Speaking to investment community attendees at Genuine Parts Company’s Investor Day conference, Will Stengel, President and Chief Operating Officer, painted a strong, future-positive picture of the core automotive aftermarket.
He also stated that, while planning for an EV market has begun, the real potential is some years away.
While his comments were naturally directed at some specific elements that GPC can bring to bear for investors–an 8% market share where it can bring elements of scale to competitive local markets for example–the outlook also serves to provide a positive outlook for the automotive aftermarket industry moving forward.
“Our markets are also consistently growing. Going back to 1970, miles driven in the United States has increased 47 of the last 53 years. And if you think about what [CEO] Paul [Donahue] talked about, this constant consistent growth through cycles, that’s an incredibly attractive dynamic to have in your end market.
“If we assume our markets grew at the same rate as they have in the past for the next 30 years, and Genuine Parts Company in its businesses takes one to two points of market share for the next 30 years consecutively, we still would only own less than 20% of the total addressable opportunity. People can make a career enjoying the industries in which we operate, creating a ton of value in capturing wallet share from our existing customers.”
He spoke too of the aging car parc: “People love their cars and will continue to use a car as the primary source of mobility. Post Covid has certainly created a new appreciation for experiences in travel. We have a massive global installed base in the car parc. Globally our addressable car parc is 600 million cars. People are holding on to their vehicle longer. The average age of the car in the United States is 12 years; a little bit less than that in Europe. And while the availability of new cars has gotten better, given chip shortages, manufacturing complexities with automotive dealers, and global logistics, investing in your existing vehicle will continue to be a tailwind for the industry.
“Importantly, the complexity of the car has and will continue to increase, and that positions us really well. As that car gets more complicated, it will be more and more challenging for the average car enthusiast to work on his or her car.”
He said too that the importance of the relationships they have with customers, but also the non-discretionary nature of the transactions–referring to it as a “break-fix business model.”
“If you’re delivering that service, that drives the legacy of the relationship as you move forward.”
EV aftermarket opportunity
He called the EV transition a net positive for the aftermarket industry: “We believe the energy transition to electric does create an opportunity for Genuine Parts Company. In the aggregate, we think that is a net benefit not only our industry, but for Genuine Parts Company.”
He emphasized in his presentation that GPC is working with existing stores to build EV capability today and to carve out a leadership position, but that the aftermarket opportunity for EVs lies largely in the future.
Looking to 2030, GPC’s in-depth studies have put the influx of EVs to be a +/-1% impact on the overall core market, in a “do nothing” approach, but that the anticipated growth of the EV car parc from 1% today to 16% in the Europe, 13% in Canada, and 8% in the U.S. by 2030 represents the foundation of the market opportunity.
“Hybrid is a great opportunity for our business. It creates the best of both worlds. We get to sell EV parts and combustion engine parts. People talk about all new cars sold by 2030, 2035 are going to be required to be EV. That’s true. Seven years after that new car gets sold will be the aftermarket opportunity.
“The trend will take time. We are appropriately calibrated on what this opportunity is and we are not distracted from what is a great business today.”
The event was held live and virtual March 27 at 8:00 a.m. ET and is available through a webcast replay at the HERE at Genuine Parts Company’s investor relations website.