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Suppliers cut advertising as auto slump continues

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The slump in auto sales is hitting suppliers hard, from the $240 billion parts industry to electronics manufacturers—and that's taking its toll on advertising. “Supplier advertising has dropped substantially due to the market conditions,” said Rick Greer, advertising director of Automotive News. “Until people start buying cars, manufacturers and suppliers are going to continue to struggle and, unfortunately, a lot of the advertising follows suit.” Parts maker Johnson Controls recently announced it would shutter 21 plants in the U.S. and Europe and is now considering more drastic measures, such as a shorter work week, if the auto sales drought continues. Parts supplier ArvinMeritor announced in early January that it planned to cut executive pay 10%. One comparative bright spot has been the telemantics industry, which provides vehicle GPS systems and other wireless and tracking devices aimed at improving business, fuel and overall efficiency. Before a slowdown in recent months, the industry had enjoyed annual sales growth of 25% a year since 2000, said Clem Driscoll, president of CJ Driscoll Associates, a market research and consulting firm that focuses on GPS and wireless products and services. Whether that trend continues depends on several variables, Driscoll said, including how many fleet operators go out of business and how many put off investing in telemantics systems. For local fleet tracking solutions, Driscoll estimates the U.S. market is approaching 2 million units in service out of a total market of 15 million vehicles. “All these solutions are designed to help fleet operators operate much more efficiently,” he said, adding that the hope is that fleet customers will realize this is a technology they can't afford to do without—even in a recession. —Patricia Riedman
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