Digital Auto Care Factbook & Lang Annual 2017 - LANG20

Section II - Executive Summary

DISTRIBUTION CHANNELS
The light vehicle aftermarket is supplied by five major distribution channels: Traditional, Specialized, OE, Integrated, and the Import channel.
Traditional Distribution. Involving Warehouses, Jobbers, and Installers, the Traditional channel,
in its classic three-step form, is a multi-tier distribution system comprised of Manufacturers selling
to Warehouses, Warehouses distributing to Jobbers, and Jobbers selling to Installers (Do-It-Yourselfers and Service outlets). A growing portion of Traditional channel volume involves two-step
distribution, wherein Warehouses sell to large Installers and other end-users (bypassing Jobbers)
and Jobbers purchase directly from Manufacturers, Rebuilders, and other marketers (bypassing
Warehouses). Constantly evolving, the Traditional channel is currently a mix of distribution patterns, with Warehouses and Jobbers both involved in two-step and three-step distribution. Capturing 21.3% of 2005 light vehicle aftermarket products, the Traditional channel climbed to 22.7% of
the 2012 market, plateauing at 22.8% share during 2014 and 2015. The Traditional channel recorded a $5.4 billion 2015 product sales increase compared to 2005: $24.0 billion versus $18.6 billion
at user-price. Traditional channel expansion proceeded at a faster pace over the past ten years than
total aftermarket products, producing Traditional distribution's expanding product share.
Specialized Distribution. There are two primary types of Specialized distribution in the U.S. light
vehicle aftermarket: distribution focused on a limited array of products and distribution involving
a specific segment of the aftermarket specializing in certain types of light vehicle products. Specialized distribution captured 14.1% of 2015 car and light truck aftermarket product sales, down
from 14.5% share the previous year. Specialized distribution slipped from 16.4% of 2005 light
vehicle aftermarket products to 14.1% of the 2015 light vehicle market. Nevertheless, sales grew
from $14.4 billion to $14.8 billion at user-price between 2005 and 2015. Specialized distribution
averaged a 0.3% gain in aftermarket product sales in current dollars at user-price between 2005
and 2015. This is less than the 1.8% annual product growth rate recorded by the total car and light
truck aftermarket at user-price. As a result, the product share of Specialized distribution diminished 230 basis points between 2005 and 2015.
OE Distribution. The OE (Original Equipment) light vehicle channel involves vehicle Manufacturers and their suppliers shipping products to Dealers who install products in their service bays
and/or redistribute products through their parts departments to Independent Installers and Do-ItYourselfers. Capturing 18.4% of car and light truck 2015 aftermarket products, the OE channel
held approximately one-fifth less product share in 2015 than it did 10 years earlier. OE distribution
receded from $20.3 billion to $19.3 billion in product sales at user-price between 2005 and 2015,
peaking at $21.1 billion in 2007 product volume. OE channel product sales declined at a 0.5% average annual pace between 2005 and 2015, the only major distribution channel which represented
less light vehicle 2015 product volume than ten years earlier, at user-price.
Integrated Distribution. Integrated distribution has a signature characteristic: products do not
change ownership (or franchise affiliation) from the time they are purchased from Manufacturers
to the point of ultimate consumption or sale to an Installer (Service outlet or Do-It- Yourselfer).
© 2016 by Lang Marketing Resources, Inc.
20

www.langmarketing.com

http://www.langmarketing.com

Table of Contents for the Digital Edition of Digital Auto Care Factbook & Lang Annual 2017