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Letter to the Editor

This article originally appeared in the December 2003 Issue of INSIGHT

Key Notes and Indications

That faint scent of cautious optimism picked up last month by sensitive market noses seems stronger in this final month of 2003. It has been a long time since I have been able to say that it has been a great month.

November was a great month for our INSIGHT Fund Index, up over 16 percent since January. Our auto insurers’ index is up by almost one-third, and overall the stocks we track are beating the Dow’s 13 percent year-to-date increase.

Keystone Automotive Industries has reported a record quarter (See article on page 3.) A couple of elements not mentioned in Keystone’s financial report, but discussed in a telephone session by Keystone CEO Charlie Hogarty with financial analysts, may very well potentially impact the company’s performance in the New Year.

The first fact was an overall three percent increase in sales pushed through in September by Keystone management.

Secondly, there was a production problem on bumper covers in Keystone’s Michigan plant, reportedly related to finishing systems. This perhaps may tarnish Keystone’s image as an OE supplier for fascias. The company will definitely have to take some immediate corrective measures.

On general company financial standing, Hogarty commented that the overall difference in price between OE and aftermarket is at a 32 percent level. However, some competitive parts are at a 15 percent differential. Keystone’s mix of business still favors aftermarket parts.

Growing business segments at the company are paint and wheels.

The continuing decline in overall market volume for collision repair facilities is impacting all industry suppliers. This month’s TrendLine (on page 18) indicates that nationally, the collision repair market is down five percent from one year ago according to shops that responded to our survey in November.

Roger Penske certainly has the right car keys over at the United Auto Group. The UAG stock price has more than doubled since the first day of 2003. Every indication is that he’ll continue driving that particular vehicle carefully and confidently in 2004.

-Charles Baker-

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