Tuesday, 27 October 2015

Amazon hasn't hurt booming auto parts industry

NEW YORK—Not all brick-and-mortar retailers are running in fear from Amazon.com Inc. Just look at the auto parts industry.

The three largest U.S. sellers of replacement parts are seeing sales surge, sending their stock prices on a roll. AutoZone Inc., Advance Auto Parts Inc. and O’Reilly Automotive Inc. all have gained at least about 20 percent this year. That trounces the 1.3 percent decline for the Standard & Poor’s 500 Index.

The retailers are benefiting from the fact Americans’ cars are aging, as well as a new wave of technologically advanced cars that’s boosting sales to professional mechanics. Auto parts sellers also have so far proven immune to the e-commerce threat that has plagued other merchants.

"The auto-repair industry is well-positioned because it’s not being disrupted by places like Amazon," said Bret Jordan, an analyst at Jefferies L.L.C. "When you need a part, you can’t wait for tomorrow’s delivery. You need it today."

Currently about 250 million vehicles are on U.S. roads, a record. That’s partly due to the lingering effects of the most recent recession, which has caused the average age of vehicles to climb to 11.4 years, the highest ever, according to data compiled by Bloomberg.

At the same time, lower gas prices and higher employment have drivers putting more miles on their cars, creating a booming market for oil and replacement tires. That trend may cause auto part consumption to grow 3 percent to 4 percent for the next four years, according to Michael Montani, an analyst at Evercore ISI.

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