Begin the program. Today's presentation and web class include a slide presentation that can be found on the investor's page of the Genuine Parts Company website. Please be advised, this presentation and discussion may include certain non-GAAP financial measures. A reconciliation of these measures to the most comparable measure under generally accepted accounting principles is provided in the presentation materials. Today's event may also involve forward-looking statements regarding the company and its businesses. The company's actual results could differ materially from any forward-looking statements due to several important factors described in the presentation and the company's SEC filings. The company assumes no obligation to update any forward-looking statements made during this presentation.
For nearly a century, we have been a company that you can count on as a global distributor of automotive and industrial parts, leading the way with cutting-edge innovations, establishing our reputation for reliability. Around the globe, our dedicated team is committed to excellence, inspired by new ideas and pushing boundaries, working as one team to shape a brighter future, raising the bar and seeking customer-centric solutions. We are more than just parts. We're a global network of over 10,000 locations, expanding into uncharted territories. Our journey may evolve. We remain steadfast and strong, united in our purpose. We keep the world moving. We are GPC.
Please welcome Senior Vice President, Investor Relations, Sid Jones.
Very much. Love that video, especially love the messaging to start the day. We are GPC. We keep the world moving. Good morning to all of you. Welcome to Atlanta. Sunny and warming Atlanta. Welcome also to the 2023 Genuine Parts Company Investor Day. Great to see a full room of folks, both familiar faces, I can see most of you, but also new faces. Most importantly, on behalf of the entire GPC team, we really appreciate you joining us today. We also want to thank all of our virtual guests on our webcast with us this morning from wherever you are. We hope today will be an informative and productive day for each and every one of you. Moving along, I think we covered our safe harbor comments at the onset. This is our full statement.
We can just keep moving and turn to an agenda that we feel is really packed for you today. That was our intent. This morning you'll hear key messages from our Chairman and CEO, then our President and COO, and then our EVP and CIDO. After that, we're going to take a break, move out to our initiative showcase. There, we're really excited to show you some of the things we're working on to execute and drive profitable growth into the future. For the virtual audience, this is going to run from around 9:30 A.M. to 11:00 A.M., and we have something for you as well. We invite you to stay on the webcast. We're going to stream videos containing content that our in-person attendees are going to be viewing in the showcase.
We're gonna return from the 10th at 11:00 A.M., we're gonna continue the stage presentations with Will Stengel and our EVP and CFO, who's going to provide our three-year outlook. Finally, we're going to bring our speakers back up for a Q&A session, we know how much you guys love that part. That's going to be followed by a lunch, all of our management team is here to join you, please be with us for that. We look forward to it. We look forward to the entire day with each of you. With that, it's my pleasure to turn it over to our Chairman and CEO, Paul Donahue.
Good morning, everybody. It's great to see everyone. You know, last time we were together, 2019. Lots happened, right? Lots happened in four years. I will tell you, we're gonna get that mug off the screen here momentarily. I had black hair four years ago, pre-pandemic. That's what a pandemic will do to one. It has been four years and really my objective today is really to share with you what all has happened at Genuine Parts Company in the past four years. Certainly a lot has happened. Pleased to tell you most of it is really good. Let's jump right in. These are our key objectives for the day. Look, we've got a great story to share with all of you.
You know, in terms of the objectives, look, we wanna make sure you all understand our culture at Genuine Parts Company. Many of you know us very well. I think you do. For some of the newer folks in the room, we wanna walk you through just kinda all the things that we stand for at Genuine Parts Company and how we drive value. We wanna showcase our strategic plan and our various initiatives that we've got across both our main businesses. You know, as important as all of that, we really wanna highlight and showcase our management team.
You're gonna get an opportunity today, not only to see some of the executive leaders and business unit leaders up here on stage, but you're also gonna see a layer and two layers down when you go to the showcase, and we go through the various opportunities that we've got out in the tent. Highlighting our management team's a big one for us. We're gonna share our three-year financial targets. We're gonna save that towards the end. Bert will get up here and walk you through our financial targets. Last but certainly not least, we hope that you all leave here with just a real sense of confidence in Genuine Parts Company as a differentiated investment. We are a little different. We get that. We're not some of our competitors who shall go nameless.
We are different. There's no doubt. We hope when you leave here, you'll have a greater appreciation for GPC. You know, for those of you who don't know us very well, I want to give you just a bit of a snapshot as to who we are really today. We've been around a long time, 95+ years, founded right here in Atlanta, one-part store back 95+ years ago. Today, we're in 17 different countries. With the addition last year of Spain and Portugal, took us from 15 to 17 countries. We have well over 10,000 locations. We've got 58,000 really great teammates around the world, passionate teammates. In 2022, we crossed $22 billion in revenues. First time ever for GPC, we're quite proud of that.
We're even more proud of the fact that we posted back-to-back double-digit sales and earnings growth, the last couple of years. You know, how did we do it? You know, when we were together last, you would have seen that pie chart for 2019. How did we go from that business to the business that we are today? I'm gonna walk you through a little bit of all the initiatives in the middle of that chart. Back in 2019, we had four businesses. We had automotive, of course, our legacy business. We had Motion, our industrial business. We had S.P. Richards. Many of you remember S.P. Richards, our business products group. We had an electrical business called EIS.
Those two businesses, business product and EIS, were non-core for us, didn't necessarily fit in that automotive industrial world. We made some tough decisions, and I'll get to that. I really wanna walk you through what all has happened to get us from that 19 pie chart to that 22 pie chart. You know, the first thing we did back in 2019, we were not exactly hitting on all cylinders back in 19. We took a real hard look at our business. We had gotten a little top-heavy. Our SG&A had grown to levels we weren't comfortable with, and we knew we had to take some significant action. What we did back in 2019, the latter part of 19, is we formed a transformation office.
We went out and found Will Stengel to run that transformation office and be our CTO. We divested both EIS and SPR between 2019 and 2020. We're really good at buying companies. Selling companies was a little bit of a new twist for us, but we succeeded. Most importantly, in the latter part of 2019, as we looked at that SG&A growth, we knew we had to get that get our expenses down. With Will Stengel running the transformation office, we identified $150 million in permanent expenses that we removed from our business. Thank God we did, because literally a few months later, we got hit with the pandemic. You know, I don't need to tell all of you, all hell broke loose, right?
Once the pandemic hit, we jumped in both feet, took another $300 million out of our cost base. Between the two initiatives, $450 million in costs came out. At the same time, we began to identify needs inside of our business that required new skill sets. We went out and recruited really top talent, new talent for GPC. Look, M&A has always been a hallmark of Genuine Parts Company. You all know that. I would tell you that we ramped up our M&A, highlighted by the acquisition of Kaman Distribution Group in the early part of 2022. That is a business that has transformed what was already a great business, Motion Industries.
I have to tell you, getting from 2019 to 2022, what I just walked you through in literally five minutes was an incredible amount of work, time, effort, blood, sweat, tears. It was challenging. It was challenging for all of us. I could not be more proud of the work of our team and the things that we did as a group to really bring this business back and position us in terrific shape for the future. In the end, we've delivered pretty good results and streamlined our portfolio so that today, as you look at GPC, we are all automotive and all industrial. 62% auto, 38% industrial, and we'll talk a bit more about that here shortly.
As we moved out of 2022 and what happened since, we went through our transformation, I want to share with you our results. You can see top line sales back in 2019, almost $17 billion in revenues. We delivered from 2019 to 2022, 9% sales CAGR annually and added almost $5 billion in new revenues to GPC for a 9.3% overall. 17% annual EPS CAGR, going from $5 billion to over $8 billion. Total shareholder return, a stat we're really proud of, S&P 500 in that same timeframe, about 7.7% Genuine Parts Company, 21.2%. You know, we often get asked about our business mix and how does automotive and industrial, I kinda commented on it earlier. How do these businesses fit together?
Why have these businesses under the same GPC umbrella? I wanna share with you maybe just a couple of bullets. Many of we've talked about before with this group, I wanna just emphasize it a bit more. A streamlined business mix that we now have, unloading the two other businesses back in 2019 and 2020. We've got a business mix that we really believe creates value, I think we've proven that. Both of these businesses are value-add, service-oriented distribution businesses. We share many of the same suppliers, folks like Bosch and Gates, MANN+HUMMEL that are global suppliers. We have massive scale when you put these two companies together, we sit at the negotiating table with these suppliers, both on the direct side and on the indirect side. We share talent, we share technology, we share best practices between both businesses.
In the end, we believe the two businesses complement one another extremely well. Again, I hope that our performance over the last couple of years would support that. Let's dive deeper into the automotive segment. We've got a great presence across the automotive networks around the globe. We've got the largest network of parts stores as well as car care. We've got almost 10,000 stores now around the world. We've got over 30,000 shops that we partner with every day. That is really the hallmark of our automotive business. Brands like NAPA AutoCare Center, Repco Authorised Service, our stores and shops across Europe. They depend on us every day for their parts and services, and to keep them operating.
As you look at our pie chart and the diversification of our business around the world today, we're 2/3 North America, and we're 1/3 international. 80% DIFM across North America. This is a segment, and you all know it, that will continue to grow year after year. We love our retail business. We'll grow our retail business, but the real growth is gonna come out of commercial and DIFM. As I look across our European footprint, it's even higher than 80%. From a branding standpoint, look, we've got iconic brands. The NAPA brand is 85% of everything we sell in our North American automotive business. I'm really happy to see the progress the teams have made across Europe and Australia in promoting that brand. More importantly, how that brand has been accepted in places like Europe and Australia.
It's now 10% in just a few short years. 10% of our sales across Europe are now NAPA branded, and about a third of our products we sell in Australasia are NAPA branded. I would wrap this slide up with our three-year return, 7.6% sales CAGR in our global automotive business. More importantly, 110 basis points of margin improvement in that same timeframe. That's a quick snapshot of automotive. Let's segue over to industrial. A great story to talk about here, we are really proud of our Motion business. Our sales in 2022 crossed the $8 billion mark for the first time ever. We are, without a doubt, the market leader in both North America and Australia, New Zealand.
We've got over 800 branches and locations now around the world. We've got access to 19 million parts on any given day that we deliver to our manufacturing partners and distribution partners around the world overnight. The acquisition of Kaman Distribution Group strengthened our services offering, and we're gonna talk about that kinda throughout the day, and you'll see some great examples when you go out into our showcase outside. We're not just a distributor of parts in our industrial segment. If you take anything away from this, I really want you to hone in on what our core competencies are in Motion. We are really a full service provider, products like fluid power, automation, of which, by the way, Kaman has really added to our arsenal in both of those categories.
