Lower Gas Prices Trigger Increased Demand for LKQ Corporation (LKQ)

September 4, 2015

Benjamin S. Bienvenu, Research Analyst covering the retail broadlines sector at Stephens, Inc., says one of the most important trends he is observing in the retail sector is the impact of lower gasoline prices on the consumer. Gas prices, coupled with improving employment statistics, are resulting in increased miles driven, creating a positive impact for companies like LKQ Corporation (LKQ), Bienvenu says

“Also within autos, I am seeing that theme play out for LKQ, who is a large alternative parts provider,” Bienvenu says. “If you think about a vehicle, it gets into an auto accident and the insurance company needs to make a decision as to whether to repair it or whether to scrap it.”

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When people are using non-OEM parts and choose to repair a vehicle at the cheapest cost, Bienvenu says they would use a part that LKQ would have pulled off of a salvaged vehicle or an aftermarket part sourced from overseas.

“So with more people driving and more accidents occurring, you are seeing increased demand for LKQ’s alternative parts,” he says.