State of uncertainty

AGR sales relatively flat amidst changing market conditions
Jenni Chase
January 1, 2009

Despite problems at the auto manufacturer level and fuel prices that crested $4 a gallon, auto glass replacement shop sales increased by 2.9 percent in 2008 to $3.1 billion, according to the Automotive Aftermarket Industry Association, Bethesda, Md. With the future of the Big 3—General Motors, Ford and Chrysler— in doubt, however, 2009 remains a question mark for the U.S. automotive industry, including the auto glass segment.

New vehicle sales
Given the current state of the economy and the Big 3's precarious situation, it's difficult to pinpoint where vehicle sales will land in 2009. Last fall, J.D. Power and Associates, Westlake Village, Calif., projected U.S. new light-vehicle sales, including retail and fleet, would drop to 13.6 million units in 2008, a 16 percent decline from the 16.1 million units sold the previous year. 2009 new light-vehicle sales were predicted to drop even further, to 13.2 million units.

In a Dec. 4 presentation to Congress, Ford President and CEO Alan Mulally said the manufacturer expects U.S. industry sales for 2010 and 2011 of 14.5 million units and 15.5 million units, respectively.

“Buyers are both voluntarily and involuntarily exiting the U.S. new-vehicle market,” said Jeff Schuster, executive director of automotive forecasting for J.D. Power and Associates, in a statement. “Falling trade-in equity, fewer leasing options, credit market restructuring and the increased migration to used vehicles are all putting added pressure on the U.S. new-vehicle sales market in 2009. Any truly pronounced recovery appears to be more than 18 months away.”

Repair and replacement rates
Approximately two-thirds of the decline in retail sales can be attributed to consumers delaying vehicle purchases, according to J.D. Power and Associates. On average, consumers kept their vehicles four months longer in 2008 compared to 2007, up from 67 months to 71 months, the firm reports.

“If people are looking at keeping their cars longer, chances are they’ll maintain what they have a little better,” says Glen Moses, technical director for Belron US, Columbus, Ohio. “With a lot of product out there, I think the news for the replacement glass industry is actually very good.”

Owners of vehicles 4 years old to 7 years old replace their windshields 3.74 times over the life of the vehicle, according to the AAIA "2009 Automotive Aftermarket eFactbook."

Driver habits
Of course, with the exception of hail storms and other weather-related events, consumers have to drive their vehicles to incur windshield damage. Yet, with fuel costs unstable at best and record-breaking at worst, it’s not clear how many miles Americans will cover in 2009. During the January 2008 to August 2008 time period, U.S. drivers logged 67.2 billion miles less than they did in the same period in 2007, down 3.3 percent, according to the U.S. Department of Transportation Federal Highway Administration.

Another indication Americans might be driving less is the declining rate of fuel consumption. The use of all petroleum products was expected to decline substantially in 2008, driven by the increase in prices and a weakening economy during the second half of the year, according to the Energy Information Administration’s Nov. 12 “Short-Term Energy Outlook.”

“This marks the first time since 1980 that annual total petroleum consumption is expected to decline by more than 1 million barrels per day,” according to the report. “In 2009, total petroleum product consumption is projected to sink by a further 250,000 barrels per day, or 1.3 percent.”

Fuel is just one piece of the driving puzzle. Vehicle maintenance and tires are among the other costs drivers can expect to incur. In 2008, it cost 23.5 cents per mile to drive a four-wheel-drive SUV; 19.4 cents per mile to drive a minivan; 19.1 cents per mile to drive a large sedan; 17.9 cents per mile to drive a medium sedan; and 13.9 cents per mile to drive a small sedan, according to the AAIA. As Americans tighten their belts this year, these costs might impact how often they hit the road.

Design trends
The good news is auto manufacturers continue to feature more glass in their vehicle designs, presenting more opportunity for replacement. Domestic and foreign manufacturers alike have picked up on the glass-roof trend, for example, says Mark Gold, director of applications for Solutia, St. Louis. “The trend that started in Europe is for a large glass roof that gives the feeling of a convertible with the protection of a traditional roof,” he says. Increasingly, manufacturers are specifying laminated glass in these applications for the added solar, safety and acoustic benefits. Gold reports there are more than 18 vehicle models globally that offer a laminated panoramic roof, and more are on the way.

Another trend that might be headed to the United States is the panoramic Cielo windshield/roof, Gold says. A popular option in Europe, the Cielo windshield is a continuous piece of laminated glass that begins at the cowl and ends at the rear of the vehicle roof.

Year-to-date sales
Let’s face it. The auto glass industry has already felt the effects of many of these trends. Yet, AGR sales outpaced sales in the collision repair industry—defined as paint and body repair shops; dealership-operated repair shops; automotive glass repair shops; and other repair shops doing paint, body, and glass repair and replacement—by 0.9 percent in the 1999-2008 time period, according to the AAIA. AGR sales showed a growth rate of 5.9 percent during the 10-year period compared to 5.0 percent in the collision repair industry as a whole.

For additional insight to the year ahead, see "The Big 3 effect."

Jenni Chase is editorial director of Glass Magazine, e-glass weekly and Write her at