In terms of the competitive landscape, of the roughly 35,000 auto parts stores in the United States, we expect to see the larger players continue to grow their store base although the total number of auto parts stores will likely remain unchanged (or even possibly shrink somewhat) as smaller competitors simply exit through attrition. We expect to see even greater consolidation within the still very fragmented professional service market, where only a handful of companies operate more than 1,000 locations in the United States out of a total base of more than 200,000 repair shops. We believe this trend is likely to provide a multi-year tailwind for those public companies with the scale, systems and access to capital necessary to capitalize on this development. For the suppliers, continued consolidation simply reinforces the need to have the most efficient manufacturing processes and lower possible cost structure in order to offset the increased buying power and leverage that downstream customers possess in pricing negotiations. The new car dealers remain a force to be reckoned with, and with new vehicle sales still at depressed levels the automotive retailers have become even more aggressive in their efforts to regain share in the service and parts business. We believe that the auto retailers are refocusing their efforts on providing the best customer service possible from the time a new vehicle is sold through the expiration of that new car’s warranty in order to maximize the possibility that they win the customer’s automotive service and repair business down the road. In addition, the auto retailers are also placing a greater emphasis on initiatives that promote frequent customer contact such as selling a greater portion of their new car customers extended service contracts and oil change packages.
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