Used Motor Vehicle Parts Wholesalers

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 1,500 used motor vehicle parts wholesalers in the US purchase used and damaged vehicles, dismantle them, and resell the related parts. Major revenue categories include used automotive parts, accessories, and equipment; and new and rebuilt automotive parts and supplies. Firms may also offer generic auto parts and supplies, refurbished parts, or warranties. Some companies offer related services, such as towing or repair.

Uneven Supply

Supply of salvaged vehicles varies over time and firms face increasing competition for vehicles from overseas buyers.

Dependence On Auto Industry And Driving Trends

The used motor vehicle parts industry is dependent on vehicle accidents and mechanical failures to both drive demand for replacement parts and provide a source of supply for recycled and refurbished parts.

Industry size & Structure

The average used motor vehicle parts wholesaler operates out of a single location, employs 13-14 workers, and generates $3-4 million annually.

    • The used motor vehicle part wholesale industry consists of 1,500 firms that employ about 20,600 workers and generate about $5.4 billion annually.
    • The industry is somewhat fragmented; the top 50 companies account for 64% of industry revenue.
    • Large companies with auto salvage operations include LKQ and Schnitzer Steel.
    • While some large companies have operations in foreign countries, Internet trading allows firms of all sizes to buy and sell used motor vehicles for parts from almost any location.
                                  Industry Forecast
                                  Used Motor Vehicle Parts Wholesalers Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Nov 14, 2022 - Used Car Prices Fall
                                  • Used car prices across all market segments fell 10% in October compared with the year earlier period, The Detroit Bureau reports. Prices for used luxury vehicles declined the most, down 13.5% year over year, followed by SUVs (-12.3%), midsize cars (-10.4%), pickup trucks (-8.4%), vans (-6.3%) and compacts (-5.4%), according to the Manheim Used Vehicle Value Index. The index showed wholesale used vehicle prices (on an adjusted basis) fell 3% in September from August. September 2022 was the first month since May 2020 that wholesale values declined year over year. Cox Automotive’s Chris Frey expects the downward trend to continue but not as dramatically. “Our expectation is that depreciation over the next three months will be slower and lower than what we’ve just seen this past quarter."
                                  • Canada’s Ritchie Bros. Auctioneers in November agreed to purchase vehicle auction service provider Insurance Auto Auctions Inc. (IAA) for $7.3 billion in stock and cash. The sale will diversify Ritchie Bros.’ global asset management and disposition business and customer base by providing a presence in vehicle remarketing. The combined company will have new opportunities to advance its salvage yard strategy more efficiently in key regions across the United States and internationally, and to expand IAA’s broader capacity, including for catastrophic weather events, according to an IAA press release. The sale is expected to close in the first half of 2023. Used motor vehicle parts wholesalers typically procure damaged or totaled vehicles through regional or online salvage auctions and mine the vehicles for salable parts and components.
                                  • As new-car inventory begins to stabilize, J.D. Power forecasts that used-vehicle values will start to return to more normal levels by late this year and into 2023. “We do expect used prices to cool once new-vehicle production and inventories begin to recover,” J.D. Power’s David Paris told in August, adding that in 2022 “We expect many of the hangover factors to begin dissipating, causing residual values to begin moving back toward normal levels.” Residual values on 3-year-old vehicles will dissipate from 68% currently to a “historically high” new normal of 54% by 2024. The expected decline in used car prices may cause shoppers who can afford to wait to delay purchasing a used car until later this year or into next.
                                  • Demand for used and salvaged vehicle parts is rising as original equipment manufacturers (OEMs) struggle with supply chain issues, with some motorists waiting months for replacement parts. Vehicle parts in short supply include catalytic converters, brake parts, engine sensors, transmission control modules, and windshields. Motorists facing long delays at dealerships for backordered parts, increasingly are turning to used car parts from salvage yards, swap shops, and flea markets. The auto parts shortage is affecting the DIY and DIFM (do-it-for-me) markets alike with individuals and auto repair shops both struggling to find replacement parts.
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