[Atlas] Parts distributors at the top table

Their first two ITGs (International Trading Groups), Nexus Automotive International and ATR , are close to €40bn and €30bn of revenue respectively. The leading distribution groups, GPC and LKQ Corp , posted figures of around $12bn and almost $20bn respectively in 2019. In Europe, about ten of their counterparts exceed or approach €2bn. In North America, the Top 5 are worth some $50bn... This is only the beginning of a great concentration movement that distributors around the world are following and pursuing with obvious and strategic relish. For many independent businesses, it is the opportunity to cash in on the result of a lifetime’s work. For investors, this external growth, based on a market as acyclical as vehicle fleets, offers attractive and secure growth of 6 to 10% per year. And there are still many independents to be absorbed among the 106,000 outlets in Europe and North America alone (45,000 and 61,000 respectively).

The art of becoming indispensable

This dense logistical fabric is in any case necessary in order to be just as capable of supplying a continent as a simple canton. With hundreds of thousands of references in stock from an array of brands, and promoting a multitude of services (delivery, returns, warranty management, technical information, training, sales promotion, etc.), distributors have now become indispensable. They serve, or at least help out, all types of garages. Powerful through their capital concentrations or via their alliances, agile through their local roots, they have just proved during this unprecedented and long-lasting supply-side crisis that they have, all over the planet, sufficiently solid backbones to absorb the shocks in supply chains and guarantee their daily deliveries to millions of PC, LCV and HDV garages.

Equal footing

They are finally talking to global OEMs on an equal footing, and sometimes even taking the liberty of chastising them when the service rate of these referenced suppliers erodes under the effects of the supply chain crisis inherited from the global lockdowns.

They are beginning to earn their place at the top table occupied by the vehicle manufacturers, who are finally acknowledging their legitimacy, and even their necessary complementarity, with their sacrosanct original parts, which cannot reach older vehicles.

It is therefore not surprising that, here too and in keeping with the marriages of reason that are beginning to be celebrated between car manufacturers and independent repair shops, the small distributors of yesteryear – Davids which have become Goliaths - are now forging connections for the future with car brands.

Jean-Marc Pierret

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