The Auto Parts Sector in 2026: Capitalizing on Aging Vehicles and Stagnant New-Car Demand

The U.S. automotive landscape in 2026 is defined by a structural shift: the average age of vehicles on the road has climbed to 12.8 years in 2025 and is projected to reach 13.1 years by 2026 according to data. This aging fleet, driven by high new-car prices, economic uncertainty, and improved vehicle durability, has created a tailwind for the auto parts sector. As consumers extend the lifespans of their vehicles, demand for repairs, replacements, and maintenance is surging, particularly in the do-it-yourself (DIY) and dealer-installed, factory-manufactured (DIFM) segments. Among the key players, O'Reilly Automotive and AutoZone are leveraging these trends with disciplined capital allocation, operational efficiency, and strategic adaptation to electric vehicles (EVs). In contrast, Advance Auto Parts remains mired in restructuring challenges, raising questions about its ability to compete in a sector poised for long-term growth.

Structural Advantages in the Aftermarket

The aging fleet has created a durable tailwind for the auto parts industry. According to S&P Global Mobility, the average vehicle age in the U.S. hit 12.8 years in 2025, a figure that underscores the growing reliance on repair and maintenance services. This trend is amplified by economic factors: new-vehicle prices averaged $48,644 in 2025, while used-car prices remain elevated, discouraging replacement purchases. As a result, consumers are prioritizing vehicle longevity, driving up demand for parts and services.

The DIY and DIFM segments are particularly well-positioned to benefit. DIYers, who account for a significant portion of the market, are drawn to the cost savings of self-service repairs, while DIFM channels-where dealers install factory-approved parts-benefit from the complexity of modern vehicles, which often require specialized tools and expertise. For example, vehicles equipped with advanced driver-assistance systems or hybrid technology demand higher-margin repairs, a niche where DIFM players excel.

O'Reilly Automotive: Shareholder-Focused Growth and Operational Discipline

O'Reilly Automotive has emerged as a standout performer in the sector, combining aggressive share repurchases with disciplined capital allocation. In 2025, the company authorized an additional $2 billion for buybacks, bringing its total repurchase capacity to $3 billion. This strategy has bolstered earnings per share (EPS), with second-quarter 2025 results showing an 11% year-over-year increase in diluted EPS. O'Reilly's operating margin of 20.2%-among the highest in the industry-reflects its ability to balance cost control with strategic investments.

The company's expansion strategy further strengthens its position. O'Reilly plans to open 225-235 new stores in 2026, with a focus on contiguous and international markets. A new 560,000-square-foot distribution center in Fort Worth, Texas, is expected to enhance supply chain efficiency, supporting its dual-market model that serves both DIY and professional customers. Analysts project a 13.07% upside for O'Reilly's stock by 2026, with a 12-month average price target of $111.12.

AutoZone: Resilience Amid Margin Pressures

AutoZone, while slightly less aggressive in share repurchases, maintains a strong competitive position. Its 22.3% EBITDA margin highlights its operational leverage, though 2025 results showed margin pressures due to rising costs. First-quarter 2026 earnings fell short of expectations, prompting some firms to lower price targets. However, AutoZone's focus on high-margin DIFM services and its extensive store network (over 8,000 locations) provide a buffer against sector-wide headwinds. Analysts expect its performance to align with O'Reilly's in 2026, though its forward P/E of 35.13x makes it a less attractive valuation play compared to O'Reilly's 30.6x.

Advance Auto Parts: A Struggling Turnaround

Advance Auto Parts (AAP) stands in stark contrast to its peers. Despite a three-year restructuring plan that includes 500 store closures and distribution center consolidations, AAP reported an operating income of just $22 million in Q3 2025-1.1% of net sales. Its adjusted operating margin target of 7% by 2027 remains aspirational, with near-term disruptions from store closures and inventory adjustments likely to delay progress.

Structural risks persist: AAP relies heavily on supplier factoring and faces elevated interest costs, which could become untenable if credit terms tighten. Its debt-servicing capabilities and profitability lag behind O'Reilly and AutoZone, raising concerns about its long-term viability. While revenue is projected to grow modestly (1.9% annually) and earnings by 20.37%, these gains are not expected to materialize until 2027.

EV Readiness and Long-Term Sector Dynamics

The shift toward EVs, while still in its early stages, is reshaping the auto parts sector. Global EV sales reached 18.5 million units in 2025, with a projected 26.7% penetration rate by 2026. While this trend primarily benefits automakers and EV component manufacturers, O'Reilly and AutoZone are adapting by expanding their product lines to include EV-compatible parts. In contrast, AAP has shown limited progress in this area, further widening the gap with its peers.

Investment Implications

The aging fleet and stagnant new-car demand present a compelling case for the auto parts sector in 2026. O'Reilly Automotive and AutoZone are best positioned to capitalize on these trends, with O'Reilly's disciplined capital allocation and operational efficiency offering a clearer path to outperformance. AutoZone's resilience, though slightly dimmed by margin pressures, remains robust. Advance Auto Parts, meanwhile, faces an uphill battle, with its turnaround efforts unlikely to yield meaningful results before 2027.

For investors, the sector's structural tailwinds-driven by an aging fleet and rising repair demand-make O'Reilly and AutoZone attractive long-term plays. As the market continues to reward companies that execute with precision, these two leaders are poised to outperform in a landscape where operational discipline and strategic foresight are paramount.