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Letter to the Editor

This article originally appeared in the June 2009 Issue of INSIGHT

Road Trip

Well, statistics released by the Department of Labor are a mixed bag this month. Overall, it does seem that the economy is inching its way toward recovery. The pretty good news is that U.S. employers cut 539,000 jobs during the month of April, a number that sounds enormous but actually is the fewest lost since October 2008. The not-so-good news is that the unemployment rate rose to 8.9 percent, its highest mark since way back in September 1983. Some okay news is that almost nine percent unemployment is still better than what financial analysts predicted.

Among our automotive paint refinishing manufacturers, Valspar managed a nice recovery this month, with a per share stock price nearly 25 percent above its January 1 posting. DuPont and Akzo Nobel were both up a hair. PPG and Sherwin-Williams were off their New Year marks, but not by much.

The publicly traded automobile insurers that we track are still seeing some potholes on their road to improvement at the Dow. Progressive and Travelers have improved a bit. Allstate continues to fare badly at the stock exchange. With a current per share stock price of $24.30, Allstate has stalled at nearly 27 percent below its January mark of $33.26.

Despite their per share stock prices continuing to drive upward into the black on Wall Street, the national vehicle dealership companies that we track in our stock chart have miles of rough road yet ahead of them.

The Penske Automotive Group, with a per share price of just under $11, is up almost 30 percent YTD, as is CarMax. AutoNation has posted a per share stock price 50 percent higher than its beginning of this sorry year mark. Sonic Automotive, at $6.97 per share, is up an astounding 70 percent YTD. However, Sonic’s first quarter report definitely showed some bumps on the road upward. The national dealership group reported its net income down a whopping 87 percent.

Dealers across the nation got bad news recently. With Chrysler in bankruptcy and GM still trying to put the brakes on its drive toward a possible Chapter 11 filing, both auto makers are pulling the plug on many dealerships, even some of their oldest and most loyal.

Shops contacted for this month’s Market Watch survey were in a decidedly melancholy mood. Many consumers are just not getting cars repaired right now, holding off to see if the economy improves. It will be interesting to see if road trips get shortened or called off during vacation time this summer.

-Charles Baker-

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