This is marketing research on the Automotive Aftermarket industry and can include information on the background, market structure, definitions, competitors, trends and developments of automotive aftermarket and is related to other topics such as cars, trucks, vehicles, parts and accessories.

Table of Contents

[edit] Background

The term aftermarket defines the combined network of traders who design and sell vehicular components that are made to replace the automotive stock manufacturer's parts. Car buyers use aftermarket products either in order to modify the appearance or performance of the vehicle or to replace a stock item at a lower price. Similar principles that apply to the design of a vehicle that would appeal to the maximum number of consumers at a reasonable price for the vehicle's class also apply to the aftermarket as well. Appearance, price, reliability, and fuel economy are the key factors that apply.

The aftermarket is a viable option by which one may customize a vehicle to suit a particular personality or to provide a role not satisfied by the stock vehicle or to simply express individuality. Aggressive styling and/or performance enhancements, which might not be important to, or wanted by the average buyer, usually make up a significant portion of the aftermarket.

It is large market in total, reaching approximately $250 billion in total sales in 2002. For example, there are currently 3,596 automotive accessory outlets alone in the U.S. with collective annual revenue of US $1.21 billion. On average, 6 employees work at each of these establishment and each outlet generates average annual revenues of $400,000.

[edit] Market Structure

With 225 million vehicles operating in the United States during 2003 and an average annual growth rate of 2% the Automotive Aftermarket industry has a large potential customer base.

The automotive aftermarket comprises several sub categories, most having been derived from various vehicle components such as wheels, engine, upholstery, etc. Some of the sub-categories include:

• Paint, body and equipment specialists
• Automotive warehouse distributors
• Tools and Equipment
• Refinishing and collision repair
• Engine rebuilding
• Automotive service and repair
• Manufacturers of brakes, suspension and exhaust parts
• Electrical and lighting products for commercial vehicles

[edit] Industry Definitions

• Accessories - comfort, convenience and safety products not essential to the performance of a vehicle such as audio, security products, floor mats, covers, etc.

• Aftermarket - replacement or add-on purchases for a product after its original sale. The automotive aftermarket includes replacement parts, accessories, lubricants, fuel, appearance products and repairs.

• Appearance Products – chemicals, polishes and accessories that improve the looks of a vehicle including waxes and polishes, protectants, custom wheels, pin striping, etc.

• CERCLA - The Comprehensive Environmental Response Compensation and Liability Act (1980). Provides for the identification and cleanup of hazardous materials released over land, air or water (Superfund Law).

• CFC - chlorofluorocarbons. Used in motor vehicle air conditioning units.

• CHP - (Chemical Hygiene Plan) It is a written plan that includes specific work practices, standard operating procedures, equipment, engineering controls and policies to ensure that employees are protected from exposure to potentially hazardous chemicals.

• Captive Import - car or trucks made overseas with a domestic nameplate.

• Core - the portion of automotive components that can be rebuilt, such as starters, alternators and carburetors.

• Detailing Service - specialized cleaning of vehicle interior and exterior. Includes cleaning of upholstery and engine compartment, vacuuming, washing and waxing.

• Full Line - retail outlet handling any three of the following automotive categories: chemicals, engine parts, heavy parts, accessories, and tires.

• General Service Parts - spark plugs and electrical parts (tune-up kits, wiring, switches); filters (oil, air and gas); batteries; belts and hoses; engine accessories (speed control, carburetors, oil and water pumps, alternators).

• Heavy Duty Parts - parts for large commercial trucks and commercial vehicles.

• Heavy Parts - chassis (shock absorbers, mufflers and exhaust system products, struts); drive train (U-joints, transmission parts, clutches); brake parts (brake parts, rotors, discs); crash parts (body repair kits, fenders and bumpers; fiberglass panels; glass).

• High Performance - products that enhance the speed and handling of a motor vehicle.

• Intermediate Line – a retail outlet handling one or two of the following automotive categories: chemicals, engine parts, heavy parts, accessories, and tires.

