Key Points:
- The industry did slow in May and June, likely due to higher gas prices impacting the DIY part of the business; hot weather in many parts of the country was also an issue. Since then, traffic and the pace of business have improved. While we are still awaiting AZO and AAP parts results, the elsewhere-reported slowdown was noise.
- Big picture, miles driven continue to grow and the PARC continues to grow and age. Those are what drive industry volume and the aging PARC is likely becoming a larger factor to industry growth.
With results from GPC and O’Reilly Automotive, we are able to reflect on last month’s piece - Auto Part Retail: The slowdown is less than is being reported. The industry did slow in May and June, likely due to higher gas prices impacting the DIY part of the business; hot weather in many parts of the country was also an issue. Since then, traffic and the pace of business have improved. Moreover, June’s excessive heat likely leads to more break-fix in the months ahead. Big picture, miles driven continue to grow and the PARC continues to grow and age. Those are what drive industry volume and the aging PARC is likely becoming a larger factor to industry growth; that’s a structural driver.
Below is the note’s chart reproduced to (1) put NAPA on its own axis (RHS), (2) restrict the locations to only those operated by GPC, and (3) extend it through July. In the revised chart, the deceleration in June is more apparent and the July bounce back is evident, supporting the CEO commentary from both GPC and ORLY.
GPC reported NA company-run comp sales of +4.0% (-150bps QoQ). CEO Will Stengel said, “From a cadence perspective, average daily sales were up low to mid-single digits in April and May and roughly flat in June, which we believe is driven by a softer market resulting from higher fuel prices. We've seen an improvement July month-to-date with average daily sales growth tracking in line with our expectations. In the second quarter, comparable sales at our company-owned stores increased approximately 4% with commercial up approximately 5.5%.… By customer type [across owned and independent], comparable sales to our commercial customers for the quarter were up approximately 4%, while comparable sales to our retail [DIY] customers decreased approximately -3%.” (We had previewed that DIY would be the weaker side of the business. For Q1, the figures were +5% / +1% for commercial / DIY.)
O’Reilly Automotive reported +6% comp-sales for Q2. Yes, that’s down from LQ’s +8.1%, but still industry-leading and settles the 2- and 3-year CAGRs largely where they were +5.0% /+4.1%. (Observed traffic was +3.3%. Observed ticket was +5.1%, but given that CPI-parts was only 2.1%, our observed ticket figure is too high. And so, we’d break the +6% comp-increase into +3% comp-transactions, +2% inflation, and +1% part mix.) Commercial and DIY both increased and CEO Brad Beckham said, “Sales outpaced these [our] projections each month of the quarter, with April's results outperforming a little more than May and June. As we discussed on last quarter's call, favorable spring weather supported by strong volumes in both our DIY and professional businesses as we exited the first quarter, and we saw much of that momentum continue in April. As we moved into our summer selling season, our sales trends moderated to a very consistent week-to-week pace through the remainder of the quarter… As noted in yesterday's press release, we have increased from the previous [comp] range of 3% to 5% to a range of 4% to 6%. This update flows through the outperformance we delivered in the first half of 2026 leaves our expectations for comparable store sales growth for the back half of the year unchanged. Looking forward, we are pleased with a strong start to the third quarter, but we're cognizant of the potential that the benefits we have realized so far this quarter are the result of normal month-to-month weather volatility, and we don't want to overact to trends that could moderate over time.” i.e. characterizations matched in the chart. Moreover, May did not go negative.
