The Integrated Channel is generating the greatest light vehicle product volume and the highest annual rate of product sales increase among the five major distribution channels
Fort Wayne, Ind.—Among the five major distribution channels supplying the U.S. light vehicle aftermarket, the Integrated Channel is generating the greatest light vehicle product volume and the highest annual rate of product sales growth, according to a new Lang Aftermarket iReport.
Of the five major distribution channels, the Integrated Channel has the most balanced market mix, states Lang, with strong positions in both the Do-It-For-Me (DIFM) and Do-It-Yourself (DIY) light vehicle aftermarket sectors. Its growth over the past 10 years has been strongest in the DIFM market, which will also generate most of its car and light truck product growth between now and 2028.
DIFM repair outlet chains and franchises (e.g., Midas, Meineke, Monro) share a long history of Integrated Distribution in the light vehicle aftermarket on a regional and national basis. Large retail tire chains (Goodyear, Firestone, and others) are additional examples of Integrated Distribution in the light vehicle DIFM market.
The report also notes that as o2o (online to offline) eCommerce auto repair increases in prominence, it will further expand Integrated Distribution’s position in the rapidly evolving light vehicle aftermarket supply chain.
The following are key takeaways from the analysis.
Unique Distribution Characteristic
Integrated Distribution has a signature characteristic: products do not change ownership (or franchise affiliation) from when they are purchased from Manufacturers to the point of product consumption or sale to an Installer (DIFM outlet or DIYer).
Marketing Advantages
Integrated Distribution has several competitive marketing advantages over other major channels.
• Integrated Distribution often has lower distribution costs than the other major aftermarket channels. This reflects the channel’s integrated (combined) distribution levels that eliminate the multiple distributor costs and gross margins common to other multi-tiered channels.
• Implementing marketing and sales programs through Integrated Distribution is generally easier than in other major channels since it eliminates multiple levels of decision makers who can have conflicting interests.
• Integrated Distribution participants include some of the largest organizations in the light vehicle aftermarket, whose sizes often have competitive advantages over smaller competitors in other channels.
Sales Growth and Product Mix
Since 2020, Integrated Distribution has been responsible for over half of car and light truck product growth, achieving strong volume growth in both the domestic and foreign nameplate sectors of the aftermarket.
DIFM Growth
Some auto repair operations engaged in Integrated Distribution, especially Repair Specialists, focus on a limited array of products and services. Over the past decade, most of these specialized operations have expanded their repair menus, adding to their market success.
Commercial Growth of Retail Auto Parts Stores
Integrated Distribution is making strong DIFM inroads through the product sales of Retail Auto Parts Stores to Installers (commercial accounts). In the past five years, Wholesale (commercial) business has generated most of the substantial sales increases recorded by major chains of Retail Auto Parts Stores across the U.S.
The DIFM (commercial) market product growth of Retail Auto Parts Chains is progressing significantly faster than the pace of the overall DIFM market.
Most of Integrated Distribution Growth
Lang Marketing projects that over the next five years, growing DIFM activities will generate most of Integrate Distribution’s expansion. As noted, the Integrated Channel’s DIFM growth will be increased by Repair Specialists, which are rapidly expanding their repair market position. Retail Auto Parts Stores’ commercial sales will also strongly contribute to the Integrated Channel’s DIFM expansion.
o2o Auto Repair
o2o auto repair will become increasingly important in the aftermarket over the next five years, with most transactions occurring within the Integrated Channel. eCommerce has provided the Integrated Channel with much of its DIY sales growth since 2015.
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