Impressive Scale and Resilient End Markets Should Pave Way for Genuine Parts' Continued Growth

With a solid presence in the global automotive distribution industry that is cemented by its footprint of 9,800 affiliated stores, we believe Genuine Parts is well-positioned to continue serving its professional customer base in future years. About two thirds of Genuine’s automotive sales are derived from North America (primarily the United States) where we estimate the firm’s Napa Auto Parts brand boasts a mid-single-digit domestic share of the highly fragmented commercial automotive aftermarket. Given Genuine’s professional customer base tends to value the quick sourcing of necessary parts for sake of turning over service bays, the firm utilizes its distribution network to procure and deliver a vast assortment of automotive parts to its thousands of affiliated retail locations, allowing for ample local product availability. In turn, affiliated retail locations leverage the readily available inventory assortment to service time-sensitive customer demand. In our view, the firm stands to benefit from its established distribution system, strong supplier relationships, and an aging vehicle fleet for the foreseeable future. However, growing electric vehicle adoption could pose a threat to its long-term competitive standing.