SEMA report analyzes business cycles

The automotive aftermarket is an industry that experiences large fluctuations in sales depending on the time of year. Seasonal factors play a big part in business cycles on top of the fact that the aftermarket closely follows the behavior of the automobile market itself. Though 63.3% of companies surveyed reported summer as their peak sales season, retailers rate summer and spring equally in terms of when peak sales occur.

A Specialty Equipment Market Association (SEMA) study surveyed 98 companies in July, and these findings about business cycles were revealed:

• 5.9% of manufacturers and 4.2% of retailers slow down production during valleys in the business cycle, and nearly 30% of the retailers do nothing.

• 20.8% of retailers versus 11.8% of manufacturers advertise more during slow business times.

• Almost 17% of retailers cut back on overhead/labor during slow times, whereas 8.8% of manufactures build up inventory during valleys in the business cycle.

• Roughly 60% of all companies surveyed claimed that the difference between peaks and valleys within the business cycle range anywhere from 0% to 30%.

• Slightly more than a quarter of the companies surveyed only receive up to 10% of their sales as account receivables, which shows that cash flows generally remain high for automotive aftermarket companies. However, more than one fourth of manufacturers reported having 81% or more of their sales in accounts receivable.

SEMA members can view the entire report online in the Market Research Reports section at www.sema.org.