While aftermarket consolidation has been occurring for many years, the industry remains highly fragmented. This is favorable for American Automotive as fragmentation provides for greater availability of real estate from a larger number of real property owners.

The available pool of aftermarket repair and service related real property includes real estate leased to retail parts chains, wholesale distributors, jobber stores, full and limited service vehicle repair chains, and tire only retail and service locations.

American Automotive believes the aftermarket is characterized by stable demand and is growing due to increases in:

(1) The number and age of vehicles in use. The average ages of passenger
cars and light trucks for the past ten years are summarized below;

Source: Automotive Aftermarket Industry Association


(2) The number of miles of driven annually, in trillions of total miles;

Sources: U.S. Department of Transportation and
Automotive Aftermarket Industry Association


(3) The number of licensed drivers;

Sources: U.S. Department of Transportation and
Automotive Aftermarket Industry Association

(4) The percentage of the total light vehicle fleet represented by light trucks (including SUVs), which generate higher average aftermarket product purchases and average sales per customer as compared to such purchases generated per passenger car;

(5) The cost of replacement parts as a result of technological changes in recent vehicle models; and

(6) The number of light vehicles coming off warranty, particularly leased vehicles, which often are under-maintained and therefore may require higher than average maintenance and repair expenditures in the post-warranty period.

These trends will continue to support strong comparable store sales growth in the aftermarket industry. This is favorable for real estate as rent coverage ratios (the ratio of store income divided by the rent the store is required to pay) are expected to be stable or increase.