Auto Parts Stores
Business for Sale Industry Economics
2002 - 2020
2020 - 2026
Auto Parts Stores are businesses that provide new and used vehicle parts and components, as well as provide maintenance and installation facilities.
The industry has grown steadily, although slowly, over the five years leading up to 2020. The industry benefited from rising per capita disposable income, which enabled more customers to invest in industry services over time.
Furthermore, during the five years leading up to 2020, the total age of the car fleet increased marginally. Vehicles need more routine servicing and repairs as they age, increasing demand for industry goods.
However, the industry is in a long-term slump, with profits down and no space for significant sales growth. Over the five years to 2020, revenue is expected to increase by just 0.9 percent a year on average, to $62.7 billion.
The industry has grown steadily over the five years leading up to 2020, particularly earlier in the cycle. Increased per capita disposable income, which allowed more customers to spend on business services, as well as an aging vehicle fleet, also helped the industry. Vehicles need more routine servicing and repairs as they age, increasing demand for industry goods.
The Auto Parts Stores industry is expected to expand steadily over the next five years, bouncing back from late-period losses caused by the coronavirus pandemic in 2020.
Despite the fact that the industry’s short-term future is clouded by uncertainties due to the pandemic’s recessionary impacts, research for the next five years indicates that things are expected to steadily change.
This industry includes businesses that market new and used vehicle parts and components, as well as businesses that restore cars and add accessories.
The industry of Auto Parts Stores has a low capital intensity. According to research, in 2020, the average industrial operator will spend $0.06 on capital for every $1.00 spent on labor. Over the five years leading up to 2020, capital intensity has remained largely stable.
The acquisition of required retail equipment (such as check-out desks and inventory systems), a facility to operate out of (if the firm is not renting space), or vehicles to convey purchased products need little financial expenditure (if delivery services are offered and not contracted out to a third party).
Given the high amount of connection with clients, wage expenses for this business are substantially higher. Over the next five years, the capital intensity of industry is unlikely to alter much.
The Auto Parts Stores industry had a low degree of revenue volatility throughout the five years leading up to 2020. Revenue climbed by up to 2.4 percent in 2019 after declining by up to 0.3 percent in 2018. The amount of disposable money, customer attitude, and auto usage trends may all affect industry revenue.
However, given the appropriate circumstances, many of these patterns may operate against industry operators. When consumer confidence and disposable money are strong, for example, people may prefer to buy a new automobile rather than perform costly repairs to their current vehicle.
In contrast, if disposable income and consumer confidence are both low, customers may choose to forgo completing car repairs in order to save money. As a result, when both are increasing at a modest rate and consumers feel comfortable performing repairs on their existing cars but unwilling to commit to the purchase of a new car, the sector tends to grow.
Consumer confidence, disposable income, and automobile usage have all risen over the last five years, resulting in minimal revenue volatility as consumers alternated between maintaining existing models and acquiring new ones.
However, owing to the COVID-19 (coronavirus) pandemic and the economic crisis, the business is projected to be volatile in 2020, especially for smaller companies. While the sector’s supply chain is unlikely to be affected, consumer confidence is predicted to decline in 2020, resulting in lower demand for industry services.
As a result, automotive repairs and components are expected to suffer as a result of consumer concern, with more people putting money aside. Low consumer confidence, on the other hand, might work in the industry’s favor, as people choose to perform less expensive repairs to existing vehicles rather than buying a new one.
Regardless, industry operators are projected to be affected differently by 2020, depending on their size and breadth. Large multi-national operators, such as Autozone and O’Reilly Automotive, for example, are likely to see far higher benefits than the average industry operator.