• Jobber - firms that sell more than 50 percent of their products to repair shops and more than 50 percent of their purchases are from distributors.

• Jobber/Retailer - automotive wholesaler who also sells parts, chemicals and accessories to "walk-in" retail customers. Retail sales account for at least 50% of a jobber/retailer's total sales.

• NHTSA - National Highway Traffic Safety Administration.

• OEM - (Original Equipment Manufacturer), parts and components supplied to manufacturers for motor vehicle production.

• SKU - (Stock Keeping Unit), refers to each single item carried by a retailer. Every color, style and item has its own vendor or vendee number and has its own SKU.

• Three-Step Distribution - implies the traditional aftermarket distribution process, flowing from the manufacturer to the warehouse distributor to the jobber to the service outlet.

• Tier Two Suppliers - manufacturers that produce components for Tier One suppliers.

• Tier Three Suppliers - manufacturers that supply raw materials used in the production of components.

• Tire Dealer - automotive store that generates at least 50% of its sales from tires.

• Transplant - car or truck made in the United States with a foreign nameplate.

• Warehouse Distributor - a traditional wholesaler of automotive parts and supplies selling primarily to jobbers.

[edit] Market Metrics

In 2004, the automotive aftermarket industry in the U.S. accounted for US $257 billion in sales.

Sales Category			                2002 Sales

Do-it-for-Me parts and accessories sales         $126.0 B			
Do-it-Myself parts and accessories sales          $32.6 B
Tire sales					  $16.5 B
Collision repair                                  $32.4 B
Parts and accessories                             $48.1 B
Medium and heavy duty aftermarket                 $61.5 B

[edit] Industry Players

Some of the leading companies in the automotive aftermarket include:

AutoZone

U.S.

Sale: $5.9B

One-year growth: 4.2%

Net income: $569.3M

Income growth: (0.3%)

AutoZone stores sell hard parts (alternators, engines, batteries), maintenance items (oil, antifreeze), accessories (car stereos, floor mats), and other merchandise under brand names as well as under private labels, including Duralast and Valucraft.

Genuine Parts Company

U.S.

Sale: $10.4B

One-year growth: 6.9%

Net income: $475.4M

Income growth: 8.7%

Genuine Parts Company (GPC) operates about 1,100 NAPA Auto Parts stores in more than 40 US states. NAPA Canada runs about 225 auto parts and TRACTION stores. GPC's Auto Todo subsidiary operates distribution centers and auto and tire stores in Mexico. Other subsidiaries include Balkamp, Motion Industries, S.P. Richards Company, and UAP Inc.

O'Reilly Automotive Inc.

U.S.

Sale: $2.3B

One-year growth: 11.6%

Net income: $178.1M

Income growth: 8.4%

O'Reilly Automotive sells aftermarket parts, automotive tools, professional service equipment, and accessories through more than 1,600 O'Reilly auto parts stores (most are in Texas, Oklahoma, and Missouri) and through its Web site.

Pep Boys

U.S.

Pep Boys currently has 593 stores and over 6,000 service bays in 36 states and Puerto Rico. Along with its vehicle repair and maintenance capabilities, the company also serves the commercial auto parts delivery market and is one of the leading sellers of replacement tires in the United States.

[edit] Recent Trends & Developments

This is not a high growth industry but it conversely it benefits by not being highly cyclical. Sales in 2002 for example, rose 4.6%. The major U.S. automotive manufacturers are not showing growth in 2006 or 2007, but the aftermarket suppliers had reasonable growth at the same time. Pep Boys sales were flat year on year but Autozone grew revenues 4% while Genuine Parts sales exceeded 6% growth in 2006.

[edit] Sources

• Wikipedia
• Answers.com
• Automotive Aftermarket Industry Association
• UTSA Institute for Economic Development
• University of Texas
• Federation of International Trade Associations
• National Association of Export Companies
• Society of Automotive Engineers
• International Trade Administration (ITA)
• U.S. Government Export Portal (Export.gov)
• US Bureau of Census