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 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
Recent Developments
Mar 13, 2023 - Automotive Spending to Rise
- Consumers are expected to spend 11% more on automotive purchases in winter 2023 compared to winter 2022, according to the “KPMG Consumer Pulse Winter 2023” report in Chain Store Age. The report was based on a survey of 1,000 US consumers. The top reasons given by respondents for the increase include gas price increases (79%), driving more (28%), and toll increases (19%). According to KPMG consumer and retail leader Matt Kramer, “Our most recent consumer pulse survey showed consumers have largely better or equal pay, and are becoming fairly savvy at managing their household budget through shopping around, finding promotional discounts and deferring large purchases. Consumers will spend more in 2023 on essentials, particularly grocery, automotive and personal care, and also not miss out on events and experiences with select discretionary categories like travel and restaurants proving to be winners.”
- Consumer confidence levels declined in February 2023 for the second consecutive month, according to data from The Conference Board. The Conference Board’s consumer confidence index fell to 102.9 in February 2023 from 106 in January 2023, as high prices and rising interest rates affected consumers’ willingness to spend. According to Ataman Ozyildirim, a senior director of economics at The Conference Board, “Consumer confidence declined again in February. The decrease reflected large drops in confidence for households aged 35 to 54 and for households earning $35,000 or more.” Plans to purchase homes, vehicles, and appliances have cooled, in addition to a drop in vacation intentions, per Ozyildirim.
- 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.
- Auto sales in the US are forecast to fall nearly 8% in 2022 from 2021 and are down 20% from the market peak of 2016, according to Cox Automotive. Auto sales will finish near 13.9 million units, the lowest level since 2011 when the US was coming out of the Great Recession, per analysis by Cox of Kelley Blue Book sales estimates. General Motors ranked on top for sales in 2022, followed by Toyota. Affordability concerns for consumers and uneven vehicle supply hampered sales in 2022. According to Charles Chesbrough, senior economist at Cox Automotive, "Given the large improvement in supply levels, it seems likely that rising interest rates are now constraining demand in the retail auto market. With record-high prices and elevated loan rates, the pool of potential new-vehicle buyers is shrinking." New vehicle sales are projected to grow modestly in 2023 versus 2022, supported by increasing fleet volume.
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