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Letter to the Editor

This article originally appeared in the July 2008 Issue of INSIGHT

Summertime - and the Living Is Pricey

Summertime has not been kind to our Collision Repair Suppliers so far. Only four of our suppliers have per share stock prices above their start of the year postings this month, although, thanks mostly to Snap On Tools, up over 22 percent YTD, and Solera Holdings, 14 percent higher YTD, our Supplier Index is off just a hair over one percent.

Economic news for the U.S. definitely is not the type of thing I’d want to read on a relaxing beach. The storm is still hanging over the housing market nationwide, with no sunshine in sight.

The water-logged Midwest fields pretty much guarantees a sharp rise in food prices across the nation. Ruined crops and higher than ever shipping costs will make it easy for me to carry $100 worth of groceries in one arm - maybe even in one bag.

Job statistics were cool and overcast this month, too. Employers cut payrolls by 62,000 in June, the sixth straight month of nationwide job losses, although at least the unemployment rate held steady at 5.5 percent. The national economy is in a fragile state.

Oil prices neared a record $146 a barrel in June on reports of declining U.S. stockpiles and the threat of conflict with Iran. Many delivery companies have already added a fuel surcharge to shipping invoices, and we are all feeling a bit queasy at the gas pumps. Remember when most gas stations would not accept a fifty dollar bill because making change for it would take most of the money in the cash register?

Our car dealership stocks have been feeling the heat for sure, but not in terms of consumers’ purchases. Sonic Auto-motive’s per share stock price of $15.59 is nearly 20 percent below its January standing. AutoNation and CarMax share prices are both off over ten percent YTD. The Penske Automo-tive Group continues to tread water somehow. The giant auto retailer’s per share stock price of $17.29 is down just about one percent this month.

CarMax’s first quarter re-port showed a 55 percent drop in net earnings. (See page 7 for details.) The company reported a drop in customer traffic and a huge depreciation in its SUV and truck segment.

Our insurer stocks have continued to trudge upward this month. Allstate’s stock price has about two dollars to go to get back up to its January level. Progressive is finally showing some improvement, up almost ten percent YTD, and Safeco is up over 21 percent YTD.

DuPont is our only refinish manufacturer to post a per share price higher than at the beginning of 2008. PPG and Sherwin-Williams lost ground on Wall Street this month. Both companies had per share stock prices more than 12 percent below their January prices.

-Charles Baker-

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