© Reuters. 4 Auto Parts Stocks to Buy as New Car Sales Dwindle
As the new car market remains under pressure, the auto parts industry is benefiting handsomely from the growing demand for used cars. And because the aftermarket auto parts industry is expected to continue growing amid dwindling new car sales, we think O’Reilly Automotive (NASDAQ:), LKQ Corporation (NASDAQ:), Autoliv (NYSE:), and Dana (DAN) could be ideal bets now. Read on.The sales of new cars have declined as a function of a global semiconductor chip shortage that has hamstrung automobile production. However, the demand for used cars has increased significantly since last year, as people have taken steps to avoid public transportation due to fear of catching COVID-19 . This has caused used car prices to spike. According to the Manheim Used Vehicle Value Index, used car prices are up 18.8% from this time last year.
This bodes well for the auto parts retailers because the growing used car market drives increased demand for aftermarket auto parts because sed cars need to be repaired and parts replaced to keep running. According to the 2021 Joint Channel Forecast Model from the Automotive Aftermarket Suppliers Association (AASA) and the Auto Care Association, U.S. light-duty automotive aftermarket sales are expected to increase more than 11% to $325 billion in 2021.
Given this backdrop, we think auto parts manufacturers O’Reilly Automotive, Inc. (ORLY), LKQ Corporation (LKQ), Autoliv, Inc. (ALV), and Dana Incorporated (DAN) could be solid additions to one’s portfolio now.
Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.