Despite a surge in new car sales, the U.S. fleet is pretty long in the tooth. The average vehicle on the road in the country is 11.4 years old, meaning it was made right before U.S. troops rolled into Iraq for the second time. Here’s a look at how the average age of American automobiles has changed in the past two decades:
All those aging machines haven’t necessarily been as much of a boon as one might think for parts retailers. At four of the biggest U.S. parts-sellers—AutoZone, O’Reilly Automotive, Advance Auto Parts, and Pep Boys —the average annual increase in same-store sales in the past 10 years is a clunky 2.3 percent. The do-it-yourself car repair market at-large has grown at only about a 2.8 percent rate in that time, according to the Wall Street Journal.
The trouble is that cars have become pretty reliable. People drive them for more than a decade simply because they can, according to Michael Karesh, who runs Truedelta.com, a Web service that tracks auto reliability for about 91,000 members. ”We stop covering cars when they turn 16, and some members are not happy with this,” he says. “They don’t see these cars as all that old!”
Meanwhile, fewer vehicles are cruising U.S. roads. From 2009 to 2011, the number of registered cars shrank by 5 percent.
Such so-called active safety measures as bumper cameras, adaptive cruise control, and lane-guidance technology have helped reduce the number of accidents.
In other words, growth in the car-parts business these days takes some very deft executive steering. So how can a company like AutoZone move the needle, let alone post 30 straight quarters of double-digit per-share profit gains?
For one thing, the company focuses on selling to professional mechanics. Fixing a car these days requires a lot more than bloodied knuckles and a stream of creative curses. A degree from MIT helps—that’s what each of the guys on public radio’s Car Talk show has. Ten years ago, computer diagnostics were already the norm, and getting a wrench on an oil filter was starting to require the skills of a Cirque du Soleil acrobat.
With almost 5,300 stores, AutoZone has a big enough network to serve independent garages, as well as weekend grease monkeys. Commercial sales now account for 16 percent of AutoZone’s business and have been outpacing its retail commerce.
And the company keeps growing. In the past five years, AutoZone pushed into Brazil and Mexico and overall, added almost 1,000 new locations to bring total locations to 5,200. It has also spent some returns to buy back piles of its own shares—as effective as any operational strategy at raising per-share profit numbers.
Parts retailers also keep a sublime perspective on all the new cars gliding out of lots: For every new car, there’s a new used car. “While new car sales have been very strong these past two years, we have seen those traded-in vehicles being resold to new owners who are repairing and enhancing their quote unquote new vehicle,” AutoZone Chief Executive Officer William Rhodes said during a conference call with analysts this week.
The parts market is always “a bull story,” says Bloomberg Industries analyst Kevin Tynan. “There’s roughly 250 million cars on the road,” he says “Somebody has to take care of them.”