SIC 3714 Motor Vehicle Parts and Accessories

SIC 3714

This industry includes establishments primarily engaged in manufacturing motor vehicle parts and accessories but not engaged in manufacturing complete motor vehicles or passenger car bodies. Establishments primarily engaged in manufacturing or assembling complete automobiles and trucks are classified in SIC 3711: Motor Vehicles and Passenger Car Bodies; those manufacturing tires and inner tubes are classified in SIC 3011: Tires and Inner Tubes; those manufacturing automobile stampings are classified in SIC 3465: Automotive Stampings; those manufacturing vehicular lighting equipment are classified in SIC 3647: Vehicular Lighting Equipment; those manufacturing ignition systems are classified in SIC 3694: Electrical Equipment for Internal Combustion Engines; those manufacturing storage batteries are classified in SIC 3691: Storage Batteries; and those manufacturing carburetors, pistons, piston rings, and engine intake and exhaust valves are classified in SIC 2592: Carburetors, Pistons, Piston Rings, and Valves.

NAICS CODE(S)

336211

Motor Vehicle Body Manufacturing

336312

Gasoline Engine and Engine Parts Manufacturing

336322

Other Motor Vehicle Electrical and Electronic Equipment Manufacturing

336330

Motor Vehicle Steering and Suspension Components (except Spring) Manufacturing

336340

Motor Vehicle Brake System Manufacturing

336350

Motor Vehicle Transmission and Power Train Part Manufacturing

336399

All Other Motor Vehicle Parts Manufacturing

INDUSTRY SNAPSHOT

Following the terrorist attacks of September 11, 2001, the big three U.S. automakers (Ford, General Motors, and Daimler Chrysler) succeeded in jumpstarting a suddenly depressed auto market by offering generous financing offers and rebates, which drove strong new car sales despite the recessive economy. Light-vehicle sales in the United States in 2001 totaled 17.2 million units, down just 4 percent from 2000 (a record 17.4 million units). While auto parts manufacturers' production numbers remained high during these early years of the 2000s, automakers put intense price pressure on their part suppliers, forcing the parts manufacturers to operate on razor thin profit margins.

However, by 2004 U.S. auto production had fallen to 16.9 million units, and automakers—also working with very narrow margins and looking to keep production prices as low as possible—continued to demand price concessions from their suppliers. Parts manufacturers were thus trying to operate on the same thin margins but with reduced volumes. Rising material costs and increased overseas competition were further undermining the industry. As a result, many auto parts dealers either went under or were swallowed up by the conglomerates, who were themselves struggling to show a profit.

ORGANIZATION AND STRUCTURE

The auto parts industry is divided into two principle segments: original equipment (OE) suppliers and aftermarket suppliers.

Original Equipment Suppliers

Original equipment suppliers sell parts and components directly to automobile manufacturers for the production of new vehicles. Consequently, sales in the OE market depend on the number, size, and complexity of new vehicles produced. Primary products include wheels, frames, axles, transmissions, transaxles, bearings, springs, bumpers, brake systems, fuel injectors, seats, seat belts, airbags, cushioning, and safety padding materials. For many large suppliers, OE parts provide the majority of sales, although most suppliers also produce parts for aftermarket sales. Companies that supply both OE and aftermarket parts can generally cover development and tooling costs on the OE sales volume and supply the aftermarket at higher volumes than pure aftermarket suppliers.

Furthermore, spreading research, development, and tool and die outlays over several contracts with different manufacturers provides OE suppliers a cost advantage over the in-house parts divisions of vehicle manufacturers. OE suppliers typically concentrate on a few components and systems requiring a high degree of technological skill and manufacturing efficiency. By supplying parts for new vehicles, OE manufacturers are generally on the leading edge of technology, and vehicle manufactures have started turning to suppliers for increased engineering and development responsibilities. Auto makers also look to leading suppliers for financing and services related to inventory management, logistics, and tooling.

Aftermarket Suppliers

Aftermarket parts suppliers manufacture and sell replacement products for used vehicles. Primary products include spark plugs, shock absorbers, struts, springs, brakes pads, rotors, filters, wiper blades, and exhaust systems. Aftermarket parts are distributed through a few major parts distributors and thousands of small jobbers and local firms; they are for sale by auto dealers, service stations, repair shops, auto parts stores, tire stores, department stores, discount stores, and home and do-it-yourself stores. Aftermarket sales tend to be more stable than OE sales, particularly during recessionary times. As owners put off the purchase of new autos, they tend to extend the life of their current vehicles through increased maintenance and parts replacement.

BACKGROUND AND DEVELOPMENT

The automotive parts industry began with the development of the automobile at the turn of the century, and the growth in the parts industry followed that of the automotive industry. By 1970 automobiles were manufactured in long production runs of few vehicle models. The vehicle population consisted of a fairly homogenous group of cars—known to be not particularly well made. Automobiles of the era were easy to repair, and, with nearly all of the 225,000 service stations in operation providing repair services, mechanics were abundant. Parts suppliers found it easy to predict the demand for a relatively narrow range of parts and profited from their manufacture.

Beginning in the 1970s, several trends in the U.S. automobile industry started to affect domestic parts producers. The number of vehicle models produced began to expand, buoyed mostly by the increased sales of Japanese automobiles in the U.S. market. The continued proliferation of models and the shortening of model lives increased the number of parts required for vehicle manufacture and repair while lowering the volume of individual part production. Lowered economies of scale began to dampen the profits of parts suppliers while growing product lines increased the number of niche suppliers.

During the 1980s, small trucks began to sell more rapidly than passenger cars—requiring an increased production of parts for the truck population. During this time, the increasing market share gained by foreign vehicle manufacturers—whose OE and replacement parts were principally supplied by foreign parts producers—resulted in a decrease in the overall market for domestic parts.

Responding to this global competition, U.S. vehicle manufacturers placed a stronger emphasis on quality and reliability. However, more reliable new cars led to fewer...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT