SIC 5531 Auto and Home Supply Stores

SIC 5531

This classification comprises establishments primarily engaged in the retail sale of new automobile tires, batteries, and other automobile parts and accessories. Frequently, these establishments sell a substantial amount of home appliances, radios, and television sets. Establishments dealing primarily in used parts are classified in wholesale trade, SIC 5015: Motor Vehicle Parts, Used. Establishments primarily engaged in both selling and installing such automotive parts as transmissions, mufflers, brake linings, and glass are classified in services, industry group 753 (Automotive Repair Shops).

NAICS CODE(S)

441320

Tire Dealers

441310

Automotive Parts and Accessories Stores

INDUSTRY SNAPSHOT

As a group, auto and home supply retailers participate in what is commonly referred to as the automobile aftermarket, a term referring to all the parts and services needed by motor vehicles after they leave the manufacturing plant. This broadly defined market includes the manufacturing and sale of fuel, lubricants, tires, batteries, brakes, accessories, and a host of other products used to maintain or heighten an automobile's performance, or simply to improve its appearance. Additionally, the automobile aftermarket encompasses the installation or servicing of these products.

This multibillion-dollar market, valued at $245 billion in 2003 and expected to have grown 4 percent the following year, includes various types of retailers other than auto and home supply stores, such as oil companies, rubber companies, service stations, discount wholesalers, and department stores, all of which control a portion of the automobile aftermarket. Moreover, auto and home supply retailers, as defined by the Standard Industrial Classification Manual, participate in only a portion of the automobile aftermarket. They do not generate revenue from the sale of fuel, nor do they derive the bulk of their revenue from selling and installing transmissions, mufflers, brakes, or windshield glass. These establishments generally are franchised or independent stores devoted entirely to selling, installing, or servicing a strictly limited number of automobile parts. Growth into 2005 was expected due to vehicle fleet aging and an increase in vehicles, drivers, and traveled miles.

Although consigned to a share of the automobile aftermarket, by both other retailers and the parameters of the SIC Manual, auto and home supply retailers generate an aggregate revenue measured in billions of dollars, the size of which is augmented by sales garnered from the industry's other focus, home supplies. These products generally consist of goods such as refrigerators, television sets, radios, or essentially any item a retailer believes consumers will purchase. Although the combination of auto parts and home appliances under one roof seems an odd mix, the inclusion of home supply products in auto parts retail stores has roots stretching back nearly to the genesis of the auto parts industry itself. Intended to complement the revenue realized from the sale of auto parts, home supply products historically have played an integral role in the performance of auto and home supply stores.

Within the auto and home supply industry, there are several types of retailers, some selling only one product such as tires and others concentrating on one particular segment of the automobile aftermarket, such as vehicle accessories. "Speed Shops" are an example of the latter, offering products to increase, as their name suggests, the performance capabilities of a vehicle, which also can include an assortment of decorative merchandise. Some large tire manufacturers also operate retail stores devoted solely to selling their products, while the same is true of battery manufacturers.

ORGANIZATION AND STRUCTURE

The auto and home supply industry is a densely populated niche within the automobile aftermarket, with stores fairly evenly distributed throughout the nation. In 1980, there were 35,200 establishments in operation. That number spiraled to 46,000 in 1987. During the late 1980s, a combination of store closures and consolidations blew through the ranks of auto and home supply stores, dropping the nationwide total to approximately 41,300 by the early 1990s. Industry employment has declined in recent years, falling from 408,300 people in 1997 to 405,840 in 2001. By 2003, employment was back up again, with 478,400 people employed by the industry.

On a broad level, the fortunes of the auto and home supply industry generally are dictated by economic factors that determine the welfare of nearly all retail, manufacturing, and service industries. Increases in the amount of disposable income held by consumers will have a favorable effect on auto and home supply retailers' business, as will appreciable increases in the nation's population, which eventually will mean more licensed drivers and more automobiles on the road. Also, significant increases in the number of new automobiles entering the market will boost retailers' sales, as new automobile owners buy products to equip their new purchases.

But auto and home supply retailers also may realize higher revenue when these same conditions worsen, lending the industry the enviable characteristic of benefiting from both the good and the bad. Reduced consumer spending can increase, in certain circumstances, the business activity of auto and home supply retailers, primarily because automobile owners will be more inclined to repair their vehicles themselves, rather than pay for the services of a professional mechanic. Similarly, fewer new automobiles on the road generally means consumers are continuing to drive their existing, older vehicles.

Positioned as such, auto and home supply retailers have enjoyed steady, and sometimes prolific, growth since the emergence of the auto and home supply concept in the early twentieth century. But in the mid-1990s, various challenges portended substantial decline as the auto and home supply industry entered the twenty-first century. One concern was the increasing technological advancement and complexity of automobiles, which made them more difficult for consumers to repair themselves, thus redirecting business toward trained garage mechanics, and away from auto and home supply retailers.

A second concern was the proliferation of massive discount stores and wholesale distributorships, which led to a greater representation of these types of retailers in the automobile aftermarket, further shrinking auto and home supply retailers' customer base. To help dampen the...