Automotive aftermarket executives expect growth in 2006, survey finds

While automotive aftermarket executives do not have high expectations for the United States economy in the next 12 months, they do overwhelmingly (80%) 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), 84% of the respondents anticipate an increase in their 2006 revenue over the 2005 numbers, compared to 72% that expect their 2005 revenues to increase over 2004.

Most 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.

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.

Other findings from the survey:

  • 12% report being an industry leader; 26% have made significant progress toward becoming an industry leader; 48% have made some progress; and 14% have made no progress.

  • 48% have increased spending on capital equipment, while 33% have decreased spending.

  • 43% have increased spending on information technology, while 27% have decreased spending.

  • 55% report no change in spending for prototype tooling, while 31% have increased spending and 15% have decreased spending in that area.

  • 50% report no change in spending for production tooling, while 39% have increased spending and 11% have decreased spending.

  • 95% consider innovation/product development important to their company's growth and 16% consider it a top corporate priority; however, only 4% received more than half of 2005 sales from new products or services.

For more information, access www.GrantThorton.com.

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