American companies selling car replacement parts are still enjoying substantial sales growth despite rising interest rates and high prices on new and used cars slowing vehicle sales in the United States.
Sales figures at car dealers all across the country like Lithia Motors, AutoNation, and CarMax, have dropped and even turned negative recently, but this is not the case for auto-parts retail stores.
On Wednesday, the state’s largest auto-parts retailer, O’Reilly Automotive, released its earnings report showing that store sales increased over 10% in the first quarter of 2023, overachieving its expected figure by around 4%. This increase marks the 12th straight quarter of sales revenue growth for the company. Net income was also higher than forecast and rose by over 5%. The highest-grossing auto-parts retailer by revenue, AutoZone, is also expected to reveal a similar U.S. store sale growth of around 5% for this first quarter of the year.
The increased demand for car parts has been put down to the fact that drivers are keeping their old cars for longer in recent years. This is also accompanied by the reality that both new and used cars have become less affordable lately due to high-interest rates. The average interest rate for a car financing loan in March was around 11%. This is a significant increase compared to a year earlier when the rate was around 8%. Monthly repayments also averaged out at $13 higher than they were a calendar year ago. If this wasn’t bad enough, credit standards have also been tightened by auto lenders, as an increase in clients with low credit scores falling behind on repayments has been reported recently.
According to the experts, the average age of vehicles on the road is now over 12 years, as of last year. This is a record-high number that is likely to continue until things in the economy settle down again at least. Ever since 2019, vehicles in the used car market have risen greatly and now account for over 40% of all vehicles in active operation in the U.S. This figure is also expected to keep increasing, as back in 2019, the figure was just over 35%. Since 2020 in particular, auto parts store’s retail revenue has risen considerably. For example, in the first quarter of this year, they were over 50% higher than that from the same period back in 2020.
This rise in auto parts sales in the U.S. is predicted to continue growing by at least another 5% in 2023. This forecast isn’t as monumental as the sales figures seen back in 2020 and 2021 but is still much greater than the annual sales growth seen before the pandemic.
American companies selling car replacement parts are still enjoying substantial sales growth despite rising interest rates and high prices on new and used cars slowing vehicle sales in the United States.
Sales figures at car dealers all across the country like Lithia Motors, AutoNation, and CarMax, have dropped and even turned negative recently, but this is not the case for auto-parts retail stores.
On Wednesday, the state’s largest auto-parts retailer, O’Reilly Automotive, released its earnings report showing that store sales increased over 10% in the first quarter of 2023, overachieving its expected figure by around 4%. This increase marks the 12th straight quarter of sales revenue growth for the company. Net income was also higher than forecast and rose by over 5%. The highest-grossing auto-parts retailer by revenue, AutoZone, is also expected to reveal a similar U.S. store sale growth of around 5% for this first quarter of the year.
The increased demand for car parts has been put down to the fact that drivers are keeping their old cars for longer in recent years. This is also accompanied by the reality that both new and used cars have become less affordable lately due to high-interest rates. The average interest rate for a car financing loan in March was around 11%. This is a significant increase compared to a year earlier when the rate was around 8%. Monthly repayments also averaged out at $13 higher than they were a calendar year ago. If this wasn’t bad enough, credit standards have also been tightened by auto lenders, as an increase in clients with low credit scores falling behind on repayments has been reported recently.
According to the experts, the average age of vehicles on the road is now over 12 years, as of last year. This is a record-high number that is likely to continue until things in the economy settle down again at least. Ever since 2019, vehicles in the used car market have risen greatly and now account for over 40% of all vehicles in active operation in the U.S. This figure is also expected to keep increasing, as back in 2019, the figure was just over 35%. Since 2020 in particular, auto parts store’s retail revenue has risen considerably. For example, in the first quarter of this year, they were over 50% higher than that from the same period back in 2020.
This rise in auto parts sales in the U.S. is predicted to continue growing by at least another 5% in 2023. This forecast isn’t as monumental as the sales figures seen back in 2020 and 2021 but is still much greater than the annual sales growth seen before the pandemic.
