2014-03-06 01:51:01 - Automobiles - Industry Analysis - a new market research report on companiesandmarkets.com
The Retail Automotive Industry is comprised of two kinds of companies: those that sell replacement automotive parts and accessories to "do-it-yourself" customers and to commercial "do-it-for-me" clients; and those that sell a wide assortment of new and used vehicles over the Internet and networks of regional or national franchised dealerships. The dealer business tends to be cyclical, since its fortunes are tied to auto industry production levels, gasoline prices, the financial health of the consumer, and the state of the domestic economy. Indeed, dealership groups, even the better managed ones with lean cost structures and extensive ancillary product lines (e.g., parts & service and finance & insurance), tend to struggle during tough economic times. Parts retailers are also
affected by the prevailing macroeconomic environment, but to a lesser degree. These usually less-mature, faster-growing outfits are influenced by their own merchandising & remodeling initiatives and unit development strategies. And they are subject to secular long-term trends, including fluctuations in the older-vehicle population and the number of licensed drivers. (Because of their more attractive growth profiles, parts company stocks, by and large, trade at higher price/earnings multiples than dealer issues.) Notably, about 70% of all parts purchases made by consumers and commercial customers are need-based, rather than discretionary. This helps to shield aftermarket parts retailers from unwelcome economic headwinds.
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