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Heavy Traffic Is Good News For Auto Parts Retailers
Latest company news about Heavy Traffic Is Good News For Auto Parts Retailers

It’s hard to find a sector handling pandemic-era curves better than auto parts. In recent weeks and months, the nation’s top auto parts retailers continue to report robust sales gains as used cars undergo a sales boom of their own — and all will need replacement parts at some point.

According to the 2021 Joint Channel Forecast Model from the Automotive Aftermarket Suppliers Association (AASA) and the Auto Care Association, U.S. light-duty automotive aftermarket sales are set to increase more than 11 percent to $325 billion in 2021.

In June, Bill Hanvey, president and CEO of the Auto Care Association, said that "increased reliance on personal transportation, coupled with shifts in consumer purchase and maintenance behavior, primes the aftermarket for continued growth. Indicators suggest that consumers will continue to hold onto their older vehicles, which creates further opportunity for the aftermarket.” He added that while COVID-19 was a challenge for aftermarket auto parts retailers, it was also “a catalyst for many of the tailwinds we're experiencing today."

One need only look at earnings from category leaders to see the effects of that tailwind.

As PYMNTS reported, Advance Auto Parts net sales were up nearly 6 percent from the prior fiscal year to $2.6 billion in its fiscal Q2 2022 ending July 17. Comp-store sales rose 5.8 percent in the quarter.

See also: Advance Auto Parts Sees Q2 Boost As Drivers Return To Roadways

For the three months ending May 8, AutoZone logged a 29 percent increase in U.S. same-store sales.

Read more: AutoZone Leans Into Commercial Customers As Consumers Head Back To Work

Meanwhile, O'Reilly Automotive reported the strongest same-store sales growth in the company's 64-year history in Q1 2021. It was the same story at NAPA Auto Parts parent Genuine Parts Company, whose 9.1 percent increase to $4.5 billion in Q1 beat Q1 2020.

Even the battle of the retail titans is on wheels this year, as PYMNTS reported in Q1 that “Amazon has seen its auto parts sales steadily rise over the past five years” from just 3.3 percent in 2014 to 13 percent in Q3 2020. The upshot is that Amazon is gaining ground in the automotive race with rival Walmart, as “the auto parts market share spread between Walmart and Amazon has slipped to just 4.5 percent,” according to data available at this writing.

Learn more: Whole Paycheck: Walmart And Amazon Have A Food Fight

Taken together, it’s a pedal-to-the-metal moment for the automotive aftermarket. Few predicted it, as commuting by car fell precipitously during 2020 lockdowns. Now it becomes a question of how long the rally can keep running on a crisis that’s abating, however slowly.

The Digital Shift Into High Gear

As to the split between eCommerce and in-store sales of auto parts, a report from investment bank and financial advisory firm Brown, Gibbons, Lang & Company (BLG) done with Hedges & Company states that the shift to online auto parts buying “is predicted to be permanent, and eCommerce represents a significant area of future growth.”

In-store and eCommerce traffic are so heavy for auto parts merchants this year that some question how far the pandemic push will take the trend. As The Wall Street Journal reported in early Q2, “The concern is that this growth may not be sustainable. Auto parts retailers say they aren’t writing off the possibility that demand last year was pulled forward as consumers received stimulus checks and had more time at home to pursue do-it-yourself projects.”

Preowned vehicle sales are a bellwether for aftermarket auto parts, and on that front, things continue to roll forward with no immediate end in sight.

In its Dealer Sentiment Index Second Quarter 2021, category mainstay Cox Automotive said that “the three-month market outlook index reading of 63 is an increase from last quarter and, importantly, equal to Q1 2020, the final pre-COVID-19 reading. Profits in Q2 are strong, dealers are reporting. The profit index in Q2 hit a record 59, while the price pressure index dropped to a record low 33, meaning a majority of dealers are feeling little pressure to lower prices.”

While inventories of used and certified preowned cards remain tight, Cox added that “unlike inventory, customer traffic showed a significant improvement in Q2, with the index increasing 28 points from the prior quarter and reaching a record-high 57. This reading indicates that more dealers feel their customer traffic is strong than feel it is weak, likely due to pent-up demand.”

Cox began using digital personalization to drive sales across its large portfolio of brands in late 2020 by employing the Amazon Neptune identity graphing technology.

Pub Time : 2021-08-05 15:06:30 >> News list
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