The American love affair with cars may still be intact but that special, 100-year-old relationship has never faced more changes and challenges at one time than it is right now.
Consumers are not only keeping their cars longer with the average vehicle age rising about 12 years, but they’re also dealing with record fuel prices and rampant inflation, all as the nation and auto industry continues its steady transition to electric vehicles.
Yet in the face of these headwinds, two of the nation’s largest auto parts retailers said Tuesday (May 24) that while consumer driving and shopping behaviors were clearly changing, they weren’t drying up, a development that has put a premium on innovation and observational insight.
“We are really seeing our customers being resilient,” Advance Auto Parts CEO Tom Greco told analysts on the company’s Q1 earnings call Tuesday. “We were nervous in February about the inflation of fuel and the impact that could have on miles-driven, but we really haven’t seen an impact yet,” he added, noting that people continue to want to get out and do the things they did prior to COVID.
Shift and Trade
As far as changes in habits, such as the trade-down to store brands reported last week by retailers such as Walmart and Target, Greco said those changes had yet to materialize for the Raleigh-based operator of 4,700 stores and a website.
“In terms of trade down, we have not seen that either. We look very closely at this and we knew this was something that is important for our investors, and we’re not seeing it,” Greco said.
While the retailer just barely kept its eight consecutive quarter streak of comparable store sales growth alive with a 0.6% increase for the three months ended April 23, the company said it planned to continue to invest in improving the quality of its own brands to capture a consumer demand for value, but said that shift was not part of a “formal trade down” or embrace of a tiered system of “good, better, best” parts.
Going the Extra Mile
For its part, industry heavyweight AutoZone also reported its fiscal Q3 earnings Tuesday in which the operator of 6,100 U.S. locations, plus another 700 in Mexico and Brazil, credited its 6% top-line growth to its ability to “go the extra mile.”
Within the retailer’s three-pronged growth focus on U.S. retail and the DIY customer, international expansion and its commercial DIFM (do it for me) business, the 26% increase in sales at the latter unit stood out amongst other results, with commercial sales topping a $1 Billion for the quarter and amounting roughly one-quarter of total revenue.
“During these unique and challenging times, we strive to deliver exceptional customer service while focusing on our growth initiatives,” AutoZone Chairman, President and CEO Bill Rhodes said of the three-month period ending May 7, adding that the retailer “will take nothing for granted” as it moves forward with ongoing investment and targeted store expansion in the U.S. and abroad.
A 5x Rise in EVs
Another wave of change sweeping through the auto industry is the continued rise in electric vehicles (EVs) and hybrids, which Advance projects will grow from 8.4 million today to 45 million by 2030.
While Greco said there are still years of growth ahead for parts and applications for traditional internal combustion engines, demand for hybrid and EV parts from both professional and DIY customers is set to soar, particularly in certain areas of the country.
To that point, Advance said it now stocks tens of thousands of EV parts and also unveiled the industry’s first aftermarket EV battery to tap this growing subset of demand.
“It’s not widely known by consumers that every single one of these [electric] vehicles requires a 12-volt battery,” Greco said, citing company research that shows existing batteries are not lasting as long as consumers expect.
While cognizant of the external economic headwinds that inflation and fuel prices are having, Greco remained confident in the industry’s underlying demand and improving miles driven at a time when consumer spending has skewed away from discretionary purchases and towards necessities like auto parts.
"auto" - Google News
May 24, 2022 at 09:48PM
https://ift.tt/ic2y3Mn
From Aging Cars to EVs to Record Gas Prices, Auto Parts Retailers Face Big Changes - PYMNTS.com
"auto" - Google News
https://ift.tt/uyvQFCh
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
No comments:
Post a Comment