Auto Parts Sales Up As People Hold Cars Longer

PADUCAH, Ky. (AP) -- Business is buzzing at B.J.'s Transmission Service in Reidland as people repair used vehicles rather than trade them.

"People are skittish about the economy," owner B.J. Allen said. "They say their older cars get better gas mileage than new ones."

Shop work has increased, and revenue is up 10 to 20 percent in 2009 because the average transmission job costs $200 to $600 more than just a few years ago, he said.

The same is true at Hawkins of Mayfield, a salvage yard where customers are buying everything from motors to transmissions to auto body parts.

"People say they're fixing up their cars and keeping them," sales agent Wilby Hawkins said. "I think a lot of salvage yards in the region are the same way."

Auto parts recycling and repair are up nationwide, said Michael Wilson, executive vice president of the Automotive Recyclers Association, a Fairfax, Va.-based trade group.

"With the average age of a vehicle on the road these days at 9.7 years, folks are keeping those vehicles," he said. "It's very prudent to keep them repaired, especially in these economic times."

The boost in business helps the largely mom-and-pop used auto parts industry. Roughly 70 percent of the association's members are businesses with 10 or fewer employees, and 50 to 60 percent of their revenue comes from engine and transmission sales, Wilson said.

Chain-store sales are booming, too, compared with a year ago when soaring gas prices forced consumers to put off everything but critical repairs. Falling gas prices have helped rejuvenate the industry.

AutoZone reported in late May a better-than-expected 9.5 percent increase in quarterly profit over the same time in 2008. Big factors were strong sales of auto parts to budget-conscious home mechanics and commercial repair centers.

A week earlier, Advance Auto Parts, AutoZone's biggest rival, reported a 14 percent jump in earnings, up from prior projections.

Used-vehicle sales nationwide are expected to increase to 40 million this year, up 10 percent over credit-tight 2008, one of the worst used-car years since 1991, according to CNW Marketing Research of Bandon, Ore. With new auto sales projected to peak at 10.1 million in 2008, used car and truck sales will outnumber them 4-to-1.

"This year, there will likely be about 1.3 million potential new-car intenders who are expected to instead buy a 1- to 5-year-old used vehicle, based on the first four months of 2009," CNW analyst Art Spinella said. "Additionally, parents who have increasingly purchased new vehicles for their children are buying used cars and trucks instead."

January through April, roughly 2,000 used cars and trucks sold in Kentucky from Hopkinsville west, more the doubling sales of new vehicles, according to Louisville-based Cross-Sell, which gathers auto sales records from county court clerks' offices. Cross-Sell then crunches the numbers and supplies reports to advertisers and auto dealers statewide.

Industry analysts project even more business for garages and salvage yards as General Motors and Chrysler close hundreds of dealerships. But pending federal legislation could change that.

The House Energy and Commerce Subcommittee on Energy and Environment recently approved a car-scrappage amendment to the American Clean Energy and Security Act of 2009.

It would allow people to trade older, gas-guzzling autos -- those used for at least a year and with federal combined city/highway fuel-economy rating at or below 18 miles per gallon -- and receive vouchers of up to $4,500 toward buying newer, more fuel-efficient cars and trucks.

The program would last until March 31, 2010, and is projected to stimulate about 1 million new-auto sales.

However, the legislation would bar professional automotive recyclers from harvesting and reselling engines and drive-train components.

The average price for some of the most popular used engines ranges from $750 to $1,000, compared with $2,100 to $2,800 for new ones, Wilson said.

"That's going to take 1 million engines and 1 million transmissions out of circulation and raise prices on those used parts as well as for used cars," he said. "I can understand giving incentives to car makers, but no matter what, low-income families can't afford to buy new vehicles."

Wilson said the ARA will support any vehicle-retirement program that doesn't restrict sales of high-quality, low-cost recycled automotive parts.

No matter what incentives, people largely won't buy new cars until the price drops significantly, said Ken Jerrell of Jerrell Auto Sales and Salvage near Kevil.

He said his customers still suffer from the recession and joblessness. He can't keep used tires in stock and has even had requests for used fan belts.

Business is up about 30 percent at S&S Muffler and Brake Service in Benton, where head mechanic Mike Garvin had six autos waiting last week. A year ago, S&S had trouble finding repair work, he said.

"They're actually saying, Fix everything you can,'" Garvin said. "I don't want it breaking.'"

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