Motorcar Parts of America (MPAA) Gabelli Funds 48th Annual Automotive Aftermarket Symposium summary

Business Overview and Strategic Positioning

• Manufactures and remanufactures automotive aftermarket products, focusing on rotating electrical and brake systems, with a broad product portfolio and global leadership.

• Completed a major transition to manufacturing in Mexico and Malaysia, with some outsourcing in China and a smaller facility in India, supporting efficient sourcing and production.

• Holds significant market share: 49-50% in rotating electrical, 18% in wheel hubs, 23% in brake calipers, and growing in all categories, including master cylinders.

• Recent product launches include pads and rotors, with exclusive North American rights to copper-free, environmentally friendly products, expected to drive significant revenue and margin growth.

• Provides a full suite of services (Street Smart Suite) including business planning, training, marketing, inventory management, and value-added programs.

Market Trends and Growth Opportunities

• Aftermarket fundamentals remain strong with over 280 million vehicles on the road and increasing average vehicle age, supporting sustained demand for replacement parts.

• Growth is driven by both retail and professional installer channels, with tailored programs and consolidation in the brake-line supplier base.

• Braking systems now account for 20% of revenue and are expected to quadruple in the near future.

• Margin pressure from new product lines is easing as overhead absorption improves with facility scale, and margin targets are moving from low 20% to mid-20% and higher.

• The internal combustion engine vehicle population remains dominant through at least 2025, ensuring ongoing relevance for core product lines.

Operational Efficiency and Competitive Advantages

• Industry-leading lean manufacturing and scalable infrastructure enable flexible scaling, high productivity, and 96% offshore production.

• Mexico facility employs over 5,000 people with a 98% retention rate post-trial, supporting quality and efficiency.

• Inventory and distribution are optimized using demographic and vehicle registration data, with direct-to-consumer capability and overnight delivery for major retailers.

• Remanufacturing offers cost, quality, and environmental benefits, maintaining OEM integrity and reducing resource use.

• Ongoing investment in education and technology centers enhances product quality and customer engagement.