Auto Parts Retailers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 16,400 auto parts retailers in the US sell automotive parts, supplies, and accessories. Companies may also sell batteries, lubricants, audio equipment, tires, and used products. While the majority of revenue typically comes from do-it-yourself (DIY) customers, large companies may have sizable commercial (do-it-for-me, DIFM) sales. Some companies offer repair, installation, or maintenance services.

Increasing Vehicle Complexity

The growing use of electronic components has increased the complexity of vehicles, resulting in a shift away from DIY jobs and towards DIFM.

Competition

Auto parts retailers compete with a variety of alternative sources, including traditional retailers (mass merchandisers, discount stores, hardware stores, supermarkets, drugstores, convenience stores) and auto dealers.

Industry size & Structure

The average auto parts retailer operates out of a single location, employs 22 workers, and generates about $3-4 million annually.

    • The auto parts retailing industry consists of about 16,400 companies that employ 366,800 workers and generate about $57 billion annually.
    • The industry is concentrated at the top and fragmented at the bottom; the top 20 firms account for about 59% of industry sales.
    • Large companies include AutoZone, Advance Auto Parts, and O'Reilly Automotive Stores.
    • Some large auto parts distributors have retail operations.
                              Industry Forecast
                              Auto Parts Retailers Industry Growth
                              Source: Vertical IQ and Inforum

                              Coronavirus Update

                              May 4, 2022 - Retailers Pass Higher Inventory Costs to Consumers
                              • Sales of alarms, locks, shields, and other devices to prevent the theft of catalytic converters are on the rise as thieves target the expensive devices. Theft of catalytic converters rose 325% nationwide between 2019 and 2020, according to the National Insurance Crime Bureau (NICB). Thieves, motivated largely by the sharp rise in the price of precious metals in catalytic converters, are removing catalytic converters by cutting them from beneath vehicles. Vehicles targeted the most by thieves include Ford F-Series pickup trucks, the Honda Accord and Prius, and Jeep Patriot, Carfax reports. Replacing stolen converters can cost as much as $1,500 to $3,000.
                              • Auto parts retailers are poised to benefit as the average vehicle age rises. The average car on US roads is now more than 12 years old, due to the semiconductor shortage, increased reliability, and the continuing effects of the Covid pandemic, IHS Markit reports. The average car age has increased every year for the last 20 years and is now 12.1 years - two months older than in 2020. Industry leader AutoZone considers vehicles seven years old or older to be “our kind of vehicles” because they generally are no longer under manufacturers’ warranties and require more maintenance and repair than newer vehicles, driving sales of replacement parts.
                              • Growth in e-commerce sales of aftermarket automotive parts nearly doubled between 2018 and 2021, according to the Auto Care Association (ACA) and The Automotive Aftermarket Suppliers Association (AASA). “E-commerce growth across all retail providers and marketplaces will hit $47 billion by 2025,” said Bill Hanvey, the president and CEO of ACA. The coronavirus pandemic played a major part in consumers’ adoption of online automotive shopping.
                              • Auto parts retailers are raising prices to pass higher inventory costs to customers and protect profit margins. The consumer price of motor vehicle parts and equipment jumped 14.3% in February 2022 compared to a year ago. Auto parts manufacturers upped their prices by 5.3% over the same period, but higher transportation costs and limited supply are figuring into the increased cost for retailers and consumers.
                              • Vehicle miles traveled (VMT), an indicator demand for auto parts, increased 11.2% in 2021, according to the Federal Highway Administration. As a result, VMT recovered from the 11% decline in 2020. VMT in the first two months of 2022 was up 17.2% compared to a year ago.
                              • Employment in the auto parts and accessories store industry increased 2.9% year over year in February 2022 but was down 0.6% from the pre-pandemic month of February 2020.
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