We've got an incredibly diverse portfolio of end markets and customers. You know, I'd wrap this portion up just by telling you the team has put up tremendous results since 2019. 12.4% three-year CAGR segment margin. Again, most impressive, up 240 basis points. Automotive, Industrial, what I wanna talk about now is really what that does when you roll it all together, and the power, as we talk about internally, of one GPC. Hasn't always been the case, I'll be the first to admit it. When you go back 2019 and before, we had four siloed businesses. They all operated fine. They all operated well. There was not a whole lot of cross-pollination. That term, one GPC, did not exist back then.
Today, we work together, we believe by working together, we're gonna create more value than what is available through the sum of the parts. Our approach is quite simple. We wanna leverage the shared values. We wanna leverage our talent. We wanna leverage the teamwork that you'll see on display today. By doing all of that, we believe we're gonna capture all the opportunities that we believe are uniquely available to Genuine Parts Company due to our size, due to our scale, and due to the business mix that we have. In the end, that's gonna translate into improved performance, as well as shareholder value.
Again, you're gonna see a lot of what I just described in action when we head out to the showcase here a little bit later this morning, and you'll have an opportunity to interact with many of our business leaders. I also wanna talk about how the team is working together as it relates to ESG. Our sustainable journey is another example, just one of many, of how our global teams are working together every day and sharing best practices. What I'd like to do is just share a quick video with you that I think will kind of in a nutshell highlight the ongoing efforts to address ESG issues that we're all dealing with across the globe. If you could, guys, go ahead and play the video, please.
Our culture has been a competitive advantage for 95 years, nearly a century, and we continue building on it as we move forward. As One GPC team, we work together to embrace change, focus on the most critical initiatives, and act with intensity and discipline to deliver for our customers, suppliers, communities, and investors. We knew that we had in place the fundamentals for our sustainability program, and we went to our communities that we operate in and looked at the things that we were doing in those areas to make sure that we were delivering back to our communities. We also looked at our shareholders to make sure that we were delivering what they expected from an investment perspective.
GPC's purpose, we keep the world moving, guides everything we do, including our approach to environmental stewardship. By taking responsibility and doing business the right way, we can simultaneously make a positive impact for all our stakeholders and the planet. Caring for our planet for GPC means globally taking responsibility for reducing our carbon emissions. Last year, we committed to measuring our global carbon footprint. We took Scope one and two emissions into consideration from every location in which we operate. As a team, we came together to discuss abatement measures and what would work best to reduce those carbon emissions.
We support investing in social good because we believe in bringing resources to a place of need. By utilizing our employees, as well as the will and the strength and the value of our name and brand, we're making a big difference in the communities in which we live, in which we operate, in which we serve, along with our employees. Our teammates are the heart of everything we do, and we want to ensure we have an uplifting culture where they can thrive, feel welcomed, heard, included, engaged, and supported.
GPC does business by doing the right thing in a responsible way. We recently changed our ESG governance structure so that from the board all the way down to the ESG global team, everyone understands what's happening at a global level in the ESG area.
At Genuine Parts Company, we invest in genuine people. The people are the differentiating factor with GPC and our competition.
We are-
We are-
GPC.
All right. I hope you can see our commitment to ESG is clear. We've made really solid progress in this space. We got a lot of work yet to do. I think we all do. What I would share with you is that the video really doesn't do justice to the full breadth of our efforts that's happening around the world, and there are efforts going in every one of our business units. What I would ask you, if you have further interest, is check out our sustainability report, which is on our website. Team has done a great job with it. Please feel free to access that via our website. I mentioned our management team.
I'd wanna just spend a minute here because since many of you were here back in 2019, a number of these folks weren't a part of our team then. I would tell you, half of the folks on this slide either have joined GPC since we were together in 2019, or they have, in the case of a couple, been promoted into the roles that they are in today. I would tell you that as I walked you through that 2019 to 2022 transition transformation, it's no coincidence to me that the last couple years have been arguably the best years in our company's history. It's all about talent. You guys know that. It's all about getting the right people in the right seats on the bus.
As we like to say, talent begets talent. I am proud and incredibly proud to work with this group every day, many of them you'll get a chance to hear from later. Backing up that management team is a great board of directors. I would tell you that we've got a terrific board. You're gonna see that board here momentarily. Here it is. This is our directors' group. We've got a great group of directors, diverse backgrounds, diverse skill sets, diverse experience. I would tell you we're a better organization today 'cause they've challenged us. They've given us great guidance. They've given us great counsel. I would tell you I'm a better CEO today because of this group.
I'm really proud to tell you we've got a couple with us here today. We've got, I know I saw Jean-Jacques Lafont, JJ... JJ. Here he is. JJ is on our board. JJ is also Chairman of our European business. JJ, glad to have you with us. Is John Holder in the room? John? Hey, John, glad to have you with us. John is Chairman of Holder Properties, Chairman and CEO of Holder Properties here in Atlanta, has been on our board for a number of years. John, thank you for joining us. Also in the room is somebody that many of you know, and a former Chair of our board, and that is Tom Gallagher. Tom, welcome. It's great to have you with us as well this morning.
Terrific board, lot of support, lot of guidance, and we wouldn't be where we are without this great board. Look, as I wrap, I really wanna leave you with this slide. You got lots of opportunities to invest in great companies around the world. I wanna leave you with really five reasons to invest in Genuine Parts Company. I've talked about our team. I've talked about the talent. I've talked about the added skills that we brought to this business over the last few years. We've got a deep expertise with this group that's gonna continue to drive value. We've got the size, we've got the scale across diverse industries as well as geographies that are gonna continue to serve our great customers around the world. We have a leading position.
We're either number one or number two in every one of our businesses around the world and in large and incredibly fragmented industries like automotive and industrial. Lots of runway to continue to grow. We've got a very clear strategic plan, which again, I hope when you leave here today you have a much clearer understanding of what that strategic plan is. That plan, I'm happy to tell you, is underpinned by a strength of Genuine Parts Company that has been here for many, many years, as I mentioned earlier. It's underpinned by M&A, it's gonna ensure between that clear strategy that's gonna drive our organic growth coupled with an M&A strategy, we're gonna continue to drive robust growth in the years to come. Last but not least, we're gonna continue to deliver really strong financial results, and we'll go through the cycles.
I don't know where we're gonna end up this year. Are we in a recession? Are we headed to a recession? I don't know that anybody really knows. We've got two great businesses that do well regardless of what the cycle is. Listen, I really appreciate you all being with us here today. You've got lots of opportunities to go many places, spend your time with lots of different clients and customers. We appreciate you coming here to Atlanta. Means a lot to us. We've got a great, a great program in store for you. With that, I'm gonna introduce our next speaker and I'll just take one second before he comes on stage.
I mention it is no coincidence to me the last couple of years has been some of our best years in our history. Part of that is coupled with the arrival of Will Stengel in our business back in 2019, who really led that transformation, along with many of the great GPC employees in the back. He really led and drove that transformation from 2019 to 2022. I couldn't be more proud and more grateful to the great job that Will has done. If you would, please give him a warm welcome to the stage. Will?
Good morning, everybody. That's very kind of you, Paul. It's certainly a massive global team effort, so the thanks go to the folks sitting in the back of the room on the GPC team over the last couple of years. I will admit, too, that perhaps my hair was a little bit darker in 2019. I might have even had a little bit more of it at that time as well, but man, has it been worth it. Good morning. Welcome. It's great to see everybody here. Thanks for making the effort to be here. My name's Will Stengel, as Paul mentioned, and as Paul mentioned, I've had the opportunity to be with the organization since 2019. People ask me why I joined Genuine Parts Company. It was pretty straightforward.
The quality of the people that I met during my process, the opportunity to be a part of an organization that does business the right way, and I'll talk a little bit more about that. Lastly, the opportunity to be part of a very storied history that has a ton of potential as we move forward into the future. Certainly my time in the last three years, my expectations have been wildly exceeded, not only in terms of the quality of the culture and the people, but also the opportunity that we have in front of us. I'll bring that to life hopefully in the next few minutes here. It's an honor to share the story on behalf of the organization, 58,000 global associates.
As I said, it's a massive team effort, that everybody is pitching in on. We really do believe that GPC is a compelling investment opportunity. I think the day to day, the recent performance and the future performance will bring that to life. I had really three topics: share the vision of the organization, talk a little bit about our market opportunity, talk a little bit of how we're positioned in that opportunity with our capabilities, and then importantly, how we're gonna win through our strategic initiatives. This concept of strategic initiatives, as you'll see in the showcase, is a big thought. It's how are you taking action each and every day to grow your business faster than your market growth and win share.
All right, we talk a lot about culture at Genuine Parts Company and how our culture is unique and important to our success. I think as I was learning about the organization, you heard that often. As I said, it is more than true. At Genuine Parts Company, we've been incredibly fortunate to have been led by five inspirational leaders over 95 years. Think about that for a second. Five leaders in almost 100 years. Carlyle Frazier, Wilton Looney, Larry Prince, Tom Gallagher, Paul Donahue. We're even more fortunate to have 40% of that legacy sitting in the room today. Our founding leadership is here. Mr. Gallagher, thank you for all that you've done for our organization, and thanks for your continued support of all that we're doing. It's great to have you part of the team.
It's no mistake that culture is rooted in that consistent, strong leadership over 100 years. It's that type of leadership that brings with it things that you see on this page, strong sense of mission, strong sense of values. We use this slide with our internal teams to communicate our expectations of not only where we're going, but how we expect people to behave. Paul talked about the purpose. We keep the world moving. We think it's really important as an organization to stand for something that's bigger than ourselves. It's not only something bigger than ourselves, but it also reinforces the role that we play for our customers and in the industries in which we operate. We describe our mission on this page. Another way to think about that, what do we aspire to be?
We describe our vision on this page, what we aspire to do. We describe our values on this page, or how we expect our teammates to behave. Let's talk a little bit about the markets that we find ourselves. We're very fortunate to operate in large, fragmented, and growing markets. Not every organization can say that. This has been deliberate and strategic by nature. Paul talked about the need to simplify the portfolio so that we can go all in on markets that enjoy these characteristics. We're gonna simplify the business and hold leadership positions in these large fragmented markets. You can see here that's certainly the case. In total, $350 billion market opportunity, less than 10% market share. This is a really important point as you think about the strategic focus.
