Rising Gas Prices Cause Drivers to Defer Car Maintenance, Seek Discounts

Over the last two years, those who sell the products and services that keep cars on the road have seen wild swings in two of their key drivers of demand: miles driven and the price of gas.

After seeing both drop during shutdowns earlier in the pandemic, they’re now seeing a leap in the price of gas due to uncertainty around the war in Ukraine. AAA reported Monday (March 7) that the national average for a gallon of gas is 45 cents more than a week ago, 62 cents more than a month ago and $1.30 more than a year ago.

This increase has a disproportionate impact on lower-income individuals and is largely non-transferable for many drivers because they need to drive, and they are deeply invested in their current vehicle.

Read more: Retailers Face Brand New Competitor in Gas Prices

For professionals in the automotive parts and services sectors, cars that are driven are cars that are putting wear and tear on their components. That can be impacted by the rising cost of fuel and the damper that puts on drivers’ ability and willingness to spend.

Deferring Maintenance and Trading Down

Consumers still must drive to work, but they can reduce their discretionary driving. They can also reduce expenses in other ways, such as delaying scheduled service for their car — skipping the cost of oil changes and air filters in an effort to make up for what they’re paying at the pump.

Auto parts retailer O’Reilly Automotive has in the past cautioned investors that gas prices are a potential cause of volatility along with rising price levels in general and the pandemic.

“Historically, we’ve seen when prices increase, when gas prices increase, things like that, that the economically challenged consumer has less discretionary cash to spend,” O’Reilly Automotive CEO and Co-President Greg Johnson said in July during a quarterly earnings call. “Sometimes they will defer maintenance, and sometimes they’ll trade down the value spectrum.”

Affecting Miles Driven

Gas prices fluctuate and have done so for years, AutoZone Chairman, President and CEO Bill Rhodes said March 1 during the company’s quarterly earnings call. He said his auto parts retailer has found that the price of gas doesn’t really affect the auto parts industry until it hits the “magic point” of $4 a gallon — at which point it does affect miles driven.

“There’s nothing we change in our business as a result of gas prices,” Rhodes said. “Sometimes we’re going to have tailwinds like we’ve had, sometimes we’re going to have industry headwinds. We need to just manage this business through both environments and make sure that we optimize our performance based upon the macro environment.”

Aiming to Boost Share of Wallet

Another industry retailer, Advance Auto Parts, announced in January the launch of a partnership with Shell that enables members of Advance’s loyalty program to earn savings on gas at Shell stations when they purchase products from Advance.

During the company’s quarterly earnings call held Feb. 15, an analyst asked if the company was concerned that consumers might boost their use of this offering as gas prices rise.

Advance Auto Parts President and CEO Tom Greco said the program is engineered so that there are no financial consequences for Advance and it will boost the company’s share of wallet among its do-it-yourself (DIY) customers.

“You’ve got a situation where consumers are going to be really mindful of what they’re paying at the pump, and we’re enthusiastic about how our team is engaged with this gas rewards program,” Greco said. “We’re going to be working really hard in the stores, signing up new members, so this will be a nice little boost for us on DIY in 2022.”