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Signs of another challenging spell for the auto care industry and economy at large

With rising pandemic caseloads, auto industry managers and owners should be prepared for another potential decrease in miles driven and consumer spend in the aftermarket

Bethesda, Md.—The Auto Care Association’s Market Insights report highlights recent trends in vehicle miles traveled that are encouraging, but perhaps offset by other statistics that loom as indicators of another rough patch for the U.S. economy and the aftermarket.

Good news – mileage is back to pre-pandemic levels

As of late June, vehicle travel has steadily ascended to pre-pandemic levels – since mid-April, passenger vehicle travel has gradually climbed back up to “normal” levels as states and municipalities have re-opened.

Not-so-good news – Covid-19 incidence rising

After flattening from April to early June, Covid-19 incidence has risen in recent weeks: cases have been growing rapidly in the West and South, in particular California, Texas, Florida, Georgia and Arizona.

State reopenings

Based on the changing dynamics of disease spread in each state, several have recently paused their efforts to re-open, or even reversed course to limit activity. For example, Arizona, California, Texas and Florida have scaled back operations for bars, beaches, cafes, nightclubs and gyms in an effort to mitigate disease spread and overburdening healthcare facilities.

Age group considerations

Of concern is the rise in Covid-19 cases in younger generations. Incidence has increased more rapidly since Memorial Day among those under 45 years old.

That is of concern as businesses have gradually reopened throughout the summer and as individuals have engaged in more activities outside their home. As the pandemic has progressed, individuals have become gradually more comfortable with engaging in “typical” activities like dining out, traveling for leisure, and going to a shopping mall, but still hesitant to attend movies, work out at a gym, or travel abroad.

Alongside the public’s willingness to engage in individual activities is the acceptance of risk at an organizational / societal level. Market research firm Ipsos finds that Americans are eager to get back to work despite the continued risks associated with the virus: 53 percent of U.S. adults agree with businesses reopening even if Covid-19 isn’t fully contained, vs. 43 percent who disagree.

Industry considerations

While individuals are gradually venturing out more, the increase in cases, particularly in Southern and Western states, is leading to mandates to restrict business activity. That is likely going to reduce vehicle activity and negatively impact the national economy.

Capacity utilization and industrial production for motor vehicles and parts fell significantly in April, then began climbing back in May. With the economic upheaval fresh in 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.

With the possibility of increased restrictions in areas of the country with rising caseloads, auto industry managers and owners would do well to be prepared for another potential decrease in miles driven and corresponding consumer spend in the aftermarket, the reported stated: “As many have done, positioning yourself for PPP 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.”

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