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WILL TECH TRENDS HURT AUTO PARTS SHOPS?

Auto parts retailers love the old cars. It’s the newer ones that are bothering them.

Some industry watchers wonder whether ever-more complicated technology and a move by automakers to control the data and codes needed to make repairs could soon render engine compartments off-limits to the do-it-yourselfer.

“Computers control virtually the entire vehicle, from your brake systems to your air bags to your transmission — even your radio system,” said Aaron Lowe, vice president of government affairs at the Automotive Aftermarket Industry Association (AAIA), the trade organization representing car parts stores. “I think what many of the retailers fear is [that] if the trend continues, it could seriously impact their business.”

The problem isn’t just the computers. Carmakers provide only official diagnostic equipment (often a handheld device that plugs into the car) to their dealers. Independent shops make do with devices from other sources that don’t necessarily carry all the codes. Vehicle owners though, who don’t have either, are not able to do much more with their cars beyond driving them.

Although do-it-yourself sales remain strong (up 3.6 percent last year to $35.3 billion), professional service repairs still make up the bulk of the aftermarket, according to AAIA research. And growth is faster there than in the do-it-yourself sector, rising 4.3 percent last year to $136 billion in sales.

The AAIA has lobbied Congress to pass the Motor Vehicle Owner’s Right to Repair Act, which seeks to ensure access to the codes and information that the car manufacturers are withholding from the aftermarket. Automakers are fighting the initiative in a bid to move more of the repair business to the service bays of their official dealers.

Regardless of who wins the battle in Washington, though, observers point to some other threats to the do-it-yourself market. Consider the simple oil change — or what used to be a simple operation.

“It’s just not worth it anymore,” said James Lang, president of Lang Marketing Resources, an automotive aftermarket research firm based in Wyckoff, N.J. “You can’t save any money, and it’s very difficult to dispose of the oil.”

Lang refuses to make technology the scapegoat, though. He points to demographic changes as another threat to the sector. “Baby boomers have learned they can save more money putting linoleum in the kitchen than changing the oil in their car,” he said. “It used to be an American thing to work on your car, but all those Americans got older.”

Still, the auto parts retailers say they aren’t fazed, and some even predict that technology could eventually work to save the do-it-yourself market.

“You are going to see a time when you can hook up a laptop to a car computer and diagnose what’s wrong,” said Charles Downs, vice president of real estate at Springfield, Mo.-based O’Reilly Automotive.

In the meantime, the retailers are working hard to build DIY demand. “We are doing everything we can to demystify auto repair and maintenance,” said Scott Miller, senior vice president of real estate at Advance Auto Parts, Roanoke, Va. “There’s been a change of technology, but there’s been an evolution of the industry keeping up with the changes of technology, and the consumer is also doing the same.”

Advance stores are full of brochures on auto repairs and maintenance, offer free how-to clinics and have aggressive advertising campaigns reminding consumers to keep up their regular maintenance.

Auto parts retailers are also divining hope from the increasing age of the American auto — the older the better, from their point of view. The average vehicle age has risen steadily over the past decade, topping 9.6 years in 2003 and driving the entire automotive aftermarket industry to $182 billion in sales in 2003.

So just how serious are these tandem threats to auto parts retailers?

“Those trends can be somewhat glacial,” said Alex Vallecillo, senior portfolio manager at Cleveland-based Armada Funds. “Right now, all these guys are profitable enough that none of them is going to have to close stores. But there will be less reason to open stores at the rate they have down the road.”

— MF