Less Spending On Car Repairs

Not only are Americans buying fewer vehicles as Fuel prices soar, they are putting the brakes on spending to repair the rides they have.Much to the dismay of repair shops and auto-parts retailers, the fact owners are hanging on to their cars and trucks longer hasn’t meant more repairs on aging vehicles.The shock of $4-per-gallon Fuel and a bleak overall economy have drivers spending less time on the road, which means they are able to cut back on regular maintenance. Fewer miles also mean fewer accidents, eating into another major revenue stream for repair shops.Add to that the generally improved quality of vehicles, and the biggest players in automotive parts and service stand to lose billions of dollars.AutoNation Inc., the nation’s largest auto retailer, recently said a decline in parts and service was partly to blame for a 33% slide in second-quarter net income. A decline in new-vehicle sales was the biggest driver.”Consumers are more cautious, and they seem to be putting off some of their maintenance-type spending,” AutoNation Chief Operating Officer Mike Maroone said. “Discretionary repairs are being put off.”Auto retailers have come to depend more on work paid for by customers rather than through manufacturer warranties as vehicle quality has improved. Customer-paid jobs often are either maintenance work or repairs following an accident.AutoNation’s customer-paid business was down 2% in the second quarter, while the warranty business fell 5.5%.Sonic Automotive Inc. said this month that declining service and parts revenue factored into the company’s decision to cut its earnings forecast for the year. On Tuesday, Sonic reported that second-quarter earnings from continuing operations slid to $20.1 million from $28.8 million. News source: WSJ online