Analyst Note
| Dawit Woldemariam |LKQ reported solid third-quarter results on the back of a strengthening demand environment. Net sales in the quarter reached $3.3 billion, up approximately 8% year over year. The company experienced growth across its segments, as individual transportation continued to climb back from pandemic lows. Vehicle miles driven in the U.S. stood at 3.2 trillion miles in March 2020 before declining to 2.7 trillion miles in February 2021. Since then, miles driven have started to recover, up to over 3 trillion miles in August 2021 (the last measured month based on U.S. Federal Reserve data). The elevated level of average vehicle age is another driver for the alternative parts industry. From our estimates, the average age currently stands just under 12 years today. This will likely drive strong demand for LKQ’s products as more vehicle miles are logged.