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3 Auto Replacement Stocks to Watch Amid Rising Repair Costs
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The Zacks Automotive–Replacement Partsindustry faces a challenging near-term outlook despite benefiting from an aging U.S. vehicle fleet. While older vehicles continue to support demand for replacement parts, rising repair complexity driven by electric vehicles is increasing costs for diagnostics, software and calibration, pressuring margins. Ongoing tariff uncertainty and elevated sourcing costs further weigh on profitability, particularly for companies reliant on imported components. Despite these challenges, industry players like Genuine Parts Company (GPC - Free Report) , Dorman Products, Inc. (DORM - Free Report) and Standard Motor Products, Inc. (SMP - Free Report) remain well-positioned to deliver sustained growth.
Industry Overview
The Zacks Automotive – Replacement Parts industry includes companies involved in the manufacturing, marketing and distribution of replacement components for the automotive aftermarket. Industry participants supply systems, components and equipment used to repair and maintain vehicles, including engine, steering, drivetrain, suspension, brake and transmission parts. Demand for replacement parts is generally more resilient than new vehicle sales, as consumers tend to maintain existing vehicles rather than purchase new ones during periods of economic uncertainty. Repairs may be undertaken either by vehicle owners themselves or through professional service providers.
Factors Influencing the Industry's Prospects
Vehicle Aging to Boost Aftermarket Demand:The U.S. vehicle fleet has been steadily aging over the past decade, with the average vehicle age increasing from 12.8 years in 2025 to an estimated 13 years in 2026, per CCC Intelligent Solutions. This trend reflects consumers holding onto their vehicles longer amid economic uncertainty and high auto financing costs. As of the first quarter of 2026, the average annual percentage rate for new-vehicle loans rose to 6.9%, up from 6.7% in the fourth quarter of 2025, per Edmunds. A larger fleet of older vehicles is likely to have boosted demand for replacement parts, driving sustained growth in the auto replacement market.
Repair Complexity Due to EV Technology: Vehicle repair has become increasingly complex with the growing adoption of electric vehicles. While conventional repairs primarily involved replacing damaged components and repainting body panels, EV repairs often require additional procedures such as sensor replacement, software diagnostics and system recalibration after the physical work is completed. These extra requirements increase repair costs and operational complexity, forcing replacement parts manufacturers to invest in advanced technologies and capabilities. The higher costs can weigh on profit margins, particularly for smaller companies with limited scale.
Tariff Risks: Replacement parts manufacturers continue to face uncertainty from evolving U.S. trade policies. The United States has imposed tariffs on various imported materials and automotive components from China and other countries, while also considering additional trade restrictions. The scope and duration of these tariffs, along with potential retaliatory measures, could increase sourcing costs and disrupt supply chains. Although companies may pass on some of these higher costs through pricing, incomplete cost recovery could pressure margins and adversely affect financial performance, especially for manufacturers with significant reliance on imported components.
Zacks Industry Rank is Unfavorable
The Zacks Automotive – Replacements Parts industry is part of the broader Zacks Auto-Tires-Trucks sector. The industry currently carries a Zacks Industry Rank #218, which places it in the bottom 11% of around 240 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates concerning near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate.
Before we present a few stocks from the industry worth considering for your portfolio, let's take a look at the industry’s stock market performance and current valuation.
Industry Lags Sector and S&P 500
The Zacks Automotive – Replacement Parts industry has underperformed the Auto, Tires and Truck sector and the S&P 500 composite over the past year. The industry has declined 9.5% against the S&P 500 and the sector’s growth of 21.1% and 7.8%, respectively.
One-Year Price Performance
Image Source: Zacks Investment Research
Industry's Current Valuation
Since automotive companies are debt-laden, it makes sense to value them based on the Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization (EV/EBITDA) ratio. On the basis of trailing 12-month enterprise value to EBITDA (EV/EBITDA), the industry is currently trading at 6.86X compared with the S&P 500’s 18.52X and the sector’s trailing 12-month EV/EBITDA of 25.28X. Over the past five years, the industry has traded as high as 8.2X, as low as 5.76X and at a median of 7.37X, as the chart below shows.
