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

                                    Mar 13, 2023 - Sales Climb for Stick Shifts
                                    • Sales of stick shifts are on the rise in 2023, accounting for 1.7% of new car sales compared to 1.2% in 2022 and 0.9% in 2021, according to data from JD Power in the Wall Street Journal. Car manufacturers are adding more models with stick shifts to their lineups to accommodate growing demand. Mini is adding four new manual models in March 2023. Acura added a manual option back to the Integra in 2022 after discontinuing stick shifts in its lineup in 2015. Of the five versions of the MX-5 Miata by Mazda Motor Corp., three are manual transmissions. The appeal for many younger drivers is that driving a clutch is more fun and runs counter to an increasingly automated world. Younger consumers accounted for more than half who bought manual Integras (between 18 and 46 years old) and a quarter of those who bought manual Miatas (between 18 and 35 years old).
                                    • US manufacturing activity contracted in February 2023, falling below the baseline for growth for the fourth consecutive month, according to the Institute for Supply Management’s Manufacturing ISM Report on Business. The Manufacturing PMI registered 47.7 in February, a slight change from the 47.4 recorded in January. A reading above 50% indicates manufacturing expansion. In February, the ISM’s Purchasing Managers Index (PMI) fell to 47.4%, down from 48.4% in January. February’s New Orders Index remained in the contraction zone at 47%. The February Production Index decreased slightly to 47.3%. Of the manufacturing industries tracked by the ISM, four reported growth in February: Apparel, Leather & Allied Products; Transportation Equipment; Petroleum & Coal Products; and Electrical Equipment, Appliances & Components. Fourteen sectors reported contraction, including Computer & Electronic Products, Fabricated Metal Products, Nonmetallic Mineral Products, Plastics & Rubber Products, Primary Metals, Textile Mills, and Wood Products.
                                    • Tesla is working to lower car repair costs for consumers by providing needed parts and tweaking the car design, according to FenderBender. Tesla founder and CEO Elon Musk discussed during a recent earnings call that providing spare parts and making small changes in design can have an “enormous effect on the repair cost” of Tesla vehicles. According to the report, online data from salvage auction houses Copart and IAA found that most of the 120 totaled Model Y Tesla cars had fewer than 10,000 miles. The online data does not reveal the damage details of the totaled cars, but insurance companies often total a car if the repairs are too expensive. Analysis by Reuters showed that one Model Y Tesla vehicle listed by the IAA in January 2023 had a retail price of about $61,000 but had incurred a front collision with repairs estimated at $50,000.
                                    • Electric vehicle sales in the US jumped by two-thirds in 2022 even as the broader auto market decreased, according to the WSJ. Fully electric vehicles accounted for nearly 6% of all cars sold in the US in 2022, totaling more than 807,000, up from a 3.2% share the previous year, according to Motor Intelligence data reported by the WSJ. Meanwhile, total US auto sales dropped 8% in 2022 from a year earlier. Tesla continues to command the US electric vehicle market, but its share fell to 65% in 2022 from 72% in 2021 as competition continued to grow in the EV space. The Ford Motor Company placed second for EV sales, accounting for 7.6% of the US market for fully electric vehicles, followed by Hyundai Motor Co. and Kia Corp. combined for third place for 7.1% of the market. Offering consumers more models and price points are a priority for EV makers. According to JD Power data cited in the article, 53 EV models are on the market or will go on sale this year, compared to 625 separate vehicle models sold in the US in 2022.
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