Auto Parts Distributors

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 8,100 auto parts distributors in the US generate revenue by selling automotive parts, supplies, equipment, tools, and accessories to retailers and auto service providers. In general, auto parts distribution involves warehouse distributors (WD), jobbers, and retailers. Large WDs purchase and stock large quantities of parts and supplies from manufacturers and distribute them to jobbers. Jobbers purchase smaller quantities from WDs and sell them to retailers/dealers, repair shops, body shops, and dealership parts departments.

Complex, Long-Lasting Parts

Advances in technology have increased the quality, complexity, and average useful life of automotive parts.

Significant Investment in Inventory

As a result of new product proliferation in the auto industry, warehouse distributors (WD) stock hundreds of thousands of parts, components, and accessories to service the ever growing number of different brands and models.

Industry size & Structure

The average auto parts distributor operates out of a single location, employs 20-21 workers, and generates about $23-24 million annually.

    • The auto parts distribution industry consists of about 8,100 companies that employ about 168,400 workers and generate about $192 billion annually.
    • The industry is concentrated at the top and fragmented at the bottom; the top 50 companies account for 61% of sales. Many companies are small independent operators.
    • Large companies include Hahn Automotive Warehouse and Keystone Automotive.
    • Some large auto parts distributors have extensive retail operations.
                                  Industry Forecast
                                  Auto Parts Distributors Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Coronavirus Update

                                  May 4, 2022 - EVs Reshape Auto Industry
                                  • Soaring electric vehicle (EVs) sales is a signal that the internal combustion engine (ICE) is on the road to obsolescence, with potential dire consequences for many industry players, according to a recent article in CleanTechnia. Mufflers, fuel injection systems, and other engine parts in ICE-powered vehicles will no longer be needed. Instead, EVs require new types of car components like electric motors, lithium batteries, chargers, and controllers. Distributors of engine parts and exhaust systems, in particular, will need to adapt or be left behind. Moreover, because EVs have fewer moving parts and require less maintenance than ICE-powered vehicles, overall demand for replacement parts will fall.
                                  • Sales of alarms, locks, shields, and other devices to prevent the theft of catalytic converters are on the rise as thieves target the expensive devices. Theft of catalytic converters rose 325% nationwide between 2019 and 2020, according to the National Insurance Crime Bureau (NICB). Thieves, motivated largely by the sharp rise in the price of precious metals in catalytic converters, are removing catalytic converters by cutting them from beneath vehicles. Vehicles targeted the most by thieves include Ford F-Series pickup trucks, the Honda Accord and Prius, and Jeep Patriot, Carfax reports. Replacing stolen converters can cost as much as $1,500 to $3,000.
                                  • The Q1 2022 Automotive Supplier Barometer Index by the Original Equipment Suppliers Association registered “marginally optimistic” at 52. A reading over 50 indicates optimism. The Q1 result was up from the negative reading of 34 in Q3 2021. Small and medium suppliers were more optimistic but large suppliers remained pessimistic. Top threats to industry improvement include production slowdowns, supply chain shortages, labor availability, backlogs, cost pressures, a pandemic resurgence, and rising interest rates.
                                  • Auto parts distributors may be impacted by pandemic-induced changes in logistics strategies that are being implemented in the auto industry. Many companies in the supply network are reducing reliance on the just-in-time, lean production practices that have guided automotive manufacturers for nearly 40 years, according to Reuters news service. Firms are sourcing products from multiple suppliers, asking suppliers to hold in warehouses a backlog of critical inventory, and building out software networks to better track suppliers. Companies are looking at the total cost of any approach instead of simply its upfront price tag, according to BorgWarner Chief Executive Frederic Lissalde.
                                  • Vehicle miles traveled (VMT), an indicator demand for auto parts, increased 11.2% in 2021, according to the Federal Highway Administration. As a result, VMT recovered from the 11% decline in 2020. VMT in the first two months of 2022 was up 17.2% compared to a year ago.
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