Have auto parts stocks run their course?
The Motley Fool says so, and it made me wonder, who were the big winners due to this winter's severe weather?
Auto repair is an industry that flourishes during extremes. It follows that the most obvious winners have been the auto body shops, which thrive on slippery roads and narrowed snow-jammed streets. Unexpected storms in states like Georgia and North Carolina caught drivers by surprise; they're unaccustomed to driving on ice, and as a result they send many vehicles to the shop. In the northeast the body and fender guys are reporting a 25-percent bump in business over last year.
Transmission shops like snow, especially when it's deep and gets all kinds of cars stuck. While rocking the car back and forth by alternating between drive and reverse may seem like the solution at the time, the damage to the car's transmission can be severe and costly. You would never think about driving down the highway and putting the car in reverse, but that is what you are doing when the tires are spinning on the ice and you do the "D" to "R" shuffle.
For some shops, the bonanza is somewhat delayed. Once the potholes are deepened as melting snow washes out what little road bed remains, the front-end damage begins. Bent wheels, blown tires, twisted tie rods and lost wheel covers spell more work for the front-end shop or general repair guy. I'm reminded of a story of a shop that was just downstream from the mother of all potholes and became the resting place of vehicles swallowed up by the crater. In spite of repeated reports to the highway department the road was unrepaired until a police car fell victim.
Tires don't fare well on the ice either, especially when they are overheated. Tires have been known to be worn thin in a mere 15 minute confrontation with an icy patch. They are also susceptible to damage when a car or truck hits a curb or snowed-over parking space barrier.
They say that you can never time the stock market, and that may be true. The Motley Fool article emphasized recovering auto sales as justification for vacating the auto parts stocks which have had a substantial and extended run. But knowing what this extreme weather is doing to cars, it might be ok to wait until winter is over.