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

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 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
                                    Source: Vertical IQ and Inforum

                                    Recent Developments

                                    May 22, 2024 - Auto Sales Up, Shipments Down
                                    • Sales of new automobiles were up 1.2% in March 2024 compared to a year ago and were up 20.8% from the previous month, according to data from the Bureau of Transportation. Shipments and new orders of motor vehicle bodies, parts, and trailers fell 5.3% and 4.8%, respectively, in March 2024 compared to a year ago, according to the latest data from the Census Bureau. Inventories for motor vehicle bodies, parts, and trailers were up 1.6% from a year ago and were essentially flat from the previous month.
                                    • 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.”
                                    • US manufacturing activity contracted in April 2024 after a brief expansion in March, according to the Institute for Supply Management’s Manufacturing ISM Report on Business. The Manufacturing PMI registered 49.2% in April, down 1.1 percentage points from the 50.3% recorded in March. A reading above 50% indicates manufacturing expansion. Prior to March’s expansion, US manufacturing activity had fallen below the baseline for growth for 16 consecutive months. April’s New Orders Index was in the contraction zone at 49.1%. The April Production Index was 51.3%, a decrease from March’s 54.6%. Nine manufacturing industries tracked by the ISM reported growth in April: Nonmetallic Mineral Products; Printing & Related Support Activities; Primary Metals; Textile Mills; Electrical Equipment, Appliances & Components; Petroleum & Coal Products; Transportation Equipment; Chemical Products; and Plastics & Rubber Products. The industries reporting contraction in April were Miscellaneous Manufacturing; Machinery; Furniture & Related Products; Wood Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; and Paper Products.
                                    • 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.
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