Fuel Cost Adjustment

Dec 3, 2009

Just a day or so before Independence Day I had a discussion with a fellow editor from a competitor magazine. (Yes, we travel within some of the same circles, talk with some of the same people, report on some of the same issues, so it’s OK even for competitors to share some notes.)

The conversation, of course, turned to industry concerns – concerns, as in issues and topics, and concerns, as in Whoa, Nelly, what’s going to happen to the truck and SUV aftermarket market, now that gas has gone beyond $4 a gallon, heading to, maybe $5 by Labor Day?

I’m not an alarmist, the sky’s not falling, no death knell is sounding, and the vehicle aftermarket isn’t going to disappear into a black hole. Good gracious, no.

But my head’s not stuck in the sands of economic blindness either; and neither is yours, be you a manufacturer/supplier or a retail/service shop. We all know that the dramatic climb in gas and diesel fuel has everyone in our industry thinking, rethinking, how our collective business world will play out.

We all read the news, the business pages and the Internet reports, and hear the daily broadcasts. Who isn’t thinking about fuel costs?

And it’s not just us. The Europeans have even more to be concerned about as they, too, rely on oil to fuel their economies, and import it for survival. Want cheap gas on the other side of the pond? Head to Eastern Europe where Bulgarians, Lithuanians and Romanians got it cheap: about $6.50/gal. as of this spring. The Brits, French, Italians and Germans pay twice what most North Americans are paying.

The Europeans chuckle at our ire. They’ve been living with high fuel costs for years; we’ve just gotten the economic cattle prod. The Australians laugh, too, from what a manufacturer’s rep shared during a recent conversation. They live and drive much like Americans – they’re spread out and motor over long distances. They love their cars and trucks likely as much as Americans love theirs. And those Down Under pay more for their petrol than do we.

So, who isn’t concerned about the price at the pump? (OK, it’s absurdly cheap in Venezuela: 12 cents/gal. But Venezuela is an oil-producing country with a state-owned oil company subsidizing just about the whole shootin’ match.)

Americans are driving less; that’s a fact: 20 billion fewer miles in 2008, CNN reported in June. Truck plants have closed. Some folks are giving up their gas guzzlers. That’s happened before. Still (and I’m not just waving Old Glory to the tune of “America the Beautiful”), like mom and apple pie, our four-wheeled pets are part of who we are. With more than 135 million cars and nearly 100 million trucks and SUVs on U.S. roads in a land of more than 300 million people, that’s love, folks. Yet even in uncertain economic times, people use their autos and seek ways to personalize them. To wit: the Denverite who bought a 2000 GMC Denali for about $12,000, then spent another $60,000 to restyle it into a one-of-a-kind.

As part of the automotive aftermarket we’re realists, yes, and we’ve got to think pragmatically about the business future. But this industry is populated with optimists –  that’s why you went into business, stayed in the business. And that’s why you assess the situation and make whatever adjustments are needed. When big is out and little’s in, you adjust. Suppliers and restylers will work in concert by listening to what the ultimate consumer wants and responding to their call. From where I sit, you’re already doing that.

You’re making a fuel cost adjustment.