Some Major Auto Parts Retailers See Visit Growth

For all the talk of an improving economy, with households returning to pre-pandemic incomes, some Americans are still below the median line and have challenges. Almost half of renters are cost-burdened, meaning spending at least 30% of their income on shelter. And although used cars and trucks saw a drop of 10.4% year-over-year in August, according to the Consumer Price Index, they’re still expensive.

At least, that’s the point made by Placer.ai — which uses cell phone data to analyze foot traffic down to a property level — when looking at auto parts retailers AutoZone, O’Reilly Auto Parts, and NAPA Auto Parts. An increase in older cars on the road combined with the companies’ markets have sustained their “pandemic-era success.” It’s a combination of economic conditions and demand for necessary transportation.

The “captured markets” of the three companies have incomes below the “nationwide baseline,” which would be the median for the country, or $80,610 in 2023. That’s half the country. More specifically, the median household income of new car dealerships’ customers was $75,600. For NAPA, it was $66,700; $63,800 for O’Reilly; and $64,100 for AutoZone.

The average used car in July cost $25,415 according to Kelly Blue Book. There’s been strong demand, with the average used car dealer having 41 days of inventory ending in July. That was down from 55 cars. There were only 31 days of supply of cars priced below $15,000. For households with below-median income, that is a lot of incentive to avoid buying another car and keeping an existing one, however old, functioning. They may put off non-essential repairs, as Placer.ai separately covered in late July 2024, But there are still the fixes that are the difference between driving and walking. In August 2024, motor vehicle parts prices were down 0.5% compared to 2023 — not an enormous amount, but maybe enough for people to undertake repairs, “providing these retailers with continued foot traffic boosts.”

Over the past 12 months or so, the three companies have continued to see growth. AutoZone and O’Reilly have seen year-over-year growth each month in 2024. NAPA had “mild visit gaps” in March, June, and August but still saw increases over most of the months. They are likely to continue seeing more foot traffic through the end of the year, with likely additional success.

Not all chains are doing well, however. Advance Auto Parts decided to sell Worldpac, its automotive parts wholesale distribution business, to global investment firm Carlyle for $1.5 billion in cash. The company has had a challenging time over the last few years, going from $11.2 billion in revenue and $464.4 million in net income in 2022 to $11.3 billion in revenue and $29.7 million in profit in the following year. Share prices went from $241.91 in November 2021 to $49.39, as of the close of trading on Tuesday.