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 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 15,500 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 fewer than 20 workers, and generates about $3-4 million annually.

    • The auto parts retailing industry consists of about 15,500 companies that employ 398,000 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

                              Recent Developments

                              May 8, 2024 - Genuine Parts Acquires Largest NAPA Independent Store Owner
                              • Leading auto parts distributor Genuine Parts Company (GPC) has acquired the largest US independent NAPA store owner, according to Jobber Nation. The strategic acquisition of Motor Parts & Equipment (MPEC) announced in May 2024 adds 181 NAPA Auto Parts stores in Illinois, Indiana, Iowa, Michigan, Minnesota, and Wisconsin. According to GPC’s President and CEO-elect Will Stengel, the deal aligns with the company’s initiative to own more NAPA stores in priority markets. GPC has been acquiring independent NAPA member companies over the years. GPC’s distribution network in North America includes almost 80 distribution centers and 6,800 NAPA Auto Parts Stores, including about 1,500-company owned stores.
                              • Auto parts suppliers will receive $100 million in new grants from the US Department of Energy (DOE) to help small and medium-sized manufacturers convert facilities to electric parts supply and improve the sustainability of facilities, according to the Detroit News. The grants aim to improve the flow of EV parts made by US companies into the supply chain. Of the new funds, $50 million from the DOE’s Automotive Conversion Grant program will support small and medium-sized suppliers retooling from manufacturing parts for internal combustion engine vehicles to manufacturing parts for the EV supply chain. The DOE’s Implementation Grants Program will apply $50 million to assist auto suppliers upgrade their facilities to improve “energy and material efficiency, cybersecurity, or productivity, or reduce the greenhouse gas emissions,” per the White House press release. Funding for the grants comes from the Inflation Reduction Act and the Bipartisan Infrastructure Law, respectively.
                              • Consumer confidence levels fell in April 2024 from March 2024, marking a third consecutive month of weakness, according to data from The Conference Board. The Conference Board’s consumer confidence index was 97 in April 2024 from 103.1 in March 2024. According to Dana Peterson, Chief Economist at The Conference Board, “Confidence retreated further in April, reaching its lowest level since July 2022 as consumers became less positive about the current labor market situation, and more concerned about future business conditions, job availability, and income.” Peterson added that confidence declined among consumers of all age groups and for all income groups except those in the $25,000 to $49,999 range. Plans for vacations, home purchases, and large appliances decreased on a six-month basis.
                              • 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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