Toronto, Ontario — LKQ released its third quarter earnings report last Thursday and found that recycled parts are out-performing the aftermarket in revenue. President and CEO Dominick Zarcone believes he knows why.
“Salvage parts come from the local markets, right? We buy total loss vehicles locally, we dismantle them locally and then we can distribute on a local basis,” said Zarcone.
“Although fill rates have been challenged, we are witnessing a positive offset from our quote conversion rates on salvage parts.”
These comments were made during Thursday’s company conference call to discuss the new earnings report.
Zarcone said that LKQ offers customers a choice between recycled and aftermarket components. In turn, making it possible to “shift the customer from an aftermarket product that we may not have in inventory to a salvage product that we can get to them the same day or next day.”
International supply chain disruptions continue to strain the aftermarket industry as collision shops around the world wait on parts, many of which are collecting dust on delayed shipping vessels right now.
“The global supply chain continues to be under duress. It is widely known that, today, a record number of ships are anchored off the coast of California waiting for port lanes to unload containers, some of which hold our aftermarket inventory and are eventually headed to LKQ facilities,” said Zarcone.
“High demand for overseas products, congestion within the ports and at the rail hubs and a severe shortage of truck drivers, has led to delays and increased cost for ocean and land freight, both in North America and in Europe.”
LKQ says purchasing will increase once supply chain roadblocks have been cleared.