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why auto parts stocks are getting hammered

by:ShenHao     2020-06-09
Stock of auto parts like Advanced Auto Parts (AAP -Get Report), AutoZone (AZO)
O\'Reilly motor (ORLY -Get Report)
Others were hit on Wednesday, down 6. 5%, 7. 1% and 4.
2% respectively. What gives?
The stock market was generally flat that day, but the names were far from it.
Despite strong performance this year, brands such as Advance Auto and O\'Reilly have risen 58% and 38% so far in 2018.
However, AutoZone is about flat this year.
Wednesday\'s weakness was announced at Wal-Mart (WMT -Get Report)
Advance Auto is working together for a professional online carparts store.
Specifically, the partnership will begin on 2019 and the online auto parts store will be available at Walmart. com.
Wal-Mart will also provide these services and products in the physical vehicle service center.
\"This comprehensive partnership will enhance almost every aspect of the car customer shopping experience --
From Products offered online to fulfillment capabilities, \"said Philip Oaks, vice president of e-commerce retail at Wal-Mart. commerce.
So why is the stock hit?
The reason seems to be to worry about what this partnership means for profitability and profit margins. As the U. S.
Increase the number of drivers on the road every year, as the average age of the United StatesS.
The vehicle continues to be extended and more services are needed.
For companies like O\'Reilly, AutoZone, and Advance Auto, this is a huge boon.
However, with AAP working with Wal-Mart, it is clear that the industry could be affected by such a behemoth retailer.
Specifically, Wal-Mart is known for its low prices and profits.
This is what the company has to do to compete with companies like Amazon (AMZN -Get Report)
This also increases their exposure in the auto parts market.
As big box retail enters the automotive industry, these auto parts suppliers will continue to face more problems.
Wholesale as Costco (COST -Get Report)
It also provides customers with solid automotive service products.
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Considering that Costco charges for membership in its store, this can help reduce costs and take advantage of prices to compete with companies such as Advance Auto.
It also has a similar situation due to Amazon\'s primary membership.
The question now is, does this partnership help to push the car forward, or is there any more negative impact in these three major auto parts stores?
Will the collaboration with Amazon or others be on the way? We\'ll see.
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