LKQ Looks Poised to Take Market Share in the Highly Fragmented Auto Parts Distribution Industry

Since forming in 1998, LKQ has established itself as a leading distributor of aftermarket and recycled auto parts in North America and Europe. We consider speed of service and low prices as primary sources of competitive advantage in the auto parts distribution industry, and we think LKQ boasts a solid edge over smaller independent and regional competitors in both regards. With time sensitive professional customers that seek to turn over service bays quickly, LKQ utilizes its vast distribution network to procure and deliver collision and mechanical parts on short notice. And particularly as it pertains to collision/body shop customers, there is value to having a ready assortment of salvage parts as insurance companies look to minimize repair costs. In our view, LKQ’s superior scale and product availability is evidenced by its industry-leading fulfillment rates, which typically stand around 95% for aftermarket parts (versus 65% from its competitive set) and 75% for salvage items (versus 25%).