The era of easy profits in the automotive aftermarket is over. Around 30% of weaker auto parts distributors have already been forced out of the market, while the survivors are absorbing the market share left behind.
What's Really Changing in the Market?
1. Demand for Parts Is Declining
A traditional gasoline-powered vehicle contains roughly 30,000 components, with the engine and transmission accounting for a significant portion. Electric vehicles (EVs) eliminate both of these major systems, reducing the total number of parts by one-third—or even more.
Fewer parts naturally mean fewer replacement opportunities. EVs don't require engine oil, oil filters, drive belts, timing kits, or many other consumable components. Even brake pads wear more slowly thanks to regenerative braking.
Meanwhile, from 2024 to 2025, China replaced approximately 18.3 million vehicles under its vehicle trade-in program, with nearly 60% being new energy vehicles (NEVs). During the same period, 17.673 million end-of-life vehicles were recycled nationwide, representing an average annual growth rate of 45.8%. As older, high-maintenance vehicles disappeared from the road, the traditional repair and maintenance market lost a substantial portion of its core customer base.
The conclusion is clear: overall demand is shrinking.
2. Maintenance Intervals Are Much Longer
Gasoline vehicles typically require servicing every 5,000 to 10,000 kilometers. EVs are very different. For example, Tesla recommends maintenance every 12 months or 20,000 kilometers, whichever comes first.
That difference translates directly into fewer service visits and fewer sales opportunities.
Many people therefore claim that EVs don't need maintenance and that the auto parts business is doomed. However, that conclusion is overly simplistic.
Demand remains strong for chassis components, braking systems, air-conditioning systems, tires, collision repair parts, and accessories related to the battery, motor, and electronic control systems. In many cases, the average repair bill for an EV is actually higher than that of a conventional vehicle.
More importantly, today's EV fleet is still relatively young. The industry's peak repair cycle has yet to arrive.
3. Automakers Are Keeping the Parts Business In-House
This may be the biggest challenge facing traditional aftermarket suppliers.
Today's automakers no longer stop at manufacturing vehicles. Through mobile apps, they maintain direct relationships with vehicle owners and encourage them to return to authorized dealerships by offering lifetime warranties.
For example, lifetime battery warranties often require owners to use genuine OEM parts and authorized service centers. As a result, the markets for collision parts, accident repairs, and many technical components are gradually shifting away from the independent aftermarket.
Taken together, these three trends lead to one inevitable conclusion:
The market available to traditional auto parts distributors is shrinking rapidly.
Why Does the Business Feel Increasingly Difficult?
The previous section covered the macro trends. On the ground, however, almost every auto parts supplier says the same thing:
"Business has become much harder."
Why?
1. Price Transparency
E-commerce platforms have made pricing completely transparent.
Vehicle owners can now compare parts prices online in seconds, leaving repair shops with far less room to mark up products. Naturally, wholesalers and distributors feel the pressure as well.
Ultra-low-priced products—such as $2.80 oil filters or $9.90 brake pads—have become increasingly common. Profits are either squeezed away by price transparency or destroyed by aggressive price competition.
2. Distribution Channels Have Become Fragmented
The once-stable distribution system has been disrupted by multiple new players:
- Automaker direct sales
- National repair chains
- Community group buying
- Livestream e-commerce
Many newcomers don't follow traditional classification methods based on vehicle models, brands, or compatibility. Their strategy is much simpler:
Where the traffic goes, the products follow.
When a stationery giant like Deli starts selling windshield wipers online, it becomes obvious that this is no longer just a battle between traditional auto parts companies.
3. Inventory Turns Are Slowing
Everyone in the auto parts business understands one reality:
Your money isn't in your wallet—it's sitting on your shelves.
Under the traditional model, achieving three to four inventory turns per year was considered healthy. Many businesses, however, only managed 1.5 to 2 turns.
Now, vehicle models are being updated much faster than before. A distributor may stock a batch of parts only to discover that the corresponding vehicle model has already been discontinued before the inventory is sold.
Capital becomes tied up in slow-moving inventory, making cash flow even more difficult.
4. Customer Loyalty Is Falling
Many distributors ask the same question:
"I've always treated my customers well. I deliver whenever they call, provide door-to-door service, and even host appreciation dinners every year. Why do they leave so easily?"
Because those services are no longer unique.
Online platforms deliver directly to customers' doors. Large chain stores deliver straight to repair bays. In many cases, they also offer lower prices.
Does the Auto Parts Business Still Have a Future?
Yes—but the future belongs to four types of businesses.
1. Technical Experts
There will always be demand for professionals who can diagnose problems accurately and solve difficult technical issues.
Their value comes from years of accumulated expertise and practical experience. Like a master technician, they become difficult to replace because they consistently solve problems others cannot.
2. Inventory Management Specialists
Imagine two businesses, each with $1 million in working capital.
One turns its inventory twice a year.
The other achieves six inventory turns annually.
The second company can potentially generate three times the profit from the same amount of capital.
That's not luck—it's the result of data-driven product selection, intelligent warehouse management, and algorithm-based pricing. Margins may be thinner, but capital efficiency is dramatically higher.
3. The New Generation of Digital Auto Parts Professionals
Successful businesses are combining offline service with online customer acquisition.
They create educational videos explaining auto parts, teach drivers how to identify common vehicle problems, and even produce entertaining short-form content to increase brand awareness.
Content marketing enables them to attract highly targeted customers at a much lower acquisition cost.
4. Businesses Willing to Expand Beyond Their Traditional Market
After visiting nine auto parts companies that achieved growth despite the downturn, one common pattern emerged:
They changed the way they do business.
Some have successfully expanded into overseas markets.
While competition in China's domestic market has become increasingly intense, global demand for Chinese auto parts remains strong.
Markets such as North America's DIY automotive sector and Southeast Asia's used vehicle parts market continue to offer significant growth opportunities.
Conclusion
The auto parts business is not disappearing.
The number of vehicles on the road remains enormous, and the average vehicle age continues to increase. Maintenance and replacement demand will always exist.
However, while demand remains relatively stable, the supply side has become increasingly competitive.
The industry is entering a survival-of-the-fittest era—where only the most adaptable businesses will continue to thrive.
Post time: Jul-29-2026