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
Sep 26, 2024 - New Orders Fall, Inventories Up
- New orders for motor vehicle bodies, parts, and trailers fell 5.7% in June 2024 compared to a year ago and were down 5.9% from the previous month, according to the US Census Bureau. Inventories of motor vehicle bodies, parts, and trailers were up 0.7% in June 2024 compared to a year ago and were down 0.5% from the previous month. Sales of new autos fell 10.2% in June 2024 compared to a year ago and were down 10.2% from the previous month, according to the Bureau of Transportation Statistics. The decline may have been affected by a June cyberattack on a software provider, stalling sales at 15,000 dealers in North America. Motor vehicle bodies parts and trailers shipments decreased 4.5% in June 2024 compared to a year ago and were down 4.7% from the previous month, according to the US Census Bureau.
- 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 August 2024 for the fifth consecutive month after a brief expansion in March, according to the Institute for Supply Management’s Manufacturing ISM Report on Business. The Manufacturing PMI registered 47.2% in August, up 0.4 percentage points from the 46.8% recorded in July. A reading above 50% indicates manufacturing expansion. Prior to the uptick in March, US manufacturing activity had fallen below the baseline for growth for 16 consecutive months. August’s New Orders Index was in the contraction zone at 44.6%. The August Production Index was 44.8%, a decrease from July’s 45.9%. Five manufacturing industries tracked by the ISM reported growth in August: Primary Metals; Petroleum & Coal Products; Furniture & Related Products; Food, Beverage, and Tobacco Products; and Computer & Electronic Products. The industries reporting contraction in August were Textile Mills; Printing & Related Support Activities; Nonmetallic Mineral Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Transportation Equipment; Wood Products; Machinery; Paper Products; Chemical Products; and Miscellaneous Manufacturing.
- The average age of cars and light trucks in operation on US roads reached a new record in 2024 of 12.6 years, up by two months over 2023, according to S&P Global Mobility data. More than 286 million vehicles were in operation in the US in 2024, which was 2 million higher than in 2023. In 2024, 35% of vehicles were under six years old, driven by the impact of the COVID-19 pandemic and supply chain issues that disrupted the vehicle supply. Vehicles in the 6-14 year range and older are expected to represent 70% or more of vehicles in operation for the next five years. In terms of electric vehicles (EVs), there were 3.2 million EVs in operation in 2024. The number of EV registrations in 2023 passed 1 million units for the first time, which was a 52% increase compared to 2022. According to Todd Campau, aftermarket practice lead at S&P Global Mobility, "We started to see headwinds in EV sales growth in late 2023, and though there will be some challenges on the road to EV adoption that could drive EV average age up, we still expect significant growth in the share of electric vehicles in operation over the next decade.”
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