Aftermarket experts expect growth in 2006

While automotive aftermarket executives do not have high expectations for the U.S. economy in the next 12 months, they do overwhelmingly expect to see growth for their businesses, according to Grant Thornton's 2005 Automotive Aftermarket Survey, conducted in cooperation with SEMA and the Automotive Aftermarket Industry Association (AAIA).

The survey showed that 84% of the respondents anticipate an increase in their 2006 revenue over the 2005 numbers, compared to 72% who expect their 2005 revenues to increase over 2004.

"Many firms expect to achieve these lofty expectations by their own organizational efforts rather than relying on market forces," says J. Scott Farber, Grant Thornton assurance partner and leader of the firm's Automotive Aftermarket Practice. "Executives' optimism about their own growth shows signs that the overall economy and the automotive aftermarket may grow at differing rates. One of the reasons industry executives may not have high expectations for the economy in general is that they have seen price increases across the board."

A majority of all survey respondents report that all cost categories have increased in the past year; with 94% reporting increased energy/fuel costs, 86% have seen an increase in material/product costs and 83% an increase in insurance and labor costs.

"Almost half of the executives report that energy and fuel costs have increased by more than 10% in the last year," said Farber, "but that was prior to the energy price spikes brought on by hurricanes Katrina and Rita. I'm sure those numbers would be even higher now."

On the labor front, more than half (52%) of the respondents have increased the number of full-time employees in the last year and 56% expect to see an increase in 2006. While 21% report a decrease in the number of full-time employees, only 11% expect to have to decrease staff in 2006. Turnover in the industry is good with half of the executives reporting a 5% or lower turnover rate.

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