There are a lot of choices and places where organizations can go and grow. The highest return that you can get is focusing where you are today and eating up this white space as we like to talk about. The majority of these markets are comprised of small local competitors. That creates a wonderful opportunity for us to bring scale, technology, supply chain complexity to differentiate ourselves relative to folks in the industry that don't have those capabilities. Our markets are also consistently growing. Going back to 1970, miles driven in the United States has increased 47 of the last 53 years. 47 of the last 53 years. If you think about what Paul talked about, this constant consistent growth through cycles, that's an incredibly attractive dynamic to have in your end markets.
PMI index on the industrial side has been in expansion territory for 62 of the last 74 months. A little bit more cyclical, but a nice complement to that consistent, steady automotive business. Here's just a thought for you. If we assume our markets grew at the same rate as they have in the past for the next 30 years, and Genuine Parts Company and its businesses takes one to two points of market share for the next 30 years consecutively, we still would only own less than 20% of the total addressable opportunity. People can make a career enjoying the industries in which we operate, creating a ton of value and capturing wallet share from our existing customers. As I'll share with you in a few pages, we believe that we have the right infrastructure to go attack that opportunity.
We got the right relationships, we got the right footprint, we have the right capabilities, and we've got the right initiatives to make it happen. Not only are they large and growing, but they've got great secular trends that sit underneath them. You can see here on both sides of our business, very attractive mega-trend thoughts that should position us to grow for many years as we move forward. In automotive, miles-driven trends are very positive. People love their cars and will continue to use a car as the primary source of mobility. Post-COVID has certainly created a new appreciation for experiences and travel. We have a massive global installed base in the car park. Globally, our addressable car park is 600 million cars. People are holding on to their vehicle longer.
The average age of the car in the United States is 12 years, a little bit less than that in Europe. While the availability of new cars has gotten better, given chip shortages, manufacturing complexities with automotive dealers, global logistics, investing in your existing vehicle will continue to be a tailwind for the industry. Importantly, the complexity of the car has and will continue to increase, and that positions us really well. You heard Paul talk about our primary customer as the repair technician in our automotive business. As that car gets more complicated, it will be more and more challenging for the average car enthusiast to work on his or her car. You also see here we believe the energy transition to electric does create an opportunity for Genuine Parts Company. I'll talk a little bit more about that in my presentation.
You'll have a great opportunity to see that live and in person in our showcase. In the aggregate, we think that is a net benefit to our not only our industry but for Genuine Parts Company. In industrial, nearshoring is happening. We talk about it often with our customers and our vendors today. You read it in the press. The global supply chain challenges and geopolitical issues over the past few years have really created a new awareness and intention to relocate and diversify manufacturing in North America. According to one statistic, 80% of manufacturers, the CEOs and the leadership teams in North America are thinking actively about reshoring, and we see it in our business today.
Industrial factories continue to struggle with labor and productivity, as you can appreciate through the pandemic, creates incredible opportunities for our Motion business as we think about robotics and all the value-add services and solutions that we bring to help automate those operations and drive productivity. The manufacturing workforce is changing. An aging, evolving workforce of technical experts that operate the facilities today, they're aging and moving on and getting out of the workforce, which lends itself perfectly to our seasoned and tenured associates. Remember, in many instances, our Motion sales team know the facilities better than the customer. They're in the facilities, they have an appreciation for the equipment and machinery, and they're based literally, next to those employees, learning over the last decade to learn and understand the complexity of the operations. Interestingly, electric vehicles and its related industry creates an amazing opportunity for Motion.
Some of our fastest-growing, largest customers in Motion today are somehow related to EV, and that's a nice balance to our automotive business, and I'll talk about that some more. Together, we believe the markets are well positioned over the long term, and we're excited to seize the opportunity. We have large markets, great secular growth trends, and we have deep, established customer relationships around the world. This is in thanks to the hard work of the frontline leaders that are working every single day to deliver service and value to our customers each and every day. A couple key highlights to mention on this page. Predominantly a B2B business. 80% of our global business serving a professional or a trade customer. Incredible installed base of existing customers for which we're very grateful. Nearly 2.5 million relationships already in place.
You think about that idea of selling to our existing customers and leveraging and taking share in the markets that we already operate. We have solid diversity amongst our customer base without one real specific customer type or segment representing an outsized portion of the business. You'll see it today in the showcase, but the teams are really taking a new and analytical approach to understand the needs of these customers by capturing feedback to inform what we're working on each and every day and how to evolve our value proposition to deliver service. I would tell you, in almost every instance, our transaction with our customers is nondiscretionary, which means it's a break-fix business model where if you're delivering that service, that drives the legacy of the relationship as you move forward.
It's not a surprise, part availability, reliable and timely delivery, quality product, those are order qualifiers. That's table stakes. They're the transactional elements of our business. Our initiatives help drive improvement in those areas as well. As we think at a deeper level, we have opportunities to think more broadly about the offering around innovative solutions. I'll talk a little bit more about that. You'll see it in the showcase as well, this idea that we're bringing value in addition to the transactional elements of the interaction. You'll hear Naveen Krishna talk about the role that technology plays in really thinking in a disruptive way about what the definition of solution is. Paul Donahue talked a little bit about this slide.
I think the numbers on this page are pretty startling in a positive way and amazingly different than some of the other competitors in the market. Think about that for a second. 90% of U.S. consumers are aware of NAPA. That's not our customers, that's not people in the automotive industry. That's 90% of U.S. consumers are aware of NAPA. You can see that in our business in Australia, 97% awareness for Repco. That's a 100-year-old organization with the same local credibility that we have as NAPA here. Motion ranks number two in the North American industrial distribution list in 2022. Slightly different branding strategies in Motion, but it is the known brand, not only in North America, but now also in Australasia.
The marketing teams do incredible work to be very thoughtful and strategic about how do we continue to build this brand equity. I have to say, these are differentiation points for our organization relative to the competitors. People would kill to have this type of brand equity. It's a great foundation from which we can build and deepen our relationships with customers. You'll hear throughout the day the successful momentum that we have with the NAPA brand in Europe and even Australasia. It's a great case study that proves out this point that the brand travels. It's iconic, it's global, and it's a differentiator. I'll show you a quick visual here. It's busy for a reason because I think it drives home the point. We talked about having the infrastructure to execute against the opportunities that we have. Let me build this up.
Automotive DCs, this is the U.S. just as an example. U.S. automotive DCs in yellow. I just overlaid the company-owned stores on top of that. I just overlaid the independent-owned stores on top of that. I just overlaid the 18,000 NAPA AutoCare workshops. I think we've got the market covered. Now we got to go make it happen to execute and earn that wallet share with our customers. Same point on Motion. Distribution centers, branches. Gray shadow is all of our customers today with our existing relationships. There's incredible power in this network and untapped potential. Incredible power in this network and untapped potential. We'll talk a little bit about it in the showcase, but how do you optimize this network? It's all of our work around supply chain. How do you make this perfect?
It's a never-ending journey. Okay, I've laid out for everybody the opportunity we have in front of us. Now, what do we do about it? How do we go and execute as a team? We use this page internally. We call it the GPC operating principles, and I think it clearly lays out for people the expectations of how we execute. You see here how we play one GPC working together to create customer success and shareholder and stakeholder value. Customer success, the center of everything we do, and delivering value for our investors. Where we play, we've talked about this, we are very focused on extending leadership positions in the industries, in our existing geographies, in our customers, our suppliers, where we have opportunities to profitably grow.
The whole premise and focus of all where we need to invest and what we need to execute is how we win. I'll walk through that in a little bit more detail, then you'll see it come to life in the showcase. At the end of the day, all of our activities have to deliver financial performance. Profitable growth in excess of market, operating leverage, which is the concept of profit growth as the numerator over the sales growth, free cash flow, and return on invested capital. Let me spend a few minutes on how we win. This is the strategic pillar framework that guides all of our investments into the business. This is how we run our organization when we have our business reviews each month and each quarter. We look at the initiatives in these pillars through this prism and talk about progress.
As we refined our priorities coming out of the pandemic and studied globally where everybody was spending time, they fit into these pillars. It's the framework that we use as we're talking about investment of capital, not only just managing the business. Talent and culture. The concept here, as Paul said, talent, talent. It's all about the people. Building high-performance teams. Sales effectiveness. It brings this concept of making sure that all of our selling assets, whether it's field sales professionals, inside sales, marketing strategies, pricing strategy, how are we optimizing our ability to profitably grow within our customers? Technology means many things. It starts with data. It starts with digital technology infrastructure.
This idea of creating a better customer experience with a solution using technology with the supply chain and the next pillar behind it to help support that table stakes, right product in the right market at the right time. Emerging technology is the idea that we're aware of how our industries are evolving, and we're positioning ourselves, being realistic about what's actionable today, but making sure that we're thinking about the future and we're in a position to be in a leadership position. We wrap that all with M&A activity. Let me give a little bit of perspective on each one of the pillars to tee up what you'll see in the showcase. We're proud of this page. We should be. It's incredibly differentiated and unique. Look at the scores there. This is from engagement data from our global employees, 50+ thousand employees.
80% of the employee base took the time to respond. That's a great data point, number one. I commented earlier about culture. It's this consistent leadership at the top. That's what drives a page like this. 80% of the organization is classified as engaged. 80% of the global organization is proud to work for our company. 80% of the organization believes that GPC is a great place to work. Those are amazing statistics, and you would start a company with a foundation like this. You can see on the word cloud side of the page, look at some of the words. This is a global survey. Diverse, flexible, inclusive. Remember, we're collecting this data as we come through a pandemic. This is good stuff.
The diversity, we've been very deliberate about making that an important part of building a high-performing diverse team. As an example, in 2022, every single technology hire that we made in the United States, 70% diverse, 30% female. Women in technology, that is a very impressive number, and it's very deliberate and intentional to make sure that when we're bringing new expertise into the organization, we're doing it the right way. There's also words in this word cloud that I think are reflective of where the company's been, things like evolving, transforming, change. As we look forward and our industries and strategies evolve, we need to continue to evolve our people strategies to add capabilities and expertise. The definition of culture is the way in which work gets done, and it's normal and healthy for that to evolve with its customers, industries, and competition.
