Distribution Shakeup
COVID-19 created greater changes in the strength of the five major distribution channels during 2020 to 2022 than any event since the Great Recession of 2008.
The significant changes in the product volume and share of distribution channels that occurred over the past three years are analyzed in-depth in the recently released 2024 Lang Aftermarket Annual.
Light Vehicle Distribution Channels
In the U.S., five major distribution channels supply the car and light truck aftermarket: Traditional, Integrated, Specialized, Import and OE.
The light vehicle aftermarket suffered a 7.3 percent decline in 2020 product volume from the onslaught of COVID-19, followed by nearly a 15 percent product rebound over the next two years. However, this product loss and recovery was not distributed equally across the five major aftermarket distribution channels.
Winners and Losers
Over the past three years, there has been a massive shift in aftermarket product volume among the five major distribution channels supplying the car and light truck aftermarket in the U.S.
There were big winners and big losers in product volume and share during the past three years. Two channels dominated product growth. In contrast, three other channels declined in product share, combining for only a 0.4 percent annual growth rate.
Integrated Channel Dominates
In the Integrated channel, ownership of products does not change hands from when products are purchased from manufacturers to the point of ultimate consumption or sale to an installer (repair outlet or DIYer). Like all channels, the Integrated channel was hit hard in 2020 by COVID-19, but it managed to increase its distribution channel share that year.
The Integrated channel outperformed all other channels during the 2021 and 2022 aftermarket rebound, recording the largest increase in share and dollar volume.
The Integrated channel’s growth was fueled by the outstanding performance of retail auto parts chains during 2021 and 2022 (as DIY volume soared at a double-digit rate).
The Integrated channel also benefited from eCommerce sales, which surged in the past three years, as reported in the 2024 Lang Aftermarket Annual.
Import Channel Shows Strength
The Import channel (distribution involving Import warehouses and Import jobbers) was the only other channel recording product share growth during 2020, despite the onslaught of COVID-19.
The Import channel declined in dollar volume during 2020, but it dramatically increased product volume over the next two years, significantly topping its pre-COVID-19 product share and dollar sales.
The Import channel’s growth reflected the strong aftermarket performance of foreign nameplates. See the 2024 Lang Aftermarket Annual for complete details.
Distribution Channels Declining in Strength
The Traditional channel was hit hardest by COVID-19. It fell by nearly one-tenth in dollar volume during 2020 as its market share fell sharply.
The significant downturn in Do-It-For-Me (DIFM) auto repair during 2020 hit the Traditional channel hard. It could not offset its reduction in DIFM volume by expanding DIY product distribution.
The Specialized channel is focused on a limited range of products or involved in an aftermarket sector specializing in certain types of products. In 2020, the Specialized channel lost a significant share, followed by a weak performance in the next two years.
Independent Versus OE Distribution
The OE channel suffered a product share decline during 2020 and continued to lose share during the next two years as the light vehicle aftermarket rebounded sharply in product sales. However, the increasing size of the aftermarket enabled the OE channel to expand its dollar volume, despite its lower share compared to pre-COVID-19 years.
Notwithstanding the declining share of the OE channel, dealers increased their DIFM product share between 2019 and 2022. This reflected dealers’ growing use of non-OE products, particularly for the refurbishing of used vehicles and bay repairs on nameplates other than what they sell new.
Aftermarket Impact
Aftermarket changes created by COVID-19 and other factors have concentrated the volume of aftermarket products among fewer distribution channels.
Only the Integrated and Import channels increased their aftermarket product share in 2022 compared to 2019. These two channels generated more than 90 percent of distribution volume growth during these years.
Six Major Takeaways
• The onslaught of COVID-19 created massive shifts in product volume and share among the five major distribution channels supplying the car and light truck aftermarket across the U.S.
• The Integrated and Import channels increased their aftermarket product share during 2020, despite the 7.3 percent product decline among light vehicles.
• The Integrated and Import channels continued to expand their share in the past two years. The Integrated channel was boosted by the performance of retail auto parts chains and the surging volume of eCommerce.
• The Import channel benefited from the strong aftermarket performance of foreign nameplate cars and light trucks.
• The Traditional and Specialized channels declined in product share during 2022 compared to 2019. The double-digit plunge in DIFM product volume during 2020 hit the Traditional channel especially hard.
• Boosted by the aftermarket recovery, the OE channel increased its product volume, despite falling in share during 2022 compared to 2019.
See the 2024 Lang Aftermarket Annual for complete analysis of the nearly $8 billion shift in aftermarket product volume among the five major distribution channels between 2019 and 2022. Visit bit.ly/LangAftermarketAnnual2024TOC to view the Table of Contents and bit.ly/LangAftermarketAnnual 2024Orderform for the Order form.
Want more? Check out the August 2023 issue of AASP-MN News!