31st Annual Car Care Center Study: Industry demands weigh heavy on the aftermarket

Jan. 1, 2020
With increases competition and price pressures throughout the supply chain, annual percent gains adnd gross margins are taking the fall.

Introduction by Sativa Ross, Senior Editor

Certainly vehicles today don’t look like they used to in the 1970s, when the Annual Car Care Center Study first made its debut. We no longer see rotary knobs and levers for air conditioning and radio controls. Chrome bumpers have been replaced by uniformly painted fascias that match the rest of the car. Antifreeze/coolant didn’t come in several different colors and formula types. Diagnostic tools weren’t even a thought yet, as installers and do-it-yourselfers simply needed to lift the hood or look under the car to know what was wrong. We didn’t need a high-tech navigation system to tell us where we were going and compact discs were completely unheard of.

The great automobile has made the aftermarket what it is today, and along with the times and technology advancements that came tumbling along with it, business in this field has become far more competitive. Sure, there has been more consolidation but also more innovation. Sure, we have more inventory than any other time in our history, but registered vehicles now outnumber people in our country, according to the AAIA. The automotive aftermarket hasn’t stopped shifting and changing, right along with the dynamic of the automobile.

That’s not to say challenges don’t lie ahead. Dealers are becoming increasingly more involved in the aftermarket, aggressively and somewhat successfully trying to garner more parts and service business. The Right to Repair Act and its outcome will impact the entire industry in a number of ways, and women are becoming the more mainstream target audience in the 21st century. Online ordering is common not only among consumers but also technicians, who now need more training than could ever have been imagined 30 years ago.

With such a rapidly-changing market, this industry does not lend itself to business as usual. Those within it must keep up with all the changes and advancements. They must stay attuned to their target market and “move with the cheese.” If you haven’t reflected on what the past several years as a warehouse distributor, jobber or retailer has meant to you, now is the time to do so. Now is also the time to look ahead and be sure you know what the future may bring. 

Survey enhancements 

The 31st Annual Car Care Center Study showcases how 30 different products performed at the retail level. Using an online survey format, we invited executives from automotive chains (with more than 50 percent retail sales), warehouse distributors with retail outlets, program group stores, hardware stores, supermarket chains/convenience stores, discount stores, department stores, drug store chains and home centers/general home repair locations to participate in our study.

For all 30 categories, we gathered and analyzed data on the following for the total retail aftermarket:

  • Annual percent sales gains (or losses) for 2004
  • Average gross margins for 2004
  • Estimated total sales for 2004
  • Sales projections for 2005
  • Annual inventory turns for 2004
  • Estimated market share by type of chain
  • A sales breakdown of national brands vs. private label
  • Supplier price variances

This year, we also made some improvements to our study. Not only is our layout a little easier to read, we have added the following:

  • A summary of the changes that have occurred in each product category based on the study’s results.
  • Annual percent sales gains (or losses) for automotive chains in 2004.
  • Average gross margin breakdowns for automotive chains, warehouse distributors with retail outlets, program group stores and discount, department and non-auto chains.
  • The percent of those in the total retail aftermarket that changed suppliers for each specific category in 2004.
  • The percent of automotive chains that changed suppliers for each specific category in 2004.

The big picture

The following overview is a compilation of 30 product categories that make up this year’s study. We have grouped these products into three categories — accessories, chemicals and hard parts — so results can be compared to previous years.

The data show that total aftermarket retail sales for chemicals grew by 5 percent in 2004 and our respondents are hoping for sales to rise about the same amount in the months ahead. It is the only category that has seen sales growth, not just this year, but since 2001. The sales performance for accessories and hard parts has been stagnant or has declined in the past few years, but expectations for 2005 are more positive. Hard parts are expected to increase by about 7 percent and accessories by 6.5 percent.

Average gross margins for all categories are slightly lower than in 2003. For chemicals, the average gross margin dropped 1 percent; for accessories, it decreased by 2 percent; and for hard parts, it’s down about 7 percent. We’ve also broken down average gross margins for automotive chains, warehouse distributors with retail outlets, program group stores, and discount, department and non-auto chains. You can clearly see who is on par with the total retail aftermarket average and who is not. Automotive chains report a much higher gross margin on accessories than all other respondents. Warehouse distributors with retail outlets and program group stores report a higher gross margin than others on hard parts.  

When it comes to supplier prices for accessories, hard parts and chemicals, they averaged increases between 3 and 5 percent. It is interesting to note that not all supplier changes correlated with price increases.

We asked retailers to share comments about the growth or decline in 2004 sales. Almost half mentioned they experienced growth; many reported it was in the double-digits. One in five found their sales were impacted by a competitive marketplace where eBay, the Internet, super stores, imports, exchange rates, direct sales by manufacturers and higher prices from suppliers were all noted as challenges. One in 10 based the growth they experienced on increased advertising and marketing. As for 2005 sales projections, two of three are expecting growth where many are looking for double- and triple-digit increases. One in 10 plan to add products to encourage growth. Other tactics they mentioned included increasing advertising, lowering prices and shopping around for new suppliers.

Methodology

Of all our respondents, 60 percent have stores located in the Midwest, 45 percent have stores in the Northeast, 40 percent have stores in the South and 32 percent in the West. Chains with stores outside the United States represent 28 percent of the total retail aftermarket. 

By annual sales revenue, 20 percent of the sample report annual revenue over $1 billion where an average of 23,876 employees work at 1,262 retail outlets. Twenty-two percent have revenue between $50 million and $1 billion where 3,132 employees work at 304 retail outlets. Also, 11 percent have revenue of $10 to $50 million where an average of 95 employees work at eight retail outlets. Twenty-two percent report annual revenue between $1 and $10 million, and 24 percent report revenue less than $1 million.

In terms of occupation, 43 percent are managers, 32 percent are owners/presidents and 13 percent are in administration. Sales and marketing personnel account for 10 percent and buyers/purchasing represent 5 percent of the sample. Other areas of responsibility listed include counterpersons, operations and board members.

To view the entire Car Care Center study, click

here to download a PDF of the report.