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Aftermarket Distributors With the Shortest Lead Times Are the Winners

22 June 1998

Frost & Sullivan: Aftermarket Distributors With the Shortest Lead Times Are the Winners in Competitive Industry

    MOUNTAIN VIEW, Calif., June 22 -- The automotive aftermarket
is characterized by intense pricing pressures, vendor and distributor
consolidation, parts proliferation and a shift in end users. Distribution is
playing an increasingly important role in this dynamic and competitive market,
as excellent distribution translates into higher margins for both vendors and
distributors.
    According to strategic research conducted by Frost & Sullivan
(http://www.frost.com), Automotive Aftermarket Distribution Channel Analysis,
aftermarket growth is due in part to rising sales of light trucks and
passenger cars, the growing average age of vehicles, and the increasing price
of new vehicles. Total revenues for the U.S. automotive aftermarket have grown
between one and four percent annually for the last five years, and current
trends indicate that this growth will continue for the next five years.
    "Distribution is becoming a key means of differentiation for vendors in
the aftermarket," say the authors of this report. Consumers often have little
leisure time, so when their vehicle needs repair, they want it done quickly.
For distributors, this means whoever can deliver the product first to the
professional installer or do-it-yourselfer is the winner.
    Inventory management systems are an important technology trend. Inventory
selection, order tracking and forecasting are all in need of technological
improvements. Auto parts retailers have gained an advantage in this area, and
consequently have been gaining market share since the 1980s.
    Another growing trend is two-step distribution. Although three-step
distribution is most common in the aftermarket, it is slowly giving way to
two-step distribution, which consists of warehouses selling directly to
installers, and jobbers buying directly from vendors. However, eliminating a
third level of distribution has proven to be no guarantee of success.
    The greatest threat to a distribution channel is other distribution
channels. For instance, auto parts retailers, not satisfied with their success
in the do-it-yourself market, have begun adding installer delivery programs,
threatening traditional distribution channels. In addition, some distribution
channels have been growing at the expense of others through joint ventures and
consolidation. Joint ventures between merchandisers, quick lubes, and
installer chains are increasing.
    Frost & Sullivan's new study, Automotive Aftermarket Distribution Channel
Analysis, separates the aftermarket into 14 channels of distribution, and
analyzes the strengths, weaknesses and opportunities for each channel. This
report provides vendors with new distribution ideas, as well as an idea of the
direction in which each channel is headed.
    The companies participating in this market include:  Advance Auto Parts,
AER Manufacturing, Inc., All-Pro/Bumper To Bumper, APS, Inc., ATK Engines,
Incorporated, AutoZone, BJ's Wholesale Club, Inc., Bridgestone Firestone,
Inc., CarMax Group, CARQUEST, Car-X Muffler and Brake, Chief Auto Parts,
Chrysler Corporation, Costco Companies, Inc., CSK Auto, Inc., Dayton Hudson
Corp (parent of Target Stores), Discount Auto Parts, Exxon, Federal-Mogul,
Fisher Auto Parts, Ford Motor Company, General Motors Corp., Goodyear Tire &
Rubber, Hahn Automotive, Hi-Lo Automotive, Inc., Installer's Service Warehouse
(ISW), JASPER Engines and Transmissions, Kmart Corp., Meineke Discount
Mufflers, Midas International Corporation, Mobil Corporation, Montgomery Wards
Holding Corporation, National Automotive Parts Association (NAPA), O'Reilly
Automotive, PACCAR Automotive, Inc., Pennzoil Company (parent of Jiffy Lube),
Pep Boys, Republic Industries, Inc., Sears, Roebuck & Co., Shell Oil Company,
STRAFCO, Strauss Discount Auto, Texaco Inc., Trak Auto, TruStar, Inc., Tuffy
Auto Service Centers, Wal-Mart Stores, Inc., Western Auto, and Yamato Engine
Specialists Limited.
    Frost & Sullivan is an international marketing consulting company that
monitors the automotive industry for market trends, market measurements and
strategies. This ongoing research is utilized to update a series of research
publications such as #5776-18 U.S. Brake System Part Aftermarkets, and
#5777-18 U.S. Exhaust System Parts Aftermarket, and to support industry
participants with customized consulting needs.
    Visit Frost & Sullivan's web site:  http://www.frost.com.

    Report:  5316-18       Publication Date:  June 1998       Price:  $3450