April 30, 2009, 12:00 AM

Gaining Traction

Auto part sites are fueling up with content to prepare for growing demand as new car sales slump in the recession.

When Tom West’s Volkswagen dealer quoted him a price of $600 to install a new towing hitch on his car, West decided to look elsewhere: online. He bought the part he needed there for $149 and took it to a local auto repair shop that installed it for $50.

West happens to be the CEO of online and catalog auto parts retailer Whitney Automotive Group, but plenty of consumers today are doing the same thing West did as economic times get tough: they find new ways to save.

Consumers have put the brakes on new car purchases and many are looking beyond dealer service departments for economical repair options for the cars they already own. This has sellers in the estimated $40 billion do-it-yourself auto parts market readying for what they see as a potential surge, one of the few bright prospects in economic conditions currently dismal for retail.

Growing demand

First-quarter numbers at one of the largest parts retailers, AutoZone Inc., underscore the opportunity, as the chain’s total sales increased 8.1% during its fiscal quarter ended Feb. 14. But the store-based chains count Internet sales as only a fraction of their business, with AutoZone, for example, recording web sales estimated by Internet Retailer at $61.1 million on total sales of $6.5 billion in fiscal 2008.

Sales at web-only retailers like Whitney Automotive Group, with annual sales estimated by Internet Retailer at $122.8 million, and U.S. Auto Parts Network Inc., with sales at a reported $153.4 million, already exceed those of large store-based players, and they see new opportunity online.

Where? In serving targeted content as well as parts. Affording easy access to information-on how to repair a car or enhance its performance-and broad access to merchandise hard to find in stores are two areas in which the web excels, and it’s there that online sellers see their chance to make the downturn into an uptick, and maybe more.

“If people increase their desire to fix their own cars, it doesn’t mean they’ve increased their ability to do it,” says Shane Evangelist, CEO of U.S. Auto Parts Network Inc. “But if the ability as well as the desire increases, that plays very well into selling auto parts. And if you can become the trusted advisor to the people trying to fix their cars, we think that’s positive for us.”

The challenge for U.S. Auto Parts and others selling online will be to figure out how to best leverage the web’s unique properties to grab their share of the pie.

Consumer demand for auto parts is driven by the age and mileage of vehicles in use and it generally increases when fewer new cars are sold and older cars are kept on the road longer, according to Linnea Kirgan, industry specialist at First Research/Hoover’s Inc.

Vehicle miles traveled-the aggregate miles driven among all vehicles in operation-dropped 3.6% in 2008 due to last summer’s increase in gas prices, according to the U.S. Department of Transportation. That’s been offset by the fact that the average age of cars on the road is creeping up as new car sales weaken, according to a recent study from R. L. Polk & Co., which says the age of the average vehicle on the road in 2008 was 8.8 years, up 10% from 8.01 in 1999, and the upward trend should crest at an average 9.37 years in 2012.

Keeping cars humming

It takes replacements parts to keep cars humming post-warranty. That’s good news for auto parts retailers, but they still face a number of factors that limit growth in the do-it-yourself segment of the market, even during a time when consumers are looking particularly hard to save money on services such as car repair.

“30 years ago, anyone could change their own spark plugs. In some cases now, it might take you 45 minutes of taking parts off to get at the spark plugs. Generally speaking, it’s more difficult to work on vehicles,” says Jim Lang, president of Virginia-based Lang Marketing Resources.

The computerized electronics powering many automotive components, which may require scanning tools to diagnose problems, may also discourage would-be do-it-yourselfers, as does the difficulty of obtaining parts for the increasing number of foreign cars on the road, according to Lang.

“These factors have tended to grind down the percentage of work done by DIYers,” he says. “Hard times or recessions don’t necessarily increase DIY work. It didn’t show up in the last couple of recessions of the early ‘80s and ‘90s.”

How-to content

But that was before the Internet was as big a part of how consumers shop as it is now, and online sellers of auto parts have been ratcheting up site content to press their advantage. AutoZone, for example, has gradually updated its consumer-facing site, AutoZone.com, most recently expanding the number of printable, vehicle-specific repair guides and job diagrams available free to registered users.

This year it’s done a major upgrade to its AllDatadiy.com site, improving navigation and expanding content on the sister site to AllData.com, which targets service professionals. AllDatadiy.com allows consumers to subscribe for access to vehicle-specific technical repair data at rates starting at $26.95 a year.

At U.S. Auto Parts Network Inc., Evangelist notes two consumer trends affecting the company’s business. A growing do-it-yourself mindset among consumers augurs well for the sales of hard parts like brakes, he says, though a fall-off in new car sales is likely to depress the sales of cosmetic or performance-related accessories most often purchased by car owners within six months after they buy a new vehicle. Overall, in the fourth quarter sales for U.S. Auto Parts dropped by 9.4% to $33.8 million from $37.3 million in the fourth quarter of 2007.

“It’s a tough time to sell performance and accessory products because discretionary spending is down and new car buying is down,” Evangelist concedes. “Where the opportunity for us is that our engine parts and hard parts business is starting to take off.”

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