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Rise in fuel price to hit auto spares revenues in Europe

parts sales
Can we use a slow down in new parts sales to boost our own revenues?
The credit ratings agency, Moodys recently reported that the steep rise in European fuel prices could hit the revenues of suppliers of brakes, tyres and other spare parts in the short term as consumers adopt more energy-efficient driving behaviour to keep their fuel costs down.

The report goes on to say that Moody’s expects that higher fuel prices could also affect suppliers that focus on automotive manufacturers.

“We expect motorists in Europe to increasingly adopt more energy-efficient driving behaviour or avoid using their cars to keep their fuel spending under control,” says Rainer Neidnig, a Vice President - Senior Analyst in Moody’s Corporate Finance Group and co-author of the report. “As this behaviour reduces wear and tear, we could see demand for replacement car equipment such as tyres and brakes to decline, at least temporarily, thereby affecting auto suppliers’ aftermarket revenues.”

High fuel costs will probably also affect demand patterns for new cars in the medium term and this could affect suppliers who supply car manufacturers, or original equipment manufacturers. However, the effect will be less clear: drivers may delay new car purchases or choose smaller cars, which will harm suppliers’ revenues. On the other hand, higher fuel prices will probably accelerate demand for more fuel-efficient cars, which will help suppliers that can provide fuel-saving technology to manufacturers.
So where does the auto recycler fit in all this?
As with the new parts suppliers, reduced vehicle use will mean reduced parts wear but we have the advantage of being able to offer a more cost affective product which, if we market ourselves well, could lead to an increase in demand for used parts. It is at times like this that proper standards for used parts could play a big part in giving confidence to potential new customers who have previously only bought new.

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