Our obligation as a leadership team is to continue to build on the rich history as we evolve with our customers and industries, and I'm confident that we're doing that, and we're doing it thoughtfully. Culture is a competitive advantage for this organization. It should be, and it's critical to being able to deliver differentiated performance relative to our competition. We're gonna be very intentional on this point. We will never sacrifice investing in our people, growing them, making them better leaders, and that's the core of who we are. All right, this idea of customer solutions, so more than just the transactional part of our business. That's table stakes. How do we evolve our organization to create more value when we're working with customers? It is impossible to illustrate all of the different ways in which we do that.
Remember, in the automotive business, our customer's predominantly the workshop technician. We have the largest network of workshops across the globe, all technically certified, 28,000 passenger and 2,000 truck workshops. That is a competitive advantage. How do we drive solutions through that? The right part, the right place, right time, table stakes. Initiatives certainly help us do that better, but the word solution is important to emphasize as we move forward. We wanna be more than just a part piece provider. We wanna be helpful. A few simple automotive examples. We help workshops drive bay traffic and revenue. That makes them more money. That makes them more loyal. We help them improve the profitability of their operations. That makes them more money. That makes them more loyal. We help them be more productive during their day with better technology solutions.
We help them be more productive and effective when they're training labor in their workshops. There are many other ways in which we can innovate to create those solutions where we drive that relationship deeper that positions us for better wallet share, loyalty, ultimately making us a deeper partner and solution provider to these customers. In summary, massive installed base of loyal customers. We understand their needs, actively working to bring innovative solutions to them to create a win-win solution. Same concepts in industrial. We wanna be more than just sending a part from point A to point B, and that is a big and increasingly big part of the business. You hear us talk about value-add services, solutions. This is the concept. We've got things like automation, robotics, fluid power, conveyance, repair. We're one of the largest in our industry.
All these offerings bring solutions to our customers to help the challenges that they face. They want more than parts. They want solutions and technical expertise to limit the downtime of the operations and reduce the total cost of ownership. That's a big, big thought. We are there to make them successful through solutions. As global manufacturing operations evolve, they'll become more dependent on and more connected to and intelligent and automated, and we can provide all these solutions. Digital. What does digital mean? Digital has many definitions. Naveen will follow me to bring these concepts to life and do them justice, but I'll add a few of my thoughts. First, when we say digital, we mean the use of technology as we interact with our customers. For this to work, you obviously need the data that underpins that technology to be actionable, clean, accurate.
High-level thoughts on the page. Integrate the customer experience in a unique solutions ecosystem. What the heck does that mean? It means we need to build technology solutions that make our customers' lives easier. seamless as they work with us. Map the customer journey to craft omni-channel experiences. What does that mean? To build these solutions, you've got to deeply understand the different types of customers and what they need from us so that you can inform your design. For the U.S. automotive, for example, you have the driver. We call them the passionate doers. Think about that as the retail car enthusiast that's able to work on his or her car. We talk about the passionate planners. We talk about the pros, such as the independent workshops and major accounts, and the partner who's our independent store owners and AutoCare .
Examples of our customized digital tools for the driver would be NAPA Online and our mobile applications, ProLink and Trax shop management for the pro. Parts Pro and other business tools for the partner. For Motion, we think not only about the operational buyer in the facility that's trying to keep those operations running. We also use technology to empower our internal customers, our field sales professionals, our technical experts, to interact with the customers and interact with each other. Some examples of those would be our Motion digital tools, where we see spend dashboards and opportunities to penetrate wallet share within our customers. We've got maintenance applications that we can pull up digitally and look at with our customers to understand where they have needs. A variety of other examples that you'll see in the showcase that we'll bring to life.
Digital data and technology have an exciting role to play in the future of our industries, I can tell you GPC is gonna lean into technology and digital and make this a competitive advantage. Pricing, I think we all appreciate the importance of strategic pricing given the environment in which we operate. There's three elements that we're gonna bring to life in the showcase to you: customer segmentation, end-to-end profitability, then talent. First, customer segmentation, understanding our customer segments in terms of their purchasing behaviors and adjusting frequently based on market dynamics. We get a lot of questions on our earnings call. How do you think about pricing? What are you seeing in the market? It's changing each and every day. If you're not adjusting your prices at the SKU level by local geography, by customer each and every day, you're not capturing your full potential.
It's a very surgical approach with analytics, science, data to make sure. End-to-end profitability, more disciplined approach to contribution margin. This is a big thought. It's hard. It's a culture change. Our transaction cost with a customer is more than just the product margin. The teams are doing an amazing job to evolve how they think about the fully burdened cost of that transaction. How do you think about the cost of putting that product in the DC? What about the commission to the sales professional? A whole 'nother level of science around where are our most attractive opportunities in using this level of analytics and science to drive us to the best opportunities. Thirdly, it's all about talent. You'll see an opportunity. We've got great teams around the world around pricing. This requires a very unique skill set. It's changing fast. It requires science.
It requires analytics. If you think about the merchant at a place like an Amazon, they're not a product expert. They're probably a technologist or an engineer. This idea of data science and using math to figure out where you have opportunities, requires investment, it requires training, and we're well on that journey. Supply chain speaks for itself. Three main thoughts here that capture in three words: consolidate, automate, optimize. Consolidate is the concept of making sure that our facilities are in the right location. Automate is the idea that once your facility is in the right location, it's highly productive. Optimize is this concept of making sure that the network flow from point A to point B is highly efficient. As a distribution business, we need to be excellent at this. It is a never-ending journey.
Even when you're best in class, you've got incredible opportunities to drive productivity. You'll hear Bert talk about this as we talk through our financial expression. If you think about the pricing and some of the things that we're doing around profitable growth, that drives gross margin expansion. This area of the business drives incredible productivity in our SG&A and the way in which we serve our customers. Emerging tech, I think it wouldn't be appropriate if we didn't explicitly talk about our analysis of the impact on electric vehicles to our business. I can tell you we have studied this topic deeply, and we will continue to study this topic deeply. We have worked with what feels like almost every global consultant you can on this topic. More importantly, we've developed internal perspective on what we really think it means for our business.
The takeaway of this page is that this is a net opportunity for Genuine Parts Company. When you consider the pluses and minuses down the side of the page in the bar graph there, with a growing and aging car park, additional new products that come into the car park, price inflation from the complexity of the repair work on a car, offset by fewer parts, offset by potentially fewer collision parts given ADAS. If you look at Europe, all the way down to the U.S., it's ±1% on the market, and that's in a scenario where we assumed no core market growth. Inflation, excuse me. We also assume that you just sat there and watched the market, you don't take any action to seize some of the opportunities that I just described. It's not a practical scenario.
Even in that scenario, you're talking about a -1 to a +1 impact to the total market. What we're excited about is the green bar and why we're spending the time today to do work for the future. The right-hand side of the page shows you it is the future. By 2030, in the U.S., for example, today, EV only represents approximately 1% of the car park. In eight years, it will be 8%. We're talking about a car park in the United States, 280 million vehicles to calibrate it. 1% of that 280 today is EV. Hybrid is a great opportunity for our business. It creates the best of both worlds, where we get to sell EV parts and combustion engine parts.
In Europe, everyone says, "Well, it's moving fast in Europe." It is moving faster in Europe, and you can see the statistics here. It's 2% today. People talk about, well, all new cars sold by 2030, 2035 are gonna be required to be EV. That's true. Seven years after that new car gets sold becomes the aftermarket opportunity. I hope you leave this page firstly with a few thoughts. One is we've deeply studied it. Two, it's an opportunity for us to proactively go out and create a leadership position.
What I didn't say on this page is for our Motion business, as I talked about on that previous slide, this opportunity is incremental to anything that they contemplated a few years ago, meaning they have customers with all the EV manufacturers here in the States, some of the fastest-growing customers in their book of business. All the related industries around all things battery is an opportunity. I hope this point lands well with you, and obviously, we'll have a lot more time to talk about it. Efforts today for us, what are you doing in our green box? What are you doing about it? There are three areas: relevant parts, training and access to information, and services and equipment. NexDrive is the solution. This is our internal brand and strategy around EV.
NexDrive's the solution to provide the customer alternative and to prepare those workshops to be ready to work on an EV. Think about that network chart that I described. We are in a position to help thousands of workshops get ready for this and view us as a trusted solution provider when we do so. Training, marketing, tech support, audits and equipment, store training. This is a capital-light initiative. We're not opening new NexDrive stores. We're working with existing workshops to go and be supportive. Today, we have product opportunities that we can act on in EV. Thermal management, electrical systems, cameras and sensors, tools and equipment. Our global partnerships with all of these global innovative supplier partners are positioning us and giving us the first look to take a differentiated path forward on all things EV. The trend will take time.
We always say 10% of your time should be thinking about five plus years out, 20% of the time should be thinking about two to five years out, and 70% of your time should be thinking about what you're doing today. We're appropriately calibrated on what this opportunity is, and we're not distracted from running a great business for the next decade. All right. Another question we get often asked is M&A. Well, how does M&A fit? How do you create value? This is a legacy capability of this organization that we're gonna continue to build on. We use M&A to add density into our existing markets or fill out that strategic network that we talk about. That can mean in a market that we're already in today.
It can mean a new geography that enjoys the characteristics of that one or two, number one, number two leadership position in a highly fragmented market where we can go and take advantage of all the things I just talked about. We bring to bear a lot of value when we bring these companies into the organization. Talk about vendor harmonization, payment terms harmonization, SG&A leverage on indirect sourcing, thinking about their supply chain and their footprint in a different way. It's a very powerful, repeatable value driver for the business. We do annual bolt-ons consistently as part of our DNA, and every two or three years, we're willing to do a step out to look at a new platform that gives us some of the things that I've described over the course of my comments. Here's a little bit more information on the specifics of our M&A execution.
On the right-hand side, importantly, we have a very robust approach to thinking through why we do what we do. It starts with culture. The worst thing that we can do when we buy a business is bring them into the organization and be a bad culture fit. Strategy fit, financial fit, operational fit. On average, we'll deploy $200 million-$300 million in annual capital. Importantly, in the lower right, you can see if we pay in the mid-single digits for a purchase price multiple, we expect to pay that multiple down two-three turns, and that's been our experience over time. I'll bring it all together. I hope my comments gave you a better appreciation for a couple things.
