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 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 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

                                  Coronavirus Update

                                  May 14, 2022 - Wholesale Prices Retreat From Record Highs
                                  • Wholesale used-vehicle prices fell 1% in April versus March, marking the third consecutive month of declines from a record high set in January, according to Cox Automotive’s Manheim Used Vehicle Value Index (MUVVI), which tracks prices of used vehicles sold at its US wholesale auctions. Wholesale vehicle prices have fallen 6.4% since January but remain very high. The MUVVI was up 14% in April versus a year ago. The price retreat comes as Manheim estimates that used vehicle retail sales declined 13% in April from March, suggesting that demand for used vehicles, an indicator of future demand for auto parts, is decreasing amid record high prices.
                                  • The trend toward more virtual auctions may impact used motor vehicle parts wholesalers who purchase used and damaged vehicles for parts at auction. Following KAR Global’s $2.2 billion sale of its US ADESA auto auction business to Carvana in May, the parent of the nation’s second-largest auction chain no longer has a physical auction presence in the US, reports Auto Remarketing. The sale represented a major advancement of KAR’s move away from physical auctions and toward becoming a digital marketplace for wholesale used vehicles and comes as more dealers are looking for alternatives to physical auctions. Carvana will now operate the marketplace in the US.
                                  • The shortage of new cars and inflation of used car prices are not expected to ease until 2024, according to Car and Driver. As a result, many consumers are expected to keep their older cars longer, which eventually cuts into the supply of scrapped vehicles and used parts for wholesalers to stock.
                                  • Sales of certified pre-owned (CPO) vehicles rose 14.3% in March 2022 compared to the previous month, but were down nearly 23.3% from March 2021, according to Cox Automotive. Used car sales are an indicator of future auto parts demand. High new car prices, limited inventory, and few factory incentives make used cars an attractive option. Wholesale used-vehicle prices fell 1% in April versus March, marking the third consecutive month of declines from a record high set in January 2022.
                                  • Supply chain disruptions and factory shutdowns in the automotive parts market have slowed the flow of products and the pace of repairs. Some used auto parts wholesalers have experienced an uptick in demand as used parts fill the gaps in the supply chain due to a shortage of new parts. The semiconductor shortage has also slowed the production of new cars and auto parts. Some salvage firms report an uptick in business as consumers seek out used parts to keep their old vehicles running because new and used car inventories are tight, and prices are high.
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