Consumer Trends
Everyone is feeling the pinch of tough economic times. In the auto industry, we hear of dealers closing on a weekly, if not daily, basis. People are losing their jobs, which leads to them possibly losing their homes. The cost of fuel has affected the amount of driving people do. Some trends that affect the auto industry are:
*Poor condition of local roads. Government is feeling the pinch and infrastructure budgets are not able to keep up with the deterioration of roads, bridges, asphalt and concrete. Bad roads put added stress on vehicles. Trucks and SUVs take the stress on the frame. Cars feel pressure on the unibody, which absorbs the flexing and stress on the structure of the vehicle.
*Cars are lasting longer. As is evident by the closing of auto dealers, people just aren't buying new cars unless they absolutely have to. Americans are keeping their cars 9.2 years, the oldest age for the average in a decade. Cars will have more rust, minor body damage, and missing parts.
*Deferred maintenance. In a recession, auto repairers usually do ok, because people would rather fix their vehicles than replace them. However, people are holding off and 'living with' noises, cracks and minor problems. This means that repairs will be more immediate and larger in scope.
*Cars are getting smaller. Highest possible MPG is the goal for vehicle owners. We have hybrids, hydrogen and biofuel vehicles. In order to maximize fuel use, sheetmetal has been replaced with plastics, heavy duty steel is being replaced with aluminum, so vehicles see bigger dollars when they get in an accident. Ten years ago, the average auto body repair was $1570, now it is $2000.
*Less driving. People just might start moving back to the city where public transportation is easier to use and more readily available. In June, 2008, the Department of Transportation reported that travel on all roads and streets fell 12.2 billion miles, which is a 4.7 percent drop from last year. Less driving means less accidents and this trend is bad for the auto body industry. Thankfully people love the freedom of driving, and the rain always brings more accidents.
*Aftermarket parts. People are looking for low cost alternatives when buying, and this trend is no different for the auto industry. Insurance companies love to use aftermarket parts because they save money. The auto body industry doesn't like them because they don't fit well and don't wear as well as factory parts (OEM). In the past, consumers have refused to accept aftermarket parts on their vehicles, but now they are more willing to accept a reduction in quality for a price saving.
All in all, this economy will weed out the poorly run businesses from the well run ones. Keeping up on trends, using lean management principles and being ready to make changes will keep well run businesses going. Now, we have to work harder for less money, but if we can stick this out, the economy will bounce back and we'll be ready.
*Poor condition of local roads. Government is feeling the pinch and infrastructure budgets are not able to keep up with the deterioration of roads, bridges, asphalt and concrete. Bad roads put added stress on vehicles. Trucks and SUVs take the stress on the frame. Cars feel pressure on the unibody, which absorbs the flexing and stress on the structure of the vehicle.
*Cars are lasting longer. As is evident by the closing of auto dealers, people just aren't buying new cars unless they absolutely have to. Americans are keeping their cars 9.2 years, the oldest age for the average in a decade. Cars will have more rust, minor body damage, and missing parts.
*Deferred maintenance. In a recession, auto repairers usually do ok, because people would rather fix their vehicles than replace them. However, people are holding off and 'living with' noises, cracks and minor problems. This means that repairs will be more immediate and larger in scope.
*Cars are getting smaller. Highest possible MPG is the goal for vehicle owners. We have hybrids, hydrogen and biofuel vehicles. In order to maximize fuel use, sheetmetal has been replaced with plastics, heavy duty steel is being replaced with aluminum, so vehicles see bigger dollars when they get in an accident. Ten years ago, the average auto body repair was $1570, now it is $2000.
*Less driving. People just might start moving back to the city where public transportation is easier to use and more readily available. In June, 2008, the Department of Transportation reported that travel on all roads and streets fell 12.2 billion miles, which is a 4.7 percent drop from last year. Less driving means less accidents and this trend is bad for the auto body industry. Thankfully people love the freedom of driving, and the rain always brings more accidents.
*Aftermarket parts. People are looking for low cost alternatives when buying, and this trend is no different for the auto industry. Insurance companies love to use aftermarket parts because they save money. The auto body industry doesn't like them because they don't fit well and don't wear as well as factory parts (OEM). In the past, consumers have refused to accept aftermarket parts on their vehicles, but now they are more willing to accept a reduction in quality for a price saving.
All in all, this economy will weed out the poorly run businesses from the well run ones. Keeping up on trends, using lean management principles and being ready to make changes will keep well run businesses going. Now, we have to work harder for less money, but if we can stick this out, the economy will bounce back and we'll be ready.
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