One is that we're incredibly focused. That we've got great global alignment, and we're really intentional about where we're executing, so that we can make a difference. We believe that we do have the right positioning, the capabilities, the strategies to extend these wonderful businesses, and extend their leadership position. The GPC culture, in my opinion, does create a competitive advantage. It creates an opportunity for us to leverage our advantages, learn from each other, and work together to deliver exciting value creation for our shareholders. With that, it's my absolute pleasure to introduce Naveen Krishna. Naveen has been with our organization for a couple of years now, and Naveen is responsible for all technology across the global business. His small mandate is to modernize and design tech solutions that will extend the differentiation of our business as we move forward.
You can hear, hopefully, the theme of the role that technology is playing as we continue to drive solutions, as part of the evolution of GPC. With that, Naveen, welcome to the stage.
Thank you, Will. Good morning, everyone. Welcome to Atlanta. Thanks for taking time to meet with us and hear our story. My name is Naveen Krishna. First time I'm meeting many of you. I've been with Genuine Parts Company for little less than two years now. Having led technology and digital efforts in many industry segments like home improvement, big box retail, and department stores, I see tremendous potential in leveraging the solid business foundations that we have, global scale, the vast amount of data that we have, and then embracing modern technologies. While we can draw on these experiences, the technology strategy that I'm gonna share with you today will set us apart from our competition.
I'm especially excited about the potential to harness the power of our data to create long-term stickiness with our automotive aftermarket and industrial solutions customers. For the next 20 minutes, I will share with you how we see the role of technology evolving at GPC, and our mission to transform the customer experience to create long-term value. Traditionally, the role of technology at automotive aftermarket and industrial solutions companies, including GPC, has been mostly utilitarian and viewed as a cost center, or let's call it keep the lights on, and less of a center of, or a source of revenue and innovation. In the recent past, at GPC, the role of technology has evolved a little bit. It's become a strategic enabler to help drive growth and create value in several key areas.
We're expanding our technology platforms to help digitize and drive efficiencies inside of our customers' operations, which is resulting in increased loyalty. Also making us a lot more efficient organization. The insights we are now starting to derive from our advanced data and analytics platforms is enabling us to make decisions like we've never made before. It's especially true in pricing, inventory planning, and sourcing. We're actively working with virtual reality and augmented reality technologies to drive value for our customers through service delivery efficiencies and create even greater connectivity with our customers. Looking ahead, we're in early stages to leverage artificial intelligence technologies to increase productivity for us and our customers and accelerate the innovation of new business models, products, and services. We see technology as being a force multiplier to amplify the potential that exists with the combination of our global automotive and industrial businesses.
You will see the beginnings of some of these unique possibilities in our initiatives showcase after my presentation. While customer experience is fast emerging as the single biggest differentiator in both automotive and industrial businesses, we've not seen any meaningful differentiation among any of the companies in this space. We have started that journey, and we will lead it. For us, this means having a maniacal focus on creating frictionless and consistent customer experiences that delight our customers throughout their journey every single time. Maybe just like, you know, how they're delighted in their daily personal lives at a large coffee chain. Although we are uniquely positioned with our global scale of over 9,600 locations, the strong supplier partnerships, our deep product assortment, pricing, inventory availability, and our execution discipline, these are all table stakes today.
Globally, we supply parts to over 1.5 million auto repair and commercial customer locations, and over 900,000 industrial customer locations. On the average, our share of the addressable spend is between 12% and 15% with our automotive customers and a little over 25% with our industrial customers. While we'll continue to improve on the table stakes, we believe transforming the customer experience is critical to increasing customer loyalty and gaining a larger share of their addressable spend. We'll focus on three pillars to transform our customer experience and enable strategic priorities that we'll just laid out. First, we'll strengthen our foundational platforms. Second, we'll develop solutions to drive recurring growth and loyalty. Third, we will leverage data to modernize our competitive advantage. Transforming customer experience starts with strengthening our foundational that our customers face.
These platforms include product catalog, search, digital and commerce, payments, supply chain, and the solutions to help our customers modernize and improve their productivity. We've assembled some of the best technology talent experienced in building digital transformation platforms in similar business-to-business industries, and we will be continue to attract top talent in engineering and product. For example, in 2022, nearly 45% of all our new hires in corporate functions across North America were in digital and technology. Our investments in collaboration platforms are already paying dividends by enabling seamless connectivity for our global teams. In late 2022, we established a global technology center in Kraków, Poland. This was to accelerate our digital efforts and increase the collaboration even more with our global technology teams. We are now able to operate in an around-the-clock software development cycle on many of our platforms.
We also embraced a cloud-first approach on all our platforms' development, and that with a mindset of speed over perfection. We have partnered with Google to accelerate this roadmap, especially in product catalog and search, digital and data platforms, and inventory optimization. Approximately 15% of our suppliers are common across automotive and our industrial businesses. As we modernize our product catalog platforms, we will be able to drive more efficiencies, one, internally, and also for our supplier partners. Having an exhaustive catalog requires us to have a very robust search engine. We are working with Google to develop best-in-industry search, and we have conversational AI in the not-too-distant future. Google today powers our search in industrial business, and we have the automotive aftermarket industry-leading search will be available here very shortly.
Our investments in commerce platform to serve both the automotive and industrial businesses will help us bring digital capabilities much faster to our customers. We plan to open up these digital platforms and capabilities for our customers to use in their own operations. Our customers will be able to more seamlessly transition between our stores and our digital properties, creating an interconnected digital experience. We're also strategically investing in our payments ecosystem to streamline the payments processes that we influence at over 40,000 locations around the globe, driving over 400 million payments transactions per year. In addition to reducing the total cost to serve, this ecosystem will create a unique first-in-our-industry solution for our customers to create a differentiated degree of stickiness and also help our customers create stickiness with their customers.
Modernizing our global network of 200+ distribution centers is yet another critical step in reducing friction for our customers. This involves rethinking, rationalizing our distribution network, automating our warehouse operations, using predictive and AI to improve the demand forecasting and inventory planning, and driving a value out of more than 13,000 of our last mile delivery vehicles that we have globally. The commercial software group in our automotive business is a relatively little-known gem. We license software solutions to over 8,000 subscribing auto repair centers here in the U.S. alone. This is a highly undertapped opportunity for us. We are starting to invest in reimagining the auto repair ecosystem along with our learnings from our EV partnership with NexDrive to create the next-generation platform for auto repair centers operations.
Disciplined execution of our operations on these platforms will enable us to create increased stickiness with our customers. Our unique position to reuse these platforms across automotive and industrial businesses globally will allow us to reduce our total cost to serve. This is embedded in the financial targets that Bert will share a little later today. We're committed to taking a technology and data-driven approach to strengthening our foundations and transforming our customers' experience. While the underlying platforms can be common and shared across GPC global businesses, leveraging them in our operations to drive growth and loyalty is specific by our automotive and industrial business. In our automotive business, we are very uniquely positioned to transform the customer experience. Let me give you two examples.
Of the over 1.5 million auto repair centers we serve globally, more than 30,000 of them are GPC-branded auto repair centers. We train auto technicians for many of these 1.5 million repair centers. In 2022 alone, we trained over 50,000 technicians globally. As vehicles become more high-tech, more complex, the automotive after-market business is gonna continue to skew towards, more towards do it for me. As I mentioned before, we provide repair shop management software to 8,000+ repair centers just in the U.S. Our digital platforms that are getting direct integrated into our repair shop management solutions will provide a very unique and frictionless experience for our repair centers to manage their shops and the parts orders all on one platform. The strength of our platforms combined with the auto repair data and systems will create unprecedented loyalty with us.
As the EV car park grows, our investments and success with NexDrive in Europe has uniquely positioned us to help existing auto repair centers grow into the EV auto repair market through the NexDrive program, further increasing loyalty with us. This uniquely positions GPC to be the largest network of integrated auto parts and repair solutions partner. The next example. Our modernized platforms will further extend our leadership position in seamlessly integrating with procure-to-pay processes for our major accounts customers, fleet operators, and government agencies. Today, our proprietary technology solutions automate integrations into over 35 procure-to-pay systems. This has been a key differentiator in us winning customers and then onboarding some of our largest customers very quickly.
As our customers start to standardize their global operations, our platforms will be able to provide consistent integrations globally to support their end-to-end processes, like visibility to orders, invoices, and simplified payments. These simplified integrations and the value-added solutions will continue to be critical for our retention and loyalty of our major accounts fleet and government customers. In our industrial business, the primary driver of stickiness is the depth of knowledge and expertise our employees have of the customer's operations, their machinery, and their equipment. Our best customers rely on us for total solutions, not just our parts. Let me share two examples from our industrial business. Our proprietary IIoT or Industrial Internet of Things platform, the operational telemetries data from our customers and the advanced data analytics enables us to create a digital twin of our customers' operations.
This enables us to establish a closed loop directly with our plant floor for asset maintenance, repair, and replacement needs. It also allows us to extend our digital platforms into the customer's operations in a very unique fashion, resulting in our employees being able to move up the solutioning and buying decision chain, if you will, and creating long-term value. You're gonna see some of this at the innovation showcase. Second, we've expanded our inventory network and digital capabilities to offer our industrial customers products that we don't carry in our catalogs. This eliminates the need for our customers to go to multiple vendors and provides a seamless shopping experience through a curated marketplace. Not only does this create a significantly better customer experience, it also increases loyalty with us and expands our share of the customer's addressable spend.
Now onto the third pillar of our technology strategy. The vast amount of data available across our global operations in automotive and industrial businesses is one of the biggest under-tapped potential we have at GPC today. It's our new oil or, let's call it our lithium. For example, we have over 24,000 hours of automotive repairs content. We look to further extend and modernize our competitive advantage through data-driven decision-making. What does that mean? This means using our vast data stores to inform our decisions, leveraging emerging technologies like machine learning and artificial intelligence. Being willing to disrupt traditional industry practices to create a step function change in our customers' experience. What you see here on the screen is a simplified representation of our automotive and industrial business supply chain.
If you look to the center and towards the left of your screen, the data generated here in the upstream is from parts sourcing and parts distribution, and also data from our suppliers. These data sets help us improve our operational efficiencies. Many companies have this type of data. Let's move to the right side of the screen. Consider the data generated here, closer to the customer operations. It's highly fragmented, it's less accessible, but a lot more valuable data to help understand and then influence our customers' experiences. GPC is uniquely positioned to leverage this type of datasets generated closer to the customer operations. In our automotive business, we have an advantage with access to datasets not just that span across the global network of parts distribution, but also the auto repair centers, where the parts are consumed.
