LAS VEGAS, Dec. 17, 2009 (GLOBE NEWSWIRE) -- With auto sales slumping a recent Forbes article argues that it make sense to examine the other side of the sales coin -- parts and maintenance.
In a November 30 commentary, "Cashing in on Clunkers," Forbes makes the argument that "Auto sales are sluggish, but business is brisk for companies selling parts and accessories to keep old cars on the road." The article is available online here.
Auto manufacturers have had a rough go of it in 2009. General Motors, the largest U.S. automaker, went bankrupt. Japanese automakers like Toyota Motors and Honda Motors, which previously seemed invincible, have had to endure slumping sales, leaving Ford Motors as the only major auto maker that looks even moderately bullish at this point. Cash for Clunkers has come and gone. The reality is that given the weak U.S. economy, folks just aren't buying as many new cars as they do when the economy is good.
But that doesn't mean people aren't driving anymore.
Lower auto sales simply mean that more drivers are keeping older cars for longer periods of time in an effort to avoid down payments and monthly bills that accompany the purchase of a new car. Fortunately, there are ways to play this trend. Take the case of General Automotive Co. (OTCBB:GNAU). Florida-based General Automotive makes original equipment and aftermarket parts for distributors in the U.S. and internationally.
No, aftermarket auto parts isn't the sexiest business in the world, but as more drivers decide to keep driving their 1999 models instead of buying the 2009 model, the auto parts aftermarket is likely going to benefit. After all, you need to keep that old car functional and that means oil changes, brake service and related maintenance expenses. And the auto parts aftermarket is huge. The U.S. aftermarket for cars and light and heavy trucks is $240 billion and the global aftermarket is $370 billion, according to Forbes.
Get every piece of media for GNAU at www.BoardMark.com
Statements herein may contain forward-looking statements and are subject to significant risks and uncertainties affecting results. SmallCapSentinel.com is property of Integrity Media Inc. (IMI). IMI provides no assurance as to the subject company's plans or ability to effect proposed actions and cannot project capabilities, intent, resources, or experience. The subject companies haven't always approved statements made in this report. This report is neither a solicitation to buy nor offer to sell securities but is for information purposes only and shouldn't be used as basis for any investment decision. IMI isn't an investment advisor, analyst or licensed broker dealer and this report isn't investment advice. IMI has been paid $5,000 by Emerging Markets Consulting, a financial relations consultant to GNAU, for this report and related advertising services. Paid reports constitute a conflict of interest as to IMI's ability to remain objective in communication regarding subject companies.