Whether we like it or not, much of the infrastructure to get around the United States is built for automobiles.
Save for areas around major metropolitan hubs like New York City, San Francisco, and Chicago, public transportation is not usually a reliable option for those without cars, which forces many of those who do not wish to drive behind the wheel.
According to the latest edition of the American Automobile Association’s (AAA) American Driving Survey, 95.3% of U.S. residents aged 16 and older drove at least occasionally in 2023. The average American driver spent at least 60.7 minutes behind the wheel and drove 29.1 miles per day last year.
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Besides the costs associated with tolls, parking lots, garages, and gas, people who require a car to get around bear the weight of another expense that can determine the fate of their mobility: maintenance.
With the average age of cars on American roads topping 13.6 years, many are keeping their cars longer than ever, requiring frequent maintenance and service to keep them in top condition. But whether it be oil changes, tire rotations, replacements, tune-ups, or any of a cornucopia of other procedures, going to the mechanic’s can be similar to pulling teeth—and just as expensive.
Maintenance hesitance is hitting mechanics’ bottom line
Let’s face it: we all hate being charged by the mechanics and the dealer service departments. Many people on the roads can attest to a simple $49.99 oil change that turned into a multiple-hour visit that cost hundreds of dollars.
However, shops offering services like oil changes say Americans are spending less on maintaining their cars. They say they’re opting to skip some services or for cheaper versions of consumable parts like tires and oil, which may not be as durable as “brand name” options.
According to a new report by the Wall Street Journal, these behaviors are hurting their bottom lines. They noted that in late May 2024, shares in Monro (MNRO) , the second-largest automotive services company in North America and the operator of Monro Auto Service and Tire Centers, dipped 12% after it reported that adjusted same-store sales dropped dramatically during the 2024 fiscal year.
Execs attributed the loss in sales to “a strained low-to-middle income consumer that traded down to tires at opening price points,” meaning that those on a tight budget opted for cheaper parts. Additionally, they reported lower spending on critical components like brakes and shocks.
The hesitance is also felt by NAPA Auto Parts owner Genuine Parts (GPC) , whose shares fell by 20% in September. More recently, shares in Valvoline (VVV) ; the oil manufacturer that also operates its chain of quick oil change service centers, dropped 9%. With many customers opting to defer service, CEO Lori Flees wrote in an email that the auto service and parts industry is in a race to the bottom, noting that its competitors are losing business on its more expensive services like tires in favor of discounted oil changes.
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Cheaping out on certain parts like oil and tires may be tempting for buyers on a tight budget, as off-brand versions may temporarily fix a problem.
The Journal notes that opting for cheaper parts can lead to deeper problems that can occur much quicker. In their example, they said that an unnamed national tire chain offers an unnamed “entry” level tire that undercuts Goodyear by about $100. But while it may save the owner of a family car like the Ford Explorer $100 per tire, the trade-off is that the cheaper “no-name” tire is only guaranteed for 40,000 miles. In comparison, the Goodyears guarantee 60,000 miles alongside safety and quality advantages.
However, while inflation, high interest rates, and trade woes have affected new car sales, executives at auto maintenance giants are assured that this sentiment will only be temporary. In a statement, AutoZone (AZO) CEO Philip Daniele noted that many people will defer maintenance early on in an economic downturn, saying that “as we get further through the cycle, [customers] start to repair their cars because they realize a little investment today, maintaining their vehicle, defers a major repair into the future.”
Genuine Parts, Valvoline, and AutoZone, auto service and maintenance providers, are traded on the New York Stock Exchange under the respective tickers GPC, VVV, and AZO. Monro is traded under the ticker MNRO on the NASDAQ.
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