As we modernize and expand our auto repair center, shop management offerings, our datasets closer to the customer, that's our repair centers, will provide us much more intelligence and enable us to derive deeper insights to create a differentiated and frictionless experience both for the repair centers and our motorists. In our industrial business, the closed loop we create with our customers through a digital twin is enabling us to leverage the data and derive very unique insights to provide our customers unparalleled friction-free experiences. Also, these richer datasets and machine learning models further enable us to improve our sales effectiveness and then transition our sales force and our selling processes from being an art to a science. We've selected advanced data engineering platforms from Google to unlock the art of possible in these unique datasets. By twenty...
end of 2023, we will have a very large portion of GPC's enterprise data running on Google's data platforms. We are in early stages of modernizing our competitive advantage by leveraging our data and are pleased with our progress so far. At the initiatives showcase, you will get a chance to experience beta versions of what's possible at GPC by leveraging our data, applying machine learning and AI algorithms to pricing and supply chain use cases. Look, it's an exciting time to be part of Genuine Parts Company. We have a solid foundation and an opportunity to differentiate and set a new standard for customer experience and loyalty in the automotive aftermarket and industrial solutions segments. We have the talent. We are well underway on our roadmap, and we will transform the customers' experience.
We'll do this by strengthening our foundations, developing solutions to drive recurring growth and loyalty, and leveraging data to modernize our competitive advantage. Thank you for your time and attention this morning.
Thank you, Naveen. Technology is woven into all of our initiatives, many of which you're gonna see in the showcase, which is next on our agenda. Just a few things to know. For those of you on the webcast, please stay with us. As I mentioned earlier, the video will begin in just a moment to share what some of our in-person attendees are going to see. We'll be back with you at 11:00 A.M. For those of you in the room, the net of the messaging is that we're gonna take a quick break, and then we hope to see you in the tent as soon as possible. I've been asked to give you a little more Our way back into this room for the remainder of our program. With that, let's take a quick break. We'll see you in the tent. Thanks.
At GPC, we are modernizing our operations to increase productivity and efficiency across inventory, facilities, and logistic capabilities. Across our operations, we are strategically consolidating our facilities to improve supply chain effectiveness. We are investing in technology and automating our facilities to increase capacity. We keep the world moving.
We know today in supply chain, customers have choices. They have choices around what they buy, how they buy it, and when they buy it. That means we need to build a very dynamic and flexible supply chain that allows us to deliver what customers want, how they want it, and when they want it. We believe GPC is uniquely positioned through our global footprint of over 200 distribution centers, over 750 branches, 9,600 stores, and a final mile delivery fleet of over 13,000 vehicles. We are globally transforming our supply chain. Our business units are focused in three key areas. We're focused on optimizing our supply chain. That means integrating our distribution, fulfillment, transportation, store, and supplier networks.
We're also investing in the latest tools technology to automate our facilities, and where possible, we are consolidating our footprint globally across the business. What I wanna do is walk you through at Motion Industries with the industrial group, how we recognize and rationalize our real estate, the type of technology that we're using to support that real estate, and then finally, the science that we're using to understand the type of product we need to have in there as well. For over 75 years, Motion has operated under a hub and spoke model, meaning that we have a distribution center feeding over 20 or 30 branch locations. The branch locations handle final mile packaging and delivery. This does really mean a hectic stocking method, and the customers didn't always have what they needed in the right place.
Today, we've removed a layer of logistics, and we are replacing those distribution centers with fulfillment centers, who then will execute final mile packaging and delivery. In addition, we're coupling world-class final mile, including electronic proof of delivery. We're doing this in a way so that all customers that enter their orders by 3:00 P.M. will have those orders arrive by the following morning of the next business day. When you take a look at this map, you can see the black dots there. Don't think of them as branch locations, but think of them as heat density for customer demand. Those red dots then would be conceptually where our fulfillment centers would operate. Traditionally, in those distribution centers or fulfillment centers, we would use standard racking and shelving to house the inventory.
All in, we would process about 95 lines per hour, and it's a rather non-scientific approach for how we would locate those distribution centers. Today, we've identified technology that improves productivity by over 545%, and interestingly, requires 40% less square footage. We use geomapping to determine the right location, again, based on that heat density of where our customers are. Here's a picture of the goods-to-person technology called AutoStore that we've deployed. We piloted it in Birmingham, Alabama. You can see from the top of the grids looking down, those are the bots. We have 23 of those servicing 30,000 bins, about 25,000 SKUs. The photograph on the right is our new solution in Merrillville, Indiana, which is in the process of being constructed. It has 44 bots, 60,000 bins at about 41,000 SKUs.
I like to show this chart because it talks about lines processed per hour and solution size. Lines processed per hour or LPPH, again, conventionally we would operate about 95 lines. AutoStore has the capacity for 1,000 lines if we would have the throughput for it. VLM is a vertical lift module. These are very tall vending machines. You can string two or three of those together and pull about 120 lines per hour. This isn't necessarily a speed play, but it's a way to rationalize your space. All in 585 lines per hour in Birmingham, Alabama. Note the solution size. With conventional shelving and layout, we were at 48,200 sq ft. Now, all of that product + 30% more capacity sits on 10,500 sq ft.
As we continue to see pressure on commercial real estate, we'll continue to see prices raise. It's important to understand the size that we need to house all of that equipment. To make sure that we have the right inventory inside that technology, we've deployed something called PRIMA. It's our demand planning and forecasting tool. PRIMA stands for Predictive Regressive Integrated Machine Learning Algorithm. It's scientifically developed internally and homegrown, integrated with AI machine learning. We use a control tower approach, meaning that we can move data from one supplier to another or to any other place we choose to deploy it. It uses both internal and external data or Motion and market data, has about 30,000 lines of code, and we do calibrate it monthly. Now, we use it to leverage opportunities and mitigate risk.
By that I mean to leverage opportunities, that would be to say, when we see that things are improving and we may wanna have more inventory in place, we'll pick this up through our forecasting methodology and make sure that we increase our stocking position. Conversely, we know that if we need to be less robust in our purchasing, we can mitigate bullwhip or have material arrive before you realize you've got more than you really need. On the right-hand side, we take a look at the regressors or data. Internally, we're measuring the things you would expect, like sales and bookings, quotes, purchase orders, et cetera. Externally, we're looking at suppliers and supplier-supplier data, customers, our customers' customers' data, so forth and so on. We're looking at sales surprise, new sentiment, raw material pricing, just to name a few.
All of this gets put into that 30,000 lines of code. What we've done is we've placed PRIMA midstream of the data. To PRIMA's right or your left, you'll see where we've got our strategic suppliers, where we're looking for that external information and other suppliers and also their competitors. To PRIMA's left, we're looking at our internal data, our customers' data, our suppliers' customers, and so forth and so on. Again, all of this becomes part of the algorithm that we use.
We also integrate it with purchasing. It works like this: if we start in the first quadrant there, we'll see where PRIMA will take a look at 1 billion records and throw out all the irregularities. From there, she'll determine usage and lead time by DC, FC, or SKU, and then finally analyze our customer's SKUs and mitigate any risk. Forecast usage and lead time is considered so that in number five, stocking levels are calculated and in safety stock. Finally, we kinda stop and take a look at that and say, "Are there any inventory procedures that have changed since the last time I ran this formula? Do you have any inventory that you wanna speculate on?" If the answer is yes, those are contemplated.
We then move that over into a shared service center in Atlanta, where the purchase orders are built and grouped and the orders are staged. Now what we're doing is actually integrating that with our suppliers, so that we electronically feed that order to our suppliers so that we have end-to-end demand planning all the way into purchase. Jeff?
As we optimize and automate our distribution fulfillment centers, it allows us to have the opportunity to consolidate. You can see across the globe we have several new distribution centers under construction and/or nearing completion. They are outfitted with the latest tools, technology, and automation. In several instances, we are consolidating two-three facilities and sometimes upwards of five-seven facilities. Our end-to-end connected supply chain is coming together. It is fully integrated, it is becoming more accurate, transparent, in stock, efficient, and reliable, which is allowing us to exceed our customers' expectations. We appreciate you giving us a little bit of time to talk to you about what's happening in the supply chain. Thank you.
GPC aims to lead in emerging technologies, leveraging our unique positioning, global scale, and one GPC team approach. From technologies such as ADAS to connectivity, shared mobility trends, and electric vehicles, we are focused on enhancing supplier relationships, expanding product offerings, and investing in talent. EVs are a small but growing part of the car park, and GPC is building a global EV network to keep them on the road. We are offering the tools and training techs needed to service these vehicles. NexDrive, powered by NAPA, is the service network for the next generation of cars. Our certified workshops, which originated in Europe, are rolling out across our global markets. Our solutions that serve customers with the right parts, equipment, and marketing expertise drive demand in the aftermarket. We keep the world moving.
We're excited to talk to you about emerging technologies today. Although electric vehicle sales are growing, the proportion of EVs on the road will be a more gradual change. ICE vehicles will remain predominant even in 2030. The rate of adoption is quicker in our European and Canadian markets. In the U.S. and Asia-Pacific, this propulsion shift comes later. Nonetheless, we recognize this shift comes once in a lifetime, and we're adapting our strategy accordingly. We believe there are four competitive advantages that position GPC to be the market leader in our space. Our presence in higher adoption EV markets is something that most North American competitors don't have. Our robust training and garage network management function brings customers on this journey in new technologies. Partnerships with premium suppliers ensure our customers have full access to parts, services, training, and information. Finally, our coordinated focus approach to this function.
It means we can repeat successes from each of our business units across others. We design our strategy and initiatives around three key pillars. Most important, training and access to information. Modern vehicles are more complex and the presence of electric current in the vehicle means there are technician safety risks. We provide our technicians with the necessary training and provide additional access to vehicle technical information and advanced diagnostics. The second pillar is providing services and an equipment offering to our workshops. We're helping them fulfill their demand for modern solutions to run their businesses and out-compete their competitors. Our third pillar is parts, where we continue to remain experts in identifying and purchasing the products our customers need. 90% of the parts on an ICE vehicle will remain on an electric vehicle.
