919-406-8812.