Executive Summary

• The US aftermarket automotive retail (DIY) and wholesale (DIFM) is a roughly $175-200 bn industry growing 2-3% annually. The industry includes national chains, independents, wholesale distributors, automotive dealers, big box retailers, and online retailers; the big four national chains (Advance Auto Parts, AutoZone, Genuine Parts, O’Reilly Automotive) control 30-35% of the US DIY/DIFM market.
• From a bond perspective, AZO and ORLY make up a combined 5% of the US IG Retail Index (3% for AZO, 2% for ORLY), GPC represents 2% of the US IG Automotive Index, and AAP constitutes 6% of the US HY Retail Index.
• National aftermarket auto parts retailers derive most sales from non-discretionary failure and maintenance parts, with discretionary products representing only a mid-10% share. The non-discretionary nature of most auto parts sales makes the aftermarket auto parts industry resilient during economic downturns and supports significant pricing power.
• All four major U.S. auto parts retailers pursue dual-channel strategies that expand their addressable market, leverage store/DC synergies, and smooth cyclical channel shifts. DIY features higher margins, less weather sensitivity, and longer vehicle ownership. DIFM offers stronger topline growth, larger share opportunities, less exposure to lower income consumers, greater insulation from non-traditional competitors, and stronger positioning with long-term increases in parts complexity.
• Increasing parts complexity is a key industry driver, supporting higher prices and creating new sales opportunities. Over the last 20-30 years, average ticket inflation in the U.S. automotive retail and wholesale parts sector has consistently run at 3-5% annually, more than offsetting a 1-3% annual decline in transaction counts, reflecting more sophisticated, durable parts that raise price points and extend service intervals.