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
Feb 13, 2025 - Auto Industry Worries of Looming Tariffs
- With the US threatening 25% tariffs on Mexico and Canada beginning in March, along with the already 25% tariff it slapped on all aluminum and steel imports, virtually every automotive-related business is facing steep cost increases. Six out of every 10 auto replacement parts are imported from Mexico, Canada, and China (facing its own 10% US tariffs), according to The American Property Casualty Insurance Association. Auto parts in North America frequently cross borders of all three countries - sometimes multiple times - and would be levied with each crossing. If replacement parts and new cars all become more expensive, insurance rates and repair costs will also increase. This could drive consumers to buy used vehicles instead, but those costs would also increase due to high demand. Costs for auto parts had finally fallen after price surges in 2021 and 2022, making the tariff threat particularly worrisome to the industry.
- Employment by auto parts manufacturers fell 1.9% in November 2024 year over year while labor costs increased, according to the US Bureau of Labor Statistics (BLS). Average wages for nonsupervisory employees at auto parts manufacturers were up 12% in November 2024 year over year, reaching $30.07 per hour. The Producer Price Index for auto parts ticked up a slight 0.7% in December 2024 compared to a year ago. That number will skyrocket in 2025 if the Trump administration follows through on 25% tariffs on Mexican and Canadian imports. There is no such thing as an automobile fully made in the US. Virtually all cars contain parts from Mexico and Canada, and billions of dollars worth of auto merchandise crosses North American borders every year. Industry analysts expect tariffs to increase a car’s price by an average of $3,000.
- The Trump administration issued an executive order in January 2025 that ended a Biden era target of 50% of all new cars sold in the US being electric by 2030. The policy also ended EV tax breaks for car buyers and rescinds funding for the expansion of EV charging infrastructure. The response from car and parts manufacturers has been mixed. Industry leaders admit a shift away from EVs would be difficult given the billions of dollars manufacturers have already invested in EV capital investment. “These [factories] are 20- to 30-year investments. When you build a factory, it doesn’t come and go,” said K. Venkadesh Prasad, SVP at the Center for Automotive Research. Some also question the effect the policy will have on automotive jobs - only a small percentage of labor works on EVs. Experts predict small changes such as an increase in electric/gas hybrid production and portable chargers.
- 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.
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