Consumer demand will fall, but commercial demand will keep the industry growing.
New York, NY (PRWEB) March 28, 2014
The Auto Parts Stores industry provides widely accepted automotive parts and accessories, such as engine pumps, batteries, radiators, thermostats and brake fluid. Revenue growth is determined by demand from households and commercial clients, including gas stations, fleet operators and auto-repair shops. Bolstered by improving economic conditions, such as falling unemployment and rising disposable income, industry revenue is expected to grow at an estimated annualized rate of 0.6% to $2.9 billion, including an estimated 1.8% increase in 2014. Furthermore, profit margins (i.e. earnings before interest and taxes) are moderate for the average industry company. Margins have increased over the past five years as a result of higher selling prices.
According to IBISWorld Industry Analyst Brandon Ruiz, “The industry has largely remained resilient despite the economic downturn.” A decline in disposable income and employment levels during recession resulted in a greater number of consumers transforming into do-it-yourself customers, opting to perform their own vehicle maintenance and repair work to cut costs. As a result, they visited auto parts stores in greater numbers. At the same time, the poor economic climate limited demand from commercial clients, such as automotive manufacturers, which rely on strong economic conditions to increase production. In other words, the same conditions (i.e. low disposable income and employment rates) that spurred consumer demand for industry products reduced demand from commercial clients. As the economy continues to improve, the reverse is expected, with demand from commercial clients increasing, while demand from consumers declining.
Revenue is projected to remain stable over the next five years. “Disposable income and employment levels will continue to rise, resulting in weaker demand from consumers, but stronger demand from commercial clients,” says Ruiz. Moreover, the number of motor vehicle registrations is expected trend higher. As a result, the potential size of the auto replacement part market will increase, benefiting industry operators. From 2014 to 2019, revenue for the Auto Parts Stores industry is forecast to grow.
For more information, visit IBISWorld’s Auto Parts Stores in Canada industry report page.
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IBISWorld industry Report Key Topics
The Auto Parts Stores in Canada industry sells automotive parts and accessories, with the exception of tires. Tire retailers are included in the Tire Dealers industry (IBISWorld report 44132CA).
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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