Auto Parts Manufacturers
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 3,700 auto parts manufacturers in the US produce components, modules, and systems for auto manufacturers (also known as original equipment manufacturers or OEMs), other parts suppliers, and the aftermarket. About 70% of automotive parts are for OEMs, while 30% are destined for the repair/modification market (aftermarket).
Vulnerability to Commodity Prices
Auto parts manufacturers are vulnerable to variability in costs of raw materials, particularly steel, oil, copper, resins, and rubber.
Dependence on Auto Industry
The auto manufacturing industry is global and dominated by a few large companies.
Industry size & Structure
The average auto parts manufacturer employs 155 workers and generates $65 million in annual revenue.
- The auto parts manufacturing industry consists of about 3,700 companies that employ 573,300 workers and generate $241 billion annually.
- Breakeven production for auto parts manufacturers is estimated to be between 13.5 million and 15 million units, according to the Original Equipment Suppliers Association.
- The five major component systems in an average internal combustion engine car include the body exterior (25% of total costs), interior (24%), electronics and electrical (18%), powertrain (18%), and chassis (15%), according to Munro & Associates.
- Large companies include Adient, BorgWarner, and Lear.
Industry Forecast
Auto Parts Manufacturers Industry Growth
Recent Developments
Nov 21, 2024 - Prices, Labor Costs Up
- Employment by auto parts manufacturers fell in September 2024 year over year while labor costs increased, according to the US Bureau of Labor Statistics (BLS). Employment decreased 0.8% in September 2024 compared to a year ago. Average wages for nonsupervisory employees at auto parts manufacturers were up 7.6% in September 2024 year over year, reaching $28.62 per hour. Producer prices for auto parts manufacturers were up 1% in September 2024 compared to a year ago. Sales of new autos rose 0.7% in August 2024 compared to a year ago and were up 9.2% from the previous month, according to the Bureau of Transportation Statistics.
- US auto production costs could increase by $40 billion due to president-elect Donald Trump’s plans for 10-20% tariffs on all imports and additional tariffs of up to 60% on Chinese goods, according to a report in Nikkei Asia. The increased tariffs, which would apply to finished cars and auto parts, could have a major impact on the auto industry, which has sales of 15 million vehicles per year. Many of the vehicles are imported from Mexico, Canada, and Japan. Mexico accounted for over 40% of auto parts imported into the US in the first half of 2024. According to calculations by consulting firm AlixPartners, higher tariffs on imported parts could increase the manufacturing cost per US-made car by up to $4,000. It is expected that the tariffs would lead automakers to increase production in the US. While research nonprofit organization Tax Foundation estimates the tariffs could increase US revenue by $3.8 trillion in the long term, it is anticipated that companies will cover the higher costs by raising prices, per the report.
- Consumers pre-ordering build-to-order (BTO) vehicles in North America direct from OEMs continued to grow in 2023, though slower than expected, according to new survey data by Cox Automotive in Wards Auto. According to the survey of 1,932 consumers in February, 221 consumers bought from legacy OEMs such as Ford, and 46 bought from start-ups such as Rivian and Tesla in the previous 12 months. That equated to 14% of new build-to-order vehicle buyers in 2023, compared to 17% in 2022 and 9% in 2021. According to Sean Tucker, a senior editor at Cox's Autotrader and Kelley Blue Book, "We'll see more 'build-to-order' over time, but I think it's taking a lot longer than most people thought, especially during the pandemic." The report also showed that nearly three-quarters of build-to-order and dealer buyers were happy with their purchase. US start-up Lucid Motors offers consumers choices online for color, appearance, and extras such as heated seats, sound systems, and driver-assistance systems with transparent pricing. Offering customers additional customization options may help automakers charge more for extra accessories.
- US manufacturing activity contracted in October 2024, marking the lowest Manufacturing PMI registered in 2024, according to the Institute for Supply Management’s Manufacturing ISM Report on Business. The Manufacturing PMI registered 46.5% in October, down 0.7 percentage points from the 47.2% recorded in September. A reading above 50% indicates manufacturing expansion. Five manufacturing industries reported growth in October: Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Computer & Electronic Products; and Miscellaneous Manufacturing. Industries reporting contraction in October were Textile Mills; Printing & Related Support Activities; Transportation Equipment; Chemical Products; Electrical Equipment, Appliances & Components; Machinery; Primary Metals; Nonmetallic Mineral Products; Plastics & Rubber Products; Fabricated Metal Products; and Paper Products.
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