Posts Tagged ‘auto sales’

7 Consumer Behaviors in the Recession

Wednesday, May 27th, 2009

Below is a new list of 7 things that consumers are still doing.  People are fixing their cars, remodeling their homes, and still making trips to the dentist.  While some consumer behaviors have changed, it is nice to hear that the world hasn’t stopped in the current economic climate.

 7 Things Consumers Are (Still) Doing:

 1) Fixing their cars instead of buying new cars.

  • Auto repair shops grew their sales by an average of 2.4% over the last 12 months.
  • In contrast, car dealerships saw their sales decline by 9.7% in the same period.

 2) Remodeling and fixing their homes instead of moving.

  • Building equipment contractors (such as electricians, plumbing and heating contractors) saw their sales increase by 4.6% in the last 12 months.
  • In contrast, home builders saw their sales decrease by over 5% in the same period.

 3) Shopping at grocery stores more than eating out.

  • Grocery stores experienced average sales growth of 6.7% over the last 12 months.
  • Sit-down restaurants saw growth of 3.9% in the same period.

 4) Attending technical and trade schools.

  • Trade and technical schools saw their top-line sales grow by 7.8% in the last 12 months, compared to growth of 5.9% in 2007.

 5) Going to the dentist.

  • The average dentists’ office experienced sales growth of 6.9% in the last 12 months, up from 4.9% in 2007.

 6) Getting personal care services such as haircuts and manicures.

  • Hair salons, barber shops, nail salons, and skin care providers experienced an average of 4.5% sales growth in the last 12 months.

 7) Visiting an accountant.

  • Accounting firms saw average top-line revenues grow by 10.2% over the last 12 months, putting the accounting industry in the top 20 industries in the country by sales growth.

 

Bad times for GM and Ford trickle down to auto dealers and suppliers

Monday, October 20th, 2008
Last week the New York Times reported that J.D. Power & Associates cut its forecast for United States motor vehicle sales this year to 13.6 million vehicles, a 16 percent decline from last year’s total, and it said 2009 sales could fall as low as 13.2 million. This news resulted in a plummet in the stock prices of both GM & Ford. How are privately owned automobile dealerships faring in this current environment?

The state of these dealerships seems to be quite similar to that of the American auto manufacturing giants. An analysis of Sageworks data on private companies in the “auto dealers” and “other motor vehicle manufacturing” industries shows that over the last 12 months alone, both of these industries fall in the bottom 5% of all industries in the database by all 4 borrowing/debt ratios that are tracked. The metrics analyzed include debt service coverage, interest coverage, debt to EBITDA, and debt to equity. This indicates that the restricted borrowing environment resulting from the current credit crisis may have a particularly dire effect on the auto sales industries.

Not surprisingly, sales growth for automobile dealers has gone from 2.37% in 2007 to

-1.83% in 2008 thus far. According to Sageworks data on private companies, sales of auto dealerships have not experienced a decline since the data began being collected in 2000. Additionally, cash as percent of total assets has decreased from 8.53% in 2007 to 6.99% in 2008.

Motor vehicle parts and supplies wholesalers have also seen a huge sales decline since 2007. Sales grew at an average of 0.7% in 2007 and have declined at an average rate of 11% in 2008.