Revenue will remain resilient, but investment into newer cars will limit growth opportunities
Los Angeles, CA (PRWEB) August 09, 2012
The Auto Parts Stores industry has expanded moderately during the past five years. Revenue will grow at an estimated average annual rate of 1.1% to $40.4 billion during the five years to 2012, although dropping 3.5% in 2012. The industry is a resilient spot in the automotive sector, which had two horrific years in 2008 and 2009. While this needs-based industry has a dedicated do-it-yourself (DIY) customer base, the number of consumers who would rather go to an auto mechanic to have their vehicles fixed fluctuates with economic cycles. For example, a drop in disposable income during the recession pushed more consumers to fix vehicle problems themselves, resulting in a slight growth in this industry. “Weak labor and credit markets depressed new vehicle sales, and the increasing average length of vehicle ownership compounded this trend in 2009, which continued in 2010,” says IBISWorld industry analyst Radia Amari. As consumers put off buying new cars and average vehicle ages rose, the need for repairs grew.
The largest national auto parts chains have aggressively expanded, often through acquisitions of smaller competitors. Industry leaders are introducing successful business practices and strategies from existing stores to improve productivity and profitability at acquired stores. As a result, major players have performed better than the industry over the five years to 2012. While major players have focused on retail expansion, they are also investing in providing auto parts to commercial customers. Commercial sales have been a critical growth segment, and industry players are leveraging their distribution centers to sell auto parts to the government, national and regional repair garages and service stations. This factor will provide a steady revenue stream for the industry because the market for wholesale auto parts has room for growth. This low-volatility industry will grow slowly and steadily through 2017. According to Amari, the commercial business segment will still provide demand resilience. National and regional repair garages have sought to lower prices on repairs to attract customers. Buying auto parts from large retailers essentially lowers garages' typical repair costs. At the same time, as the economy gains steam, consumers will invest in new vehicles and visit auto mechanics at increasing rates. These trends will limit revenue growth over the next five years.
The Auto Parts Stores industry has a high level of market share concentration, with the top four firms accounting for an estimated 70.3% of revenue. The vast majority of auto parts stores are independently-owned and operated establishments. However, the largest industry operators have steadily increased market share over the past five years, through new store openings and acquisitions. For example, major player O'Reilly Automotive purchased CSK Automotive, an auto parts chain concentrated in the West and Southwest regions, in 2008. Over the five years to 2012, mergers and acquisitions have become a significant trend among industry operators, directly increasing market share concentration. Furthermore, as the industry grows more mature, consolidation will increase. For more information, visit IBISWorld’s Auto Parts Stores in the US industry report page.
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IBISWorld industry Report Key Topics
This industry sells automotive parts and accessories, with the exception of tires.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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