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How will vibrant new car sales fuel business for dealers and suppliers?

car mechanic

Find stories in the sectors the gain from new car sales. Photo by Dreamstime

New U.S. car sales are due out today, and TrueCar forecasts November to boost the annual sales pace to its highest since early 2008, boding well for car makers and retailers.

Pent-up demand from consumers who are hanging on to their old vehicles for a record number of years, along with incentives and slowly improving jobs and housing markets, likely are prompting more car buys.  At the current pace, automakers will have sold some 15 million new cars in 2012.  And the average price TrueCar reported earlier this year was $30,748, up from $28,771 in 2011.

Obviously this is good news for major automakers and their dealer networks.  What other sectors benefit from new car sales?  Why not try a round-up financial feature on businesses that are prospering — and maybe even hiring — as vehicle sales pick up.  I’ve never been able to find a quantitative breakdown of the economic impact of one car sales unit, but you can illustrate anecdotally how the upswing is affecting businesses in your market.  Some to talk with include:

Parts makers.   Even if your area isn’t home to a major Tier 1 supplier like, say, seating giant Lear Corp. or glass titan Guardian Industries, your market still may include Tier 2 parts makers — those who supply components to the giants that in turn provide systems to the OEMs, or original equipment manufacturers — i.e. the automakers.  Contact your state’s automotive manufacturers’ association and/or commerce department for leads to local companies.  You also might appeal to this organization, the Automotive Who’s Who; I was unable to access their subscription resources but they may provide info for journalists free of charge; it’s worth a call to ask.

As this Center for Automotive Research newsletter alludes (and by the way, you might want to subscribe), a boom in sales can present hardships for companies that scaled down after the recession; what are your area firms doing to  accommodate increased demand without losing business?  Here’s a U.S. Department of Commerce report that might help with understanding the parts supply chain, as well.

And this report from the same center is a must-read; while it dates back to 2010 it’s an excellent primer on how the automotive industry ripples throughout the U.S. economy.  For example, the report claims, spin-off business from dealerships alone (not counting manufacturing, just the sale of automobiles) accounts for hundreds of thousands of jobs and billions of dollars in compensation, in fields ranging from IT, legal and accounting to construction and food services.  (The report also details the spin-off business from manufacturing, but since dealerships are more ubiquitous than factories in news markets, you might want to focus on how retail car sales give a jump-start to local economies.)

Don’t overlook the aftermarket parts, car washes and other consumer-goods suppliers to people who want to pamper their new rides.

And of course, the financing and insurance industries benefit from new-car sales; talk with banks and credit unions in your area about demand for car-buying products and services.

Also look into auto clubs and roadside service outfits; do they enjoy a better margin when new cars are on the road?  I know for years I paid AAA dues but wasn’t much of a drain on their operations, but once my car passed the 1o-year mark I maxed out on annual roadside help due to worn-out vehicle systems and other mishaps.  Now that I’m driving a new car, AAA can probably breathe more easily for a few years.

 

In Beats, Featured, Manufacturing | Large companies, Retail | Lifestyle, Story ideas, Transportation | Airlines | Travel.

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