EV/EBITDA Ratio (Past 5 Years)
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
3 Stocks to Watch
Genuine Parts: It distributes automotive and industrial replacement parts and materials. GPC's Industrial segment, led by Motion, is currently the company's biggest growth engine. With manufacturing activity remaining healthy and deferred maintenance normalizing, the Industrial business is well-positioned to deliver both revenue growth and expanding margins. Despite inflationary pressures, GPC continues to improve profitability through pricing, sourcing and restructuring initiatives. These initiatives provide a cushion against rising costs while supporting earnings growth.
GPC currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for 2026 sales and EPS implies year-over-year growth of 4.7% and 4.8%, respectively. The Zacks Consensus Estimate for 2026 EPS has moved up 2 cents in the last 30 days.
Dorman Products:It is a leading supplier in the motor vehicle aftermarket industry. Despite continued uncertainty surrounding the macroeconomic and geopolitical landscape, the company reported a 4.2% year-over-year increase in first-quarter 2026 net sales. Supported by its solid first-quarter results and encouraging momentum across all three business segments, the company reaffirmed its 2026 net sales and earnings guidance. The company expects net sales to grow 7-9% year over year in 2026.
DORM currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2026 EPS has moved up 2 cents in the last 90 days. It has surpassed earnings estimates in each of the trailing four quarters, the average earnings surprise being 8.67%.
Price & Consensus: DORM
Image Source: Zacks Investment Research
Standard Motor: It is one of the leading manufacturers, distributors and marketers of premium automotive replacement parts for engine management and temperature control systems. The acquisition of Nissens, completed in November 2024, has helped SMP expand its geographic presence and establish a significant global growth platform. The Engineered Solutions segment's rebound, which began in mid-2025, reflects improving demand across commercial vehicle and powersports markets. Although this business is more cyclical than the aftermarket operations, the recovery provides SMP with an additional growth engine beyond its traditional repair-focused business.
SMP currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2026 sales and EPS implies year-over-year growth of 4.6% and 9.5%, respectively. It has surpassed earnings estimates in each of the trailing four quarters, the average earnings surprise being 22.27%.
View the Zacks #1 Rank List
Image: Bigstock
3 Auto Replacement Stocks to Watch Amid Rising Repair Costs
The Zacks Automotive–Replacement Partsindustry faces a challenging near-term outlook despite benefiting from an aging U.S. vehicle fleet. While older vehicles continue to support demand for replacement parts, rising repair complexity driven by electric vehicles is increasing costs for diagnostics, software and calibration, pressuring margins. Ongoing tariff uncertainty and elevated sourcing costs further weigh on profitability, particularly for companies reliant on imported components. Despite these challenges, industry players like Genuine Parts Company (GPC - Free Report) , Dorman Products, Inc. (DORM - Free Report) and Standard Motor Products, Inc. (SMP - Free Report) remain well-positioned to deliver sustained growth.
Industry Overview
The Zacks Automotive – Replacement Parts industry includes companies involved in the manufacturing, marketing and distribution of replacement components for the automotive aftermarket. Industry participants supply systems, components and equipment used to repair and maintain vehicles, including engine, steering, drivetrain, suspension, brake and transmission parts. Demand for replacement parts is generally more resilient than new vehicle sales, as consumers tend to maintain existing vehicles rather than purchase new ones during periods of economic uncertainty. Repairs may be undertaken either by vehicle owners themselves or through professional service providers.
Factors Influencing the Industry's Prospects
Vehicle Aging to Boost Aftermarket Demand:The U.S. vehicle fleet has been steadily aging over the past decade, with the average vehicle age increasing from 12.8 years in 2025 to an estimated 13 years in 2026, per CCC Intelligent Solutions. This trend reflects consumers holding onto their vehicles longer amid economic uncertainty and high auto financing costs. As of the first quarter of 2026, the average annual percentage rate for new-vehicle loans rose to 6.9%, up from 6.7% in the fourth quarter of 2025, per Edmunds. A larger fleet of older vehicles is likely to have boosted demand for replacement parts, driving sustained growth in the auto replacement market.
Repair Complexity Due to EV Technology: Vehicle repair has become increasingly complex with the growing adoption of electric vehicles. While conventional repairs primarily involved replacing damaged components and repainting body panels, EV repairs often require additional procedures such as sensor replacement, software diagnostics and system recalibration after the physical work is completed. These extra requirements increase repair costs and operational complexity, forcing replacement parts manufacturers to invest in advanced technologies and capabilities. The higher costs can weigh on profit margins, particularly for smaller companies with limited scale.
