This industry classification is comprised of establishments primarily engaged in the wholesale distribution of motor vehicle parts and supplies, such as accessories, tools, and equipment. Establishments primarily engaged in the distribution of used motor vehicle parts are classified in SIC 5015: Motor Vehicle Parts, Used.
441310 (Automotive Parts and Accessories Stores)
421120 (Motor Vehicle Supplies and New Part Wholesalers)
In essence, the auto parts industry concentrates on two different markets. One side consists of several tiers of original equipment manufacturers (OEMs) that supply automobile manufacturers with parts for new automobiles. Entering the 2000s, weak economic conditions coupled with a decline in automobile production led to a period of difficult times for this portion of the industry. However, things turned around in 2002, as automobile sales—and new vehicle production—increased. Value Line estimated that sales of original equipment in the auto parts industry would reach $142.5 billion in 2002.
In addition to OEMs, other manufacturers and wholesalers serve the automotive aftermarket, providing replacement parts for used vehicles. This sector of the industry continues to experience consolidation. In addition, the introduction of high-quality parts has restricted aftermarket growth somewhat, as consumers do not need to replace parts as frequently. According to the Automotive Aftermarket Industry Association, total automotive aftermarket retail sales surpassed $178 billion in 2001. However, this figure includes more than just parts and accessories. When service repair and tire sales are factored out, this figure is about $35 billion.
Traditionally, the distribution process for delivering motor vehicle supplies and parts to the marketplace took place in three steps. Manufacturers sold products to warehouse distributors, who then sold them to "jobbers" who, in turn, sold them to customers such as service stations. Jobbers offered benefits such as the extension of credit and wholesale discounts, and often sold items at retail price to the "do-it-yourself" market segment. Warehouse distributors provided other advantages, such as accessible inventory and a process for returning defective parts and stock that did not sell.
A variation of this process, termed "programmed distribution," emerged, as jobbers united to make purchasing decisions. The largest and one of the oldest organizations of this type was the North American Parts Association (NAPA), which provided services such as volume buying, private labeling, and advertising.
During the 1980s and early 1990s, the distribution process evolved: jobbers began to make purchases directly from manufacturers, bypassing the warehouse distributors. Some claimed it would reduce costs by streamlining the industry; others claimed it merely shifted the costs of maintaining an inventory and handling returns to the manufacturer.
According to the Automotive Aftermarket Industry Association (AAIA), by 2002 consolidation had significantly scaled back the number of participants in the aftermarket portion of the industry. Much of this activity took place throughout the 1990s. Through consolidation, the number of establishments increased, while the number of owners decreased. For example, as illustrated in Automotive Marketing Online, in 1987 the top 100 chains owned 2,771 stores. By contrast, in 1999 the top four chains owned more than 6,000 stores.
Assimilation was another growing trend that became evident during the 1990s. With assimilation, the lines between the traditional and retail channels become blurred, and the use of the three-step distribution process has declined. As revealed in the November 2002 issue of Aftermarket Business, industry assimilation was still taking place in the early 2000s, and conditions were not expected to change in the near future.
Although growth in the automotive aftermarket as a whole has slowed down, the aging of the car population and the rise in miles driven bode well for industry's future, according to industry analysts and the AAIA. The Freedonia Group forecast North American aftermarket manufacturer-level sales would reach $53 billion by 2006, and indicated that Mexico would outpace the United States and Canada in terms of retail aftermarket growth.
In 2001 the top industry leader in motor vehicle supplies and new parts was Delphi Corp., based in Troy, Michigan. With about $26.1 billion in sales and with 195,000 employees, Delphi (a spin-off of General Motors) was by far the biggest company in this industry. Next in line was Visteon Corp. (a spin-off of Ford Motor Co.) with 2001 sales of $17.8 billion and 79,000 employees. The aftermarket side of the industry was led by Genuine Parts Co. Based in Atlanta, Georgia, in 2001 Genuine Parts recorded $8.2 billion in sales and employed 31,000 workers.
Automotive Aftermarket Industry Association. "The U.S. Motor Vehicle Aftermarket," 22 December 2002. Available from http://www.aftermarket.org .
"Autos & Auto Parts." Standard & Poor's Industry Surveys. New York: The McGraw-Hill Companies. 13 June 2002.
"Auto Parts Industry." New York: Value Line Publishing Inc., 2 October 2002.
Guyette, James E. "DIFM, Discounters to Gain Marketshare, Says Study." Aftermarket Business, November 2002.
"The Merging Aftermarket." Automotive Marketing Online. Available from http://www.automotivemarketing.com .
Ward's Business Directory of U.S. Private and Public Companies. Volume 5. Farmington Hills, MI: Gale Group, 1999.
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