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 3,800 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 industry is highly cyclical and sensitive to changes in economic conditions.

Industry size & Structure

The average auto parts manufacturer employs 140 workers and generates $68 million in annual revenue.

    • The auto parts manufacturing industry consists of about 3,800 companies that employ 535,000 workers and generate $260 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 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 (spin-off of Johnson Controls), Delphi Automotive (BorgWarner), and Lear.
                                    Industry Forecast
                                    Auto Parts Manufacturers Industry Growth
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    Nov 10, 2022 - New Voice Capabilities for Cars
                                    • Automakers are developing new voice control capabilities for vehicles and adding voice commands that go deeper into the car’s controls, including verbal cues for turning on windshield wipers, adjusting mirrors, or raising the tailgate, The Wall Street Journal reported in November. In an effort to keep drivers’ eyes on the road – and not on dashboard screens – carmakers are expanding voice capabilities and using artificial intelligence to transform cars “into a travel companion of sorts,” WSJ wrote. More drivers are embracing voice controls as the technology has improved. Some 40% of owners said they used their in-vehicle voice systems at least once a week, up from 30% in 2019, according to a US survey conducted last year by research firm Strategy Analytics, according to WSJ.
                                    • 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.
                                    • Employers added a seasonally adjusted 263,000 jobs in September and the unemployment rate fell to 3.5% from 3.7%, according to Labor Department figures. The increase in jobs, while still robust, was less than August’s increase of 315,000 and the monthly average gain of over 400,000 during the first half of 2022. Manufacturing employment continued to trend up, adding 22,000 jobs in September. Job gains occurred in motor vehicles and parts (+8,000), fabricated metal products (+6,000), and electrical equipment and appliances (+3,000). Manufacturing has added an average of 36,000 jobs per month thus far in 2022. In September, employment in construction – a driver of demand for hardware – continued to trend up (+19,000), in line with average monthly job growth in the first 8 months of this year.
                                    • 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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