Tariff Risks: Replacement parts manufacturers continue to face uncertainty from evolving U.S. trade policies. The United States has imposed tariffs on various imported materials and automotive components from China and other countries, while also considering additional trade restrictions. The scope and duration of these tariffs, along with potential retaliatory measures, could increase sourcing costs and disrupt supply chains. Although companies may pass on some of these higher costs through pricing, incomplete cost recovery could pressure margins and adversely affect financial performance, especially for manufacturers with significant reliance on imported components.
Zacks Industry Rank is Unfavorable
The Zacks Automotive – Replacements Parts industry is part of the broader Zacks Auto-Tires-Trucks sector. The industry currently carries a Zacks Industry Rank #218, which places it in the bottom 11% of around 240 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates concerning near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate.
Before we present a few stocks from the industry worth considering for your portfolio, let's take a look at the industry’s stock market performance and current valuation.
Industry Lags Sector and S&P 500
The Zacks Automotive – Replacement Parts industry has underperformed the Auto, Tires and Truck sector and the S&P 500 composite over the past year. The industry has declined 9.5% against the S&P 500 and the sector’s growth of 21.1% and 7.8%, respectively.
One-Year Price Performance
Image Source: Zacks Investment Research
Industry's Current Valuation
Since automotive companies are debt-laden, it makes sense to value them based on the Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization (EV/EBITDA) ratio. On the basis of trailing 12-month enterprise value to EBITDA (EV/EBITDA), the industry is currently trading at 6.86X compared with the S&P 500’s 18.52X and the sector’s trailing 12-month EV/EBITDA of 25.28X. Over the past five years, the industry has traded as high as 8.2X, as low as 5.76X and at a median of 7.37X, as the chart below shows.
EV/EBITDA Ratio (Past 5 Years)
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
3 Stocks to Watch
Genuine Parts: It distributes automotive and industrial replacement parts and materials. GPC's Industrial segment, led by Motion, is currently the company's biggest growth engine. With manufacturing activity remaining healthy and deferred maintenance normalizing, the Industrial business is well-positioned to deliver both revenue growth and expanding margins. Despite inflationary pressures, GPC continues to improve profitability through pricing, sourcing and restructuring initiatives. These initiatives provide a cushion against rising costs while supporting earnings growth.
GPC currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for 2026 sales and EPS implies year-over-year growth of 4.7% and 4.8%, respectively. The Zacks Consensus Estimate for 2026 EPS has moved up 2 cents in the last 30 days.
Price & Consensus: GPC
Image Source: Zacks Investment Research
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Dorman Products:It is a leading supplier in the motor vehicle aftermarket industry. Despite continued uncertainty surrounding the macroeconomic and geopolitical landscape, the company reported a 4.2% year-over-year increase in first-quarter 2026 net sales. Supported by its solid first-quarter results and encouraging momentum across all three business segments, the company reaffirmed its 2026 net sales and earnings guidance. The company expects net sales to grow 7-9% year over year in 2026.
DORM currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2026 EPS has moved up 2 cents in the last 90 days. It has surpassed earnings estimates in each of the trailing four quarters, the average earnings surprise being 8.67%.
Price & Consensus: DORM
Image Source: Zacks Investment Research
Standard Motor: It is one of the leading manufacturers, distributors and marketers of premium automotive replacement parts for engine management and temperature control systems. The acquisition of Nissens, completed in November 2024, has helped SMP expand its geographic presence and establish a significant global growth platform. The Engineered Solutions segment's rebound, which began in mid-2025, reflects improving demand across commercial vehicle and powersports markets. Although this business is more cyclical than the aftermarket operations, the recovery provides SMP with an additional growth engine beyond its traditional repair-focused business.
SMP currently carries a Zacks Rank #3. The Zacks Consensus Estimate for 2026 sales and EPS implies year-over-year growth of 4.6% and 9.5%, respectively. It has surpassed earnings estimates in each of the trailing four quarters, the average earnings surprise being 22.27%.
Price & Consensus: SMP
Image Source: Zacks Investment Research