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July 14, 2020 12:57 PM

ACA: Uptick in COVID-19 cases may put brakes on rebound

Tire Business Staff
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    BETHESDA, Md. — The automotive aftermarket may drive into another rough patch as the economy falters, according to the Auto Care Association (ACA).

    In its latest edition of "Market Insights with Mike," Mike Chung, ACA director of market intelligence, noted that vehicle miles traveled has steadily rebounded to pre-pandemic levels despite the pandemic.

    Since mid-April, passenger vehicle travel has gradually climbed back up to "normal" levels as states and municipalities have re-opened.

    However, after flattening from April to early June, COVID-19 incidence has risen in recent weeks, especially in the West and South, including California, Texas, Florida, Georgia and Arizona.

    This has prompted some states to pause their efforts to fully re-open businesses and activities, or even reverse course to limit activity.

    Such mandates to restrict business activity are likely going to reduce vehicle activity and negatively impact the national economy, Mr. Chung warned.

    "Looking at a few of the industry indicators available in our TrendLens platform, we see that employment and business confidence have both risen since bottoming out in April. Similarly, we see that capacity utilization and industrial production for motor vehicles and parts fell significantly in April, then began climbing back in May," he said.

    "With the economic upheaval fresh in our memory, shop owners and businesses have had to sharpen and modify their operations to manage cash flow, personnel and other vital aspects of their businesses in order to remain operational. Members have shared with us the challenges of staffing appropriately, particularly as business began regaining momentum in May/June."

    With the possibility of increased restrictions in areas of the country with rising COVID-19 cases, the auto industry should prepare for another potential decrease in miles driven and corresponding consumer spending in the aftermarket, the ACA report said.

    "As many have done, positioning yourself for PPP (Paycheck Protection Program) loans, engaging your local representative and being creative with offering innovative, customer-focused services may make the difference between businesses surviving in our 'new normal' or being forced to shutter," Mr. Chung said.

    The ACA recently forecast that the U.S. automotive industry sales are expected to drop 8.8% for 2020, but rebound by 11.7% in 2021.

    Despite the economic upheaval during the pandemic, DIY purchases and e-commerce have been growing and the average age of vehicles on the road is expected to continue to rise as consumers hold on to their aging vehicles during economic uncertainty, the ACA said.

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