There are also opportunities for new EV product families and advanced electronics that my colleague will speak to you later. Finally, I wanna call out NexDrive, an exciting initiative we believe brings together all three of these pillars.
NexDrive, powered by NAPA, was a brand that was launched in the Netherlands in 2020. This brand expanded to the rest of Europe, went over to Canada, the U.S., and expected to be global by the end of 2023.
What is this brand? Well, it's simply driven by customer need. Customers are looking for alternatives to repair and maintain their EVs. The only option they had before was going to the OE dealership. Today, they will have an option to go to the NexDrive authorized NAPA facility. Aftermarket shops have been looking for solutions for quite a while now, seeing the market change in some areas throughout the world, some faster than others, and they're looking for help in supporting them and leadership into the EV space and the hybrid space. NexDrive is a solution that we provide. We launched the program. It's a program that's available to our NAPA networks with a rather small capital investment on their part, and it provides them a solution for their future. There's really five pillars holding the strategy for a NexDrive powered by NAPA.
First of all, training. Training will be key. We need to train technicians in every one of the NexDrive facilities to make sure they repair the vehicle right the first time. Marketing and branding, targeted marketing for both the garages and consumers will be used, and we'll be quite a bit stricter on the brand and signage guidelines than we've been using. Technical support, which is well done in Europe today, is also a key piece. Information will be required. We're looking for a supplier partner for North America right now. Equipment, there's specialized equipment that's required for EVs, which did not exist before, so we need to guide our shop owners as to the equipment they need to buy.
Also have an audit system to make sure that they stay up to date on the equipment and stay up to date on the training because the cars are gonna continue to evolve. Finally, NAPA's got the greatest footprint out there in terms of stores. We need to provide store training so that the NAPA store can service the NexDrive facility in the same way so they both understand EVs and hybrid vehicles and talk the same language.
When you think about electric vehicles, most of the products and services performed on these vehicles are the same as for combustion engines. That being said, we're very excited about some of the new products that are coming into the market. I'll start by talking about thermal management. If you think about the hose systems for a combustion engine versus an EV, the EV is much more complex with many more hoses than a combustion engine. Using Tesla as an example because they're a majority market share in the pure electric vehicle market, we offer thousands of parts for Teslas. One example of that is Brembo Brakes, who is the OE supplier for Tesla. We are going to be launching next month an exclusive offer of Brembo Brakes in the U.S. aftermarket, and we're very excited about that.
We're also excited about seeing the different types of new categories that are coming in. For example, vehicle chargers. We have a number of different partners that are supplying these vehicle chargers for us and for our customers. When you turn and think about the workshop, they also have a lot of needs around electric vehicles. There's new diagnostics tools, as well, in particular, safety equipment. That could be anything from gloves to insulated tools, and we're currently launching a full line of insulated tools under our private label, Carlisle brand, and we'll be the only ones in the aftermarket to have that. Lastly, I don't wanna forget about advanced driving assistance systems. This is all the functionality up to and including self-driving. Think about your lane departure warnings, your adaptive cruise control.
All these functions require many sensors and cameras, this is growing exponentially in the marketplace. Whether you have an EV or not, this is relevant. It's not just the products that's an opportunity. The workshops need to calibrate these cameras and sensors to make sure they continue to work properly, and we are happy to sell these workshops the equipment needed to do these calibrations. In conclusion, we are very excited about our opportunities in emerging technologies.
[Video presentation
Genuine Parts is leveraging technology and data to enhance our strategic pricing capabilities across all business units. Pricing creates a unique opportunity for both the automotive and industrial parts groups to gain increased market share while improving profitability. This is an increase in both top line and bottom line. We've developed financial models to quantify relevant costs, profitability, and pricing scenarios across all offerings and markets. Our design strategy was built around the unique product and service offerings of the different businesses. We will highlight our approach to customer segmentation, end-to-end profitability, and capability building as we are continuing to invest in technology to further increase our strengths of being competitive and profitable. On customer segmentation, Genuine Parts continues to enhance our data, advanced analytics, and digital capabilities to deliver profitable growth and a best-in-class customer experience.
Our strategy is to take a customer back approach to ensure that we are fully understanding all facets of our customers' needs and behaviors. To do so, we employ surgical price setting done at the customer and product level to most effectively align with customer needs, demand fluctuation, and expectations. This includes competitive benchmarking on market pricing, real-time data and analytics, and a focus on engaging our customer base with competitive product prices and reinvestment in high-growth areas. We continue to refine and test this approach through dynamic and value-based customer pricing. We've developed a comprehensive customer discount decision tree process, which identifies significant customer attributes for hundreds of product groups from thousands of suppliers, and makes over $20 million price recommendations for a single business unit. As many of you know, each of our customers has a choice in how they wanna interact with us.
As we refine our pricing strategy internally, we're staying mindful of the importance of pricing for digital and all other omni-channel expansions. Our pricing recommendations will remain consistent and synchronously updated across all buying platforms. As we continue to expand this scalable approach and methodology, our future pricing investments will help allow us to advance our customer segmentation criteria, providing price sensitivity and elasticity across all customers and product groups.
Equally as important to understanding the buying patterns and behaviors of our customers is having an increased visibility into the service levels and customer cost to serve to further optimize that pricing. We're linking new pieces of customer insights to establish and build an end-to-end margin view of true profitability. We're connecting 20+ data sources to drive innovative visibility into price realization and potential revenue and margin leakage. By having this comprehensive view of cost to serve, profit, profitability by customer, product, suppliers, we can account for all stages of value creation and better serve our customers by aligning our services to what our customers actually want and need. With the full visibility into contribution margin, we're able to create targeted pricing strategies at the customer level.
What underpins all of these pricing strategies is profitable, competitive pricing that's designed to unlock growth, but also match expectations of our cost to serve. As we continue to refine this capability, we'll develop even more detailed analysis and comprehensive understanding of our customers relative to their servicing stores and DCs in the market. One of the most fundamental benefits of this is the increased transparency into different levels of profitability. Everything from growth margin to controllable merch margin to contribution margin, it enables us to further optimize the network service levels and our cost. As these analytics continue to evolve, they can be integrated into our customer and product segmentation methodology to ensure that our discounts are further informed by cost to serve and relative competitive positioning.
As we modernize our platforms, we're identifying opportunities to develop recurring alerts, which will then identify any changes in cost to serve by customer. As we embed this into our systems, we'll continue to enrich our data with addressable wallet and greenfield opportunity to then tailor our pricing and drive increased sales and market share. One of our additional critical focal points is a continued investment in building the holistic capabilities and talents of the pricing organization. By leveraging in tech and analytics to drive revenue quality through customer-centric focus, we can then systematically improve the speed, quality, and the impact of our competitive pricing actions. As we've mentioned, we're currently investing in more advanced and robust technology, both internally developed and also through partnerships with external pricing management software providers.
This will allow us to take that next step in terms of tools and resources for not only improved performance visibility, but also to support price management and optimization objectives. Combined with this, we're looking to continue to build and supplement our talent profiles to evolve into a best-in-class pricing organization and use this as a competitive advantage for all of GPC businesses. We're looking at the changing dynamics through our pricing strategy and then aligning new talent profiles and positions to complement that evolution of our pricing organization. In the near term, we're building out a pricing analytics and data science team in our Poland tech center that'll help drive increased data analytics.
In support of that effort, we're normalizing and centralizing all GPC data for pricing to Google Cloud, that'll allow us to apply Google's machine learning and other AI tools to then optimize our pricing recommendations. Looking into the future of our establishment of a best-in-class pricing organization, the development of innovative strategies to increase ongoing resource, talent, and retainment assurance is vital. We look to help accomplish this by offering our talent-based opportunities to grow and expand their knowledge base and career development with things like pricing rotations, data science certifications, et cetera, all part of a comprehensive pricing academy change management program of work. A lot of exciting things to come here in the pricing world.
With deep understanding of our unique customer segments, GPC utilizes data analytics to drive an increasing mix of traditional selling and digital commercial strategies. Whether the driver or pro, the buyer or facilities engineer, our customers' experiences are interlinked in a unique solutions ecosystem. We have mapped the customer journey to craft omni-channel experiences for parts, service, and solutions. Our digital capabilities and unmatched automotive and industrial networks give GPC a competitive advantage to deliver a best-in-class customer experience. We keep the world moving.
Today, we're gonna be walking you through how digital is improving our customer's experience at GPC through a little storytelling. At GPC, we start all strategic initiatives with a deep understanding of the customer, derived through customer immersion, principles of design thinking, and customer segmentation, with clearly articulated customer personas. At NAPA, we have three main types of customers. First, the driver is the vehicle owner. Second, the pro is the repair shop. Third, our partners, independent owners of NAPA Auto Parts stores and NAPA AutoCare Centers.
At Motion, we have many types of customers. Today, we will be focusing on two primary. First, the operational buyer. Second, are our sales associates.
We don't think of our customers in silos. Rather, we see them existing in this fluid customer solutions ecosystem. This unique ecosystem is enabled by technology and proprietary digital interfaces. At NAPA, we have digital interfaces for the driver, for the pro, and for the partner.
At Motion, we have digital interfaces for our local buyers, for maintenance managers and engineers, and for our sales associates.
Meet passionate planner, Rebecca. She's online researching a noise in Acura's brakes. She sees a NAPA community thread with information from other enthusiasts who recommend downloading the NAPA app to get access to diagnostic services, how-to videos, and tools required to do specific jobs. She enters her vehicle details. After watching, she's a little nervous about doing the job herself. She clicks on Book an AutoCare Appointment, which instantly shows her that there's availability the next morning. At the local NAPA AutoCare Center, Joe is alerted to the new appointment. He can see that the required parts are available at the local NAPA Auto Parts store. He assesses the system-generated cost estimate and labor scheduler and accepts the appointment. Rebecca receives a guaranteed upfront quote and appointment confirmation. Meanwhile, at the local NAPA Auto Parts store, the part order is received.
Team member, Susan, immediately picks the parts, which instantly sends a confirmation to Joe that they're on their way. The next morning, Rebecca's alerted via the NAPA app that her appointment's running on time. Upon arrival, she's welcomed by name, and a pre-ordered Lyft is ready to get her to work on time. During the repair, the NAPA Auto Care technician, Max, identifies an unexpected issue. Oh, it's a tricky one. He FaceTimes NAPA tech support for diagnostic help. He's instantly connected, and using AR technology, works through the diagnosis. The system prepares an auto quote for the additional work, checks parts availability, and assesses the day's schedule to ensure the job can be completed by the end of Rebecca's workday. It can. Joe contacts Rebecca. She is not happy. Is this an unnecessary upsell? Using interactive video, Joe explains the problem and outlines NAPA's flexible payment plan.
