The Auto Parts Industry

The Auto Parts Industry

Auto parts are manufactured components used to create motor vehicles. These vehicles may be fossil-fueled or electric and can range from small passenger cars to large trucks and buses. A basic car uses hundreds of different parts to function properly. These parts can be categorized as original equipment, or OEM, which are produced by the vehicle manufacturer; replacement or aftermarket parts; and accessories. Auto parts are generally shipped using truck transports and railroads to move them to and from the vehicle assembly plants; but air freight may be used to deliver critical parts needed immediately to keep an assembly line running. The industry also uses a network of independent jobbers, wholesalers and retailers to sell parts to the public and repair shops.

Auto part suppliers often focus their R&D efforts on technologies that will make automobiles as environmentally compatible, economical and safe as possible. This type of research helps to ensure that new autos are in line with consumer demand. Some innovations from auto parts producers have been anti-lock braking systems, automatic transmissions and electronic fuel injection.

The largest users of auto parts are vehicle manufacturers, which purchase two-thirds to three-fourths of all auto parts. The remainder is sold to repair and service operations, car dealerships, retail outlets and the do-it-yourself market. Some retailers specialize in supplying performance parts that enhance the speed, handling and acceleration of a vehicle.

Most auto parts are produced locally, but imports have become a significant part of the market in many countries. This is primarily because auto makers want to control production costs, but also to take advantage of the technology available in other nations and regions. A number of major suppliers, such as Denso and Bosch, have shifted their manufacturing bases to emerging economies in recent years.

Another problem with the growth of the global auto parts business is that it has been difficult for some companies to survive in a highly competitive environment. As a result, there has been a large number of mergers, acquisitions and bankruptcies in the industry. The auto parts industry is dominated by a few large corporations, with some smaller companies making specialty parts or providing services to the industry.

In addition, auto parts suppliers are often exposed to volatile international exchange rates that can have a significant impact on their financial results. For example, the United States is a major exporter of automotive parts, but foreign competition has forced many U.S. producers to lower their prices in order to stay competitive. This has impacted margins and eroded the profitability of the industry. In addition, some domestic auto parts companies have suffered from the weakened economy. This has reduced demand for replacement parts and led to lower than expected sales of automotive accessories. This has hurt the profits of some retailers, such as AutoZone and Genuine Parts. This has contributed to a decline in employment at many auto parts companies.