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 7,700 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 fewer than 20 workers, and generates about $25 million annually.

    • The auto parts distribution industry consists of about 7,700 companies that employ about 175,700 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

                                  Jan 5, 2024 - Rising Demand for Hybrid Cars
                                  • Hybrid market share is expected to grow in 2024 as consumers continue to see hybrids as a comfortable choice in a transition away from internal combustion engine (ICE) vehicles, according to Edmunds’ “2024 Predictions” report in Repairer Driven News. The hybrid market share reached nearly 10% in November 2023, an increase of 99% year-over-year compared to the previous year’s 4.9% share. Hybrid vehicles are outpacing EV demand, as EV market share grew by 25% during the same period. According to Ivan Drury, director of insights at Edmunds, “Sales are taking off for the humble hybrid. You’d be hard-pressed to find a hybrid—they’re almost all sold out. They’re vehicles for people who want to live their life with more benefit and less complexity.” Shifts in consumer vehicle preferences affect demand for selected auto parts.
                                  • US manufacturing activity contracted in December 2023, falling below the baseline for growth for the fourteenth consecutive month, according to the Institute for Supply Management’s Manufacturing ISM Report on Business. The Manufacturing PMI registered 47.4% in December, up from the 46.7% recorded in November. A reading above 50% indicates manufacturing expansion. December’s New Orders Index remained in the contraction zone at 47.1%. The December Production Index was 50.3%, up from November’s 48.5%. Only one manufacturing industry tracked by the ISM reported growth in December: Primary Metals. The industries reporting contraction in December were Printing & Related Support Activities; Apparel, Leather & Allied Products; Plastics & Rubber Products; Machinery; Nonmetallic Mineral Products; Textile Mills; Petroleum & Coal Products; Paper Products; Wood Products; Fabricated Metal Products; Computer & Electronic Products; Miscellaneous Manufacturing; Furniture & Related Products; Electrical Equipment, Appliances & Components; Transportation Equipment; and Chemical Products.
                                  • Lower consumer spending, lingering supply chain problems, and inflation are expected to limit growth in the auto parts distributors industry, which is projected to grow at a nearly 4% CAGR from 2022 to 2027, according to a recent Inforum forecast. This rate is slower than the projected growth of the overall economy. The forecast follows several years of disruption during the pandemic, with a sales decrease of 8.9% in 2020, an increase of 11.2% in 2021, and an increase of 10.3% in 2022.
                                  • The United Auto Workers (UAW) union reached agreements with General Motors, Ford, and Stellantis, according to Repairer Driven News. The deals, ratified by union members, ended a “stand-up” strike method targeting specific plants that began in mid-September. Workers returned to work during the ratification process. The agreements are expected to improve wages and job security protections for union workers. The union represents nearly 150,000 autoworkers, and 46,000 employees went on strike at the peak of the strike.
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