The media has done a fine job of convincing us that all things “automotive” will suffer if a big three bailout isn’t achieved. However, Memphis-based AutoZone Inc. has weathered the past three months of a sluggish economy pretty well. On Tuesday, AutoZone reported a slight drop in profits from a year ago during the first quarter of its fiscal year, despite an increase in sales.
For the three months ending November 22nd, AutoZone reported net income of $131.4 million compared with $132.5 million the same period the year before. Despite the slight drop in net income, AutoZone’s sales rose 1.6 percent to $1.48 billion.
Bill Rhodes, AutoZone’s chairman, president and chief executive officer, said the company’s long-term outlook is good. He highlighted two trends that work in AutoZone’s favor:
• A drop in gasoline prices this Fall added to driving, which, in turn, leads to a greater demand for car repairs.
• Also, with sales of new cars slumping, more people are keeping their cars longer and fixing them up.
With sales of new U.S. light vehicles falling to the worst levels in a quarter-century, some analysts say replacement parts purchases might increase over the long term as owners extend the life of existing cars, potentially driving AutoZone’s future sales and share price even higher.
I prefer to shop at my locally owned Napa for the years of experiance the partspeople have. Bob and Mark have been selling me parts since 1973. However, it is good to see that all the parts stores are surviving and that the automotive aftermarket is still going strong.
By Bruce. December 20th, 2008 at 7:23 amWe all enjoy cars and things car related or we would not be reading this blog, so any positive news about our hobby is good.
The Autozones of the world will do well since there business is based on existing vehicles versus new vehicles and people financially need to repair their cars versus buy new ones. These parts are copied overseas and brought in as replacement parts. Any parts store will tell you that. But the supply chain, which includes the major chemical companies that bank on auto (and housing markets) all the way to the little plastic wire compound and extrusion shops, will significantly suffer if not go out of business. These are the companies that there business model depends on US produced vehicles incorporating their products in new vehicles. They do the development work, not the big three.
If the auto industry goes down, the chemical industry, plastic, rubber, and color industries (which are deravities of the chemical industry), and steel industry will go away as well. Then you also have all the fabricators of parts going away as well. The trickle down effect would be tremendous.
Thanks,
By omureebe. December 18th, 2008 at 7:25 amomureebe
I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Sharon
http://www.autoloans101.info
By Sharon. December 16th, 2008 at 6:58 pmOk, but i still don’t understand the logic. Automotive is not DIY furniture. You require a basic knowledge of engineering and maintainance if you really want to DIY all the maintainance work yourself.
Now the question is:
1) How many car driver there in America are engineer or interested in engineering?
2) If less than half of them aren’t engineer, then i think they would prefer to take their car to mechanic to fix it up. But can anyone tell me is the workshop business is getting better or worse?
3) If the workshop business is getting worst, then how can we be convinced that Autozone business will grow?
Consumer dun know how to fix a car, and they are not sending it to workshop, end up how Autozone improve its business?
I think our dear economist there might have some answer, or maybe they themselves never even open the car to see what is the mechanical stuff inside.
By Eic. December 15th, 2008 at 6:52 amFunny right?
Still, any good Economical, car realted news are Great !
And new cars sucks big time, lol
By kuumakyyti.com. December 14th, 2008 at 12:25 amI’ve worked for them, they don’t pay a living wage!
By PaceFever79. December 13th, 2008 at 7:14 am“Autozone is a miniscule sized employer spread out across the country it has little to no effect on real employment. Comparing it to the Detroit 3 and their sprawling supply chain is laughable!”
Don’t agree, what’s laughable is our government and the big three trying to tell us that 1 in 10 US jobs is automotive related. That’s a long stretch. To them, this includes the drug store clerk that sells motor oil among 100,000 other heatlh and beauty products.
With respect to AutoZone, now here’s a company that is clearly “automotive related”… and they are managing well because people are being resourceful and extending the lives of their daily drivers instead of running out and financing a new car.
By Mikelonis. December 13th, 2008 at 7:11 amAutozone is a miniscule sized employer spread out across the country it has little to no effect on real employment. Comparing it to the Detroit 3 and their sprawling supply chain is laughable!
By PaceFever79. December 13th, 2008 at 6:51 am