Napa Auto Parts 2002 Annual Report Download - page 9

Genuine Parts Company’s Automotive Parts Group, North America’s leading distributor of automotive parts and accessory
items, distributes to a wide range of markets. The Automotive Parts Group consists of 57 NAPA Distribution Centers in the
United States serving over 5,800 NAPA AUTO PARTS stores, of which approximately 900 are company-owned. This group also
includes Balkamp, Inc., a majority-owned subsidiary that purchases, packages and distributes over 25,000 service and
supply items through the NAPA system. We also operate five plants where automotive parts are rebuilt and distributed under
the name Rayloc®. Furthermore, within the Automotive Group, we operate Johnson Industries, one of the nation’s largest
independent distributors of ACDelco, Motorcraft and other aftermarket parts, equipment and supplies.
Our market reach extends throughout North America with enterprises in Canada and Mexico. UAP Inc., which we acquired in
December 1998, is Canada’s leading automotive distributor as well as Canada’s largest heavy-vehicle parts distributor
through the TW/Traction division. We have made excellent progress integrating our Canadian operations. UAP’s operating
programs and marketing initiatives have been fully integrated into the NAPA system, and they are now going to market
as NAPA. We are represented in Mexico by Auto Todo, one of the largest automotive aftermarket players in Mexico. This is a
market that offers us tremendous potential and we believe we are positioned to take advantage of it.
No one is better suited to serve the automotive aftermarket in North America than our Automotive Parts Group. With decades
of distribution expertise, the Automotive Parts Group serves as the leading provider of products and services in the
automotive aftermarket, with the latest technology in place to capitalize on varied growth opportunities afforded us through
a diverse customer base.
The economic slowdown that had affected all businesses in 2001 carried through 2002. While many industries and
companies report decreases for 2002, our Automotive Parts Group was able to post a revenue increase of 2%. However, we
are not satisfied with these results and expect to see better growth in 2003. The following paragraphs will address how
we plan on accomplishing stronger growth.
POSITIVE TRENDS
Several positive trends should help energize the automotive
aftermarket and our performance in 2003 and beyond.
The Automotive Parts Group is fortunate to be part of a
large, essential industry that is projected to grow an average
of 4-5% annually during the next five years.
Aging Vehicles
After several years of high sales fueled by incentives and interest
rates, new car sales are expected to slow to normalized levels
of demand. Combined with other factors such as a growing
vehicle count – 200 million on U.S. roads, an increase in the
number of vehicles per licensed driver – 1:1 now, continuing
increases in miles driven and accumulated mileage – 99,000
for cars and 104,000 for light trucks, and the rising age of
vehicles on the road, the demand for replacement parts will
grow. The average age of passenger cars is now 9.5 years (up
1.2 years since 1993), while light trucks are now an average
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AUTOMOTIVE
PARTS GROUP