![]() UNEXPECTED GAINSĬar maintenance companies such as Monro Muffler and Midas have indicated that the closures of dealerships of major carmakers like General Motors and Chrysler LLC are working to their advantage and adding to higher store traffic. Schick said cash-strapped consumers would not be quick to take on the incremental cost of a new car in exchange for $4,500, and given rising unemployment they are likely to hold on to older vehicles that are in drivable condition. “Overall we see little impact to the auto parts space from this legislation, though on passage, concerns could cause a short-term trading impact to the auto parts aftermarket sector,” Stifel Nicolaus analyst David Schick wrote in a note to clients. However, Britain said its scrappage scheme succeeded in boosting new car orders by 35,000 since it was announced in April, while Japan’s Nissan raised its UK production plans on demand boosted by European scrappage schemes. He also argued that removing 1 million cars from the 245 million-odd vehicles on the road will not “move the needle enough” to hurt the aftermarket.Ī clunker is a car that people are putting a minimal amount of money into anyway and spending the least to keep on the road, he said, implying that it is probably not much of a potential aftermarket customer either. ![]() version of the bill is far less likely to generate similar results, as the German program was driven by impending changes in motor vehicle taxes and uncertainty about the duration of the program. GM and Chrysler dealership closings are also expected to work to the advantage of the repair companies, thanks to customers looking for new alternatives.īesides some skepticism about the “cash for clunkers” program’s likelihood of success, analysts also point to the bill’s limitations - cash incentives for buying only new vehicles and removing old ones that get 18 miles to the gallon or less - that effectively restrict participation mostly to light trucks and sport utility vehicles.īB&T’s Cristello said the U.S. However, some analysts believe the impact on automotive aftermarket companies will be minimal as the law may not eliminate enough repairable vehicles to hurt repair chains such as Midas Inc, Pep Boys-Manny, Moe & Jack and Monro Muffler Brake Inc. ![]() ![]() REUTERS/Lucy Nicholsonĭubbed “cash for clunkers,” the legislation aims to stimulate 1 million new car sales within a year, implying that auto repair chains may lose 1 million potential customers - a distressing proposition given recent decline in maintenance spending.ĭespite support for the bill from President Barack Obama and carmakers, some aftermarket trade groups are up in arms against it, saying such programs will hurt independent auto repair shops. Vehicles are seen during rush hour on the 405 freeway in Los Angeles in a file photo. ![]()
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