Survey Finds Automotive Aftermarket Executives See Growth
According to Grant Thornton's 2005 Automotive Aftermarket Survey, conducted in cooperation with the Specialty Equipment Market Association (SEMA) and the Automotive Aftermarket Industry Association (AAIA), 84 percent of respondents anticipate an increase in revenue for 2006; this compared to 72 percent that expected 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," points out 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 percent reporting increased energy/fuel costs; 86 percent have seen an increase in material/product costs and 83 percent an increase in insurance and labor costs.
"Almost half of the executives report that energy and fuel costs have increased by more than 10 percent 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 percent) of respondents have increased the number of full-time employees in the last year and 56 percent expect to see an increase in 2006. While 21 percent report a decrease in the number of full-time employees, only 11 percent expect to have to decrease staff in 2006. Half of the executives reported a 5 percent or lower turnover rate.
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