Lang Aftermarket iReport: Distribution channel growth differs

“The light vehicle aftermarket in the U.S. is supplied by five major distribution channels. These five channels topped $14 billion in combined product growth at user-price over the past five years (2014 to 2019). Nevertheless, there were significant differences in the product growth achieved by each channel.”

“The Integrated and Traditional channels dominated car and light truck product expansion from 2014 to 2019. However, the velocity of product growth was a different matter. The Import channel averaged the highest product growth rate, followed by the Integrated channel.”

— Jim Lang, publisher, Lang Aftermarket iReport

Major Distribution Channels

Five major channels supply the light vehicle aftermarket in the U.S. They vary in product volume, annual rate of growth, and the market segments that they supply.

Integrated distribution ranks as the largest channel and is characterized by product ownership not changing hands from the time products are purchased from manufacturers until their sale to end-users. The Integrated channel generated nearly half (48%) of car and light truck product expansion from 2014 to 2019, at user-price.

Traditional Channel

Traditional distribution (Traditional Warehouses and Jobbers participating in two-step and three-step aftermarket distribution) generated 22% of car and light truck product growth over the past five years. The Traditional channel is a primary supplier to the Independent (non-Dealer) Do-It-For-Me (DIFM) segment of the light vehicle aftermarket.

Import Channel

The Import channel (Warehouses and Jobbers almost exclusively handling products for foreign nameplates) represented 12% of the over $14 billion car and light truck product expansion between 2014 and 2019. This was nearly twice the size of their average light vehicle product share during these five years.

Specialized Channel

Specialized distribution (distribution involved with a limited mix of products or a specific aftermarket segment) was responsible for nearly 14% of car and light truck product volume during this period.

However, the Specialized channel declined in aftermarket product volume during this five-year period (2014 to 2019) and did not contribute to the aftermarket product growth.

Top Dollar Growth

Car and light truck product growth has been dominated by the Integrated and Traditional channels, which combined for over a $10 billion surge in car and light truck product volume at user-price between 2014 and 2019.

The Integrated channel generated over $7 billion of product expansion, which the Traditional channel accounted for more than $3 billion in product growth at user-price.

Other Distribution Channels

The Import channel, which is much smaller in product volume than the Traditional and Integrated channels, generated $2 billion in product growth, while the OE channel accounted for nearly $3 billion in product expansion.

Product Growth Rates

The Import channel, smallest of the five major channels, achieved the strongest annual product growth rate between 2014 and 2019, averaging 6.1%, followed by the Integrated channel which averaged a 4.1% annual sales gain.

The Traditional channel ranked third in light vehicle product growth velocity at 3.5%, followed by the OE channel which recorded 3.4% annual growth during this five-year span. The Specialized channel suffered a 0.2% average annual sales decline.

Product Share Changes

There were changes in the product share of distribution channels between 2014 and 2019. The Integrated distribution boosted its share from 37% 39%.

The Traditional channel rose from 22% to 23% share, as the Import channel increased its product share, 7% to 8%.

The OE channel recorded a flat 18% share during 2014 to 2019, while the Specialized channel fell from 12% to 10% of light vehicle product volume.

Six Major Takeaways

• There were major differences in the product volume growth and product growth velocity recorded by each of the five major distribution channels between 2014 and 2019. See the 2021 Lang Aftermarket Annual for a ten-year sales analysis of all five major distribution channels.
• The Integrated and Traditional channels combined for 70% of the more than $14 billion increase in light vehicle product sales at user-price, with the Integrated channel generating over a $7 billion gain and the Traditional channel recording more than $3 billion in product growth.
• Two other channels also expanded their car and light truck product volume: the OE channel, up $3 billion, and the Import channel with a $2 billion gain. The Specialized channel declined in light vehicle product sales between 2014 and 2019.
• The Import channel averaged the highest product growth velocity over this five-year span, 4.6%, followed by the Integrated channel with a 3.5% average annual increase. The Traditional and OE channel were tied third in product growth, each with a 2.7% annual increase.
• The four Independent (non-OE) channels generated 82% of the total light vehicle product growth at user-price between 2014 and 2019.
• The Integrated channel increased its aftermarket product share from 37% to 39%, followed by the Traditional channel which rose from 22% to 23% of product volume. The Import channel expanded its product share from 6% to 7%, while the OE channel was flat in share at 18%. The Specialized channel declined from 14% to 13% of car and light truck product volume.

Copyright 2020 by Lang Marketing Resources, Inc.

NOTE: Special thanks to publisher Jim Lang for granting us permission to publish the Lang Aftermarket iReport.