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 Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation 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

                                  Recent Developments

                                  Nov 10, 2022 - Scare US Warehouse Space
                                  • A shortage of US warehouse space is squeezing out smaller distributors as big retailers fill storage facilities with growing stockpiles of inventory, The Wall Street Journal reports. Logistics and real-estate specialists told WSJ that many large retailers are demanding more room to store excess inventories, driving up costs for smaller companies and in some cases driving them out. Small distributors are at a disadvantage because bigger tenants are willing and able to pay higher rates for scarce space. The nationwide vacancy rate for industrial real estate was 3.2% in Q3 2022, down 3.8% year over year, according to commercial real estate services firm Cushman & Wakefield (C&W). The limited supply has pushed rental rates to an average of about $8.70 a square foot in Q3, compared with $7.13 a square foot in Q3 2021, according to C&W.
                                  • The European Union in October 2022 approved a ban on the sale of new gasoline and diesel cars and vans by 2035, the AP reported. Under the agreement by EU lawmakers and member countries, carmakers will be required to reduce the emissions of new cars sold by 55% in 2030, compared to 2021, before reaching a 100% cut five years later. The ban is part of the EU’s effort to achieve the goal of reducing greenhouse gas emissions by 55% over this decade. In the US, California recently approved a similar ban on the sale of new gasoline-powered cars and trucks by 2035. The European Parliament and member states must formally approve the agreement before it comes into force, according to the AP.
                                  • The online aftermarket auto parts catalog has formed a partnership with e-commerce platform Shopify to bring together the cataloging of ShowMeTheParts with the reach, features, and flexibility of Shopify online stores, Counterman reported in September 2022. Unlike other third-party platforms – notably Amazon or eBay – a Shopify store gives distributors complete control over the customer experience. Moreover, users that partner with Shopify aren’t selling beside their competition, and instead will have the full attention of their customers in their own custom branded store.
                                  • Accelerating the transition to electric vehicles, the California Air Resources Board in August 2022 approved regulations banning the sale of new gasoline-powered cars by 2035. All new passenger vehicles sold in the state would then have to run on electricity or hydrogen. While the rule doesn’t force California’s car shoppers to buy these vehicles, it creates fines for automakers who fail to comply with the targets. The penalties are stiff enough that experts believe automakers will comply with the new mandates. The Clean Air Act grants California – the nation’s largest auto market – the ability to impose emissions standards on new vehicles that are stricter than those at the national level and which other states can then follow. Several other states have announced similar plans including Virginia, Washington, Oregon, Massachusetts, and New York.
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