Used Car Parts Wholesaling in the US
The Used Car Parts Wholesaling industry has a low level of market share concentration, with the two largest players, Schnitzer Steel Industries Inc. and LKQ Corporation (LKQ), typically dominating the industry. The industry is highly fragmented, in which the majority of industry operators are small, independent junkyards that operate out of one or two locations and serve small local markets.
Lack of new entrants despite low barriers to entry
• Start-up costs for automobile recyclers are minimal and typically only require a piece of open land on which to store vehicles and basic tools for vehicle dismantling. Even so, new entrants have not been optimistic considering the increasing competition from larger players. Also, an anticipated decrease in the profit margins of smaller players will likely cause operators to exit the industry as they struggle to stay afloat.
Large companies expand market share through acquisitions
• The industry has experienced increased consolidation over the past five years. For example, LKQ has rapidly expanded its market share through the acquisition of smaller operators. LKQ acquired 26 North American wholesaling operations over the five years to 2019. Larger players are obtaining an increasing share of the market, pushing smaller players to find niche markets or products to retain customers.
Internal competition revolves around price and availability
• Auto recyclers compete intensely on price, parts availability and service. Considering that used car parts customers are highly price sensitive, operators that offer different and lower price points without compromising quality gain a competitive advantage. Parts availability is also important to customers who own particularly old or rare cars, since they typically cannot use new parts to fit their models, relying directly on industry operators.
Companies in this industry wholesale used auto parts. Industry operators also dismantle vehicles for the purpose of selling used auto parts to individuals, car mechanics and others. This industry excludes companies primarily engaged in selling scrap metal, tires and tubes as well as companies engaged in the refurbishing, rebuilding or remanufacturing of car parts.
This report covers the scope, size, disposition and growth of the industry including the key sensitivities and success factors. Also included are five year industry forecasts, growth rates and an analysis of the industry key players and their market shares.
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