Rebecca is impressed. Upon completion of the job, Rebecca receives an alert, details of her payment plan, and the time her vehicle will be dropped off at her workplace. A few days after the repair, she receives a thank you message together with an invitation to attend a maintenance evening at her local NAPA Part store. She books herself and her son via the NAPA app. Upon arrival, they're welcomed by name. The NAPA team member highlights the exclusive special on wiper blades. As Rebecca approaches the section, the specific blade for her vehicle lights up on the shelf. She places payment on the mobile app and is just in time to enjoy the maintenance workshop. It's being facilitated by Max from the NAPA Auto Care Center. NAPA really is relevant beyond just the parts.
Austin has procurement and operations responsibilities at a large automotive manufacturer. In his role as a buyer, he needs to be able to quickly discover and compare parts, quote, and check out. Each day, buy lists for preventative and reactive maintenance schedules come his way. Motion's search experience powered by Google gives him quick access to the parts he needs, even when he starts his search outside of motion.com. Austin needs insights into transactional data, like tracking information, proofs of delivery, and invoices. Soon, he will have business intelligence and analytics capabilities to review and better manage his spend with Motion. He has all of this at his fingertips on motion.com and considers these e-commerce table stakes, not enough to differentiate Motion from its competitors. When coupled with Motion's other digital offerings, it's a game changer.
When Austin fills his operational or engineering role, his views are accompanied by complete technical attributes and values, ensuring the most technical research is possible. For his engineering work and modeling, 3-D product images are available and downloadable, letting him work on the CAD or 3-D modeling solution of his choice. As Austin monitors his operations, Motion's platform supports telemetric data feeds from sensors in his plants via an integrated digital twin. This gives him operational insights they would not be able to achieve without massive capital expense. After talking to his sales associate, he knows the plant floor experience is being expanded upon to include augmented reality to facilitate remote assistance or augment the plant floor with dynamic parts viewing that integrate directly in a motion.com shopping cart. By immersing themselves in his operations, Motion enables Austin to better run his operation using Motion's digital assets.
Jessica, an invested sales associate, starts her week by planning her sales and solutions call and analyzing her book of business. She uses a custom mobile sales enablement tool that allows her to manage her business anytime, anywhere. At a glance, Jessica checks KPIs, giving quick insights into day-to-day sales, profit, and margin. She recalls that she has organic growth targets and a meeting with a new food and beverage customer this week. A quick view of customer snapshot gives her what she needs to best plan her sales topics. Before she finishes her sales planning, she checks on her e-commerce web sales. She's working to flip several progressive buyers to the web platform and is seeing growing success and adoption. Finally, she checks the latest sales plays to see what profit-optimized targets have come her way.
The AI and machine learning algorithm is starting to curate sales plays, helping her best serve the customer in the most effective and efficient manner.
NAPA is uniquely positioned for three main reasons. First, the strength, trust, and credibility associated with a 98-year-old brand leader. Second, only NAPA has branded parts and care at scale. Third, NAPA's independent model, fueled by increasing need to partner with vehicle complexity, emerging technologies, and business playbooks for success.
Motion is uniquely positioned for three main reasons. First, we are the premier industrial solutions provider because of our people, culture, and our digital assets. Second, our customers require partners that will support their current operations and future expansion efforts regardless of the industry and maturity. Finally, we are bringing technology and digital front and center to a 75-year-old business model that is ripe for modernization and positive disruption. In closing, we start with the customer experience. Technology is infused in all that we do and enables the customer experience. We are guided by the vision of driving relevance beyond just access to the parts, and
We leverage GPC's unmatched solutions ecosystem to drive business value and differentiation. We wanna thank you for listening to our digital presentation today and hearing about how we're improving the customer's experience at GPC.
GPC customers look to us to deliver a mix of traditional and digital sales strategies that drive their profitability. We have a unique global view of our customers. We are using that intelligence to automate and improve operations and to unlock new business opportunities. We also provide innovative programs to automotive shop owners across the globe. Today, we have the largest partner workshop network on the planet. Supporting these sales strategies, we offer extensive training for automotive technicians and industrial customers. At GPC, we bring solutions to life for all our customers. We keep the world moving.
GPC is uniquely positioned with the world's largest network of affiliated workshops through the brands that are shown on the screen. We've been in the business of supporting these workshop owners through these brands for over 40 years across the world. In our experience, these programs are a source of sustainable competitive advantage for GPC. With over 30,000 shops globally, our shop owners serve the auto service and repair market, the collision repair, and the truck service and repair markets. As you can see, we've got shops located all across America, Canada, the U.K., Europe, and even Australia. We also have dedicated teams domiciled in each geography supporting those networks. Our customers are deeply integrated into our parts business, and as a result, we enjoy an upgraded share of wallet of around 50% with these workshop owners. They share our brands with pride.
They're really loyal supporters, as I said, they're deeply integrated into our business. As a result, they're stickier with GPC. Many of them are very progressive, forward-thinking owners, making them the ideal partners as we continue to evolve and adapt our business to the changing landscape. An ideal example of that is how we prepare for a world of EV and future technologies, and how we bring programs like NexDrive to the market with scale and speed across the world. Finally, we network with each other. We share learning and best practice across the group, and we really bring to life our One GPC culture. We use that best practice and shared learning from programs like the ones I've just talked around to strengthen our overall value proposition in the market to all of our customer channels.
Speaking of the value proposition, I'll hand over to Bert now, and he'll take us through it in a bit more detail.
Thank you, Wayne. An important note, as we think about the value proposition that we uniquely deliver to the global workshop partnerships is that we administer these programs by invitation only. You can't just be a partner of Genuine Parts Company. You're invited to the program. We vet these customers a variety of different ways. I mean, one unique way is that we validate their technician credentials, on their behalf through validation partners and things, like ASE certification. This is the value tree, or the value wheel of a customer and how they buy parts from a parts provider. You can see that it's availability, ease of ordering, delivery, price. It ends up at that value add program.
We believe that Genuine Parts Company differentiates in the value-add space by focusing on four main tenets. The first is that we wanna drive customer car count and revenue. We do that in a variety of ways. One example of that is that we provide nationwide warranty. When you go to a partner of Genuine Parts Company and get your car fixed, if that car has a problem anywhere in country across the U.S., across Australia, you can get that car re-repaired, and then Genuine Parts Company pays the second repair shop's labor and parts, making it a frictionless experience for the motorist. Number two, we provide things like digital vehicle inspection programs. The motorist is getting more accustomed to having digital and images in order to say yes to the estimate. We provide those programs.
Whether it be turnkey marketing, whether it be co-branding, we actually allow our partnership to co-brand with the Genuine Parts Company brands. We do that through a locally-owned, nationally-known mantra. Number two, we wanna drive customer profitability. They get the car in the shop. Now, how can we make them more productive and more efficient in turning their labor? We do that through business coaching. Wayne mentioned that we have teams of people domiciled in the field that are meeting with our partners on a regular basis, and they're having those meetings and taking a consultative approach to how to run their business. Business development groups. Think of 20 groups. We foster groups across our countries that allow shop owners to get together and share best practices. We provide priority services, priority partner or priority pricing, incentives, and rebates.
These are value adds that allow the shop to be more profitable. It really sets them apart as a special customer within the Genuine Parts Company portfolio. We wanna drive customer productivity. The best way to do that is via technology. Things like delivery tracking, where the shop and the technician knows where his part is in the order and the delivery process at all times. Things like B2B e-commerce. These are e-commerce portals where Genuine Parts Company provides enhanced data to the shop floor that allows that shop to order the right part at the right time for that car. Think of things like part attributes, good, better, best strategy, even migrating into repair data. We provide verified fix data within our solutions that allows the shop to get to the repair solution that works faster than he would otherwise.
Shop management solutions. We provide a shop management system that includes a point of sale and a back office system that makes the shop more productive and allows them to run their business better. Many of these solutions are a very discounted rate or even free as long as they honor us with their loyalty. Lastly, driving technician efficiency. Last year we trained 50,000 technicians. We have our own training companies, our own trainers on our payroll. The way that we do that is we provide classroom training. In the evenings, we get our technicians together. We provide virtual training. We even have an online suite of training that they can take 24/7, 365. Our approach to training is unique.
We don't wanna train the technician just on the system. We wanna actually train them on how to be faster and on how their acumen can actually produce profit for the shop in their repair experience. Finally, we have more technicians leaving the workforce than we have joining the workforce. We wanna help solution that by adding technicians into our global partnerships and then also building technicians from the shop floor up through our apprenticeship programs. We do that with a 24-month apprenticeship program, teaching the young technician or the new technician on the four main repair categories over the course of those 24 months, and these type of programs have been wildly successful, even recognized by the Department of Labor.
In a nutshell, it's more than just selling auto parts. It's about providing deeply integrated business solutions. What that does is result in a higher share of wallet for Genuine Parts Company. The end result of this mantra or this model that we've taken to the street is that these 30,000 repair shops, they actually create a more frictionless repair experience for the motorist. With that, I thank you for your time today.
Motion here today at the Industrial Customer Solutions area is displaying our different opportunities to be able to provide solutions to our end customers in the marketplace. Motion is a premier industrial solutions provider in the marketplace, where we really have positioned not just our products in caring for our manufacturers in the field, in keeping their production facilities up and running, but we've also coupled them with solutions. As we move forward into some mega trends that we'll talk about here in the reasons why Motion solutions are being sought after by the marketplace is the rise of Industry 4.0. When you look at the mega trends of connectivity with industrial IoT, industrial networking intelligence such as machine learning and cybersecurity, alongside with flexible automation, which includes robotics, vision, conveyance, and power solutions.
We really are entering a forefront where advanced automation, data exchange, and intelligent manufacturing technologies are really opening up significant opportunities for companies to embrace more and more digital transformation. Going further into the positioning of our automation solutions in robotics and conveyance and fluid power technologies, I'd like to just share with you a bit more about where we see full value solution providers going into the marketplace, such as industrial manufacturing, for us to position Motion and moreover, really bring forward increasing value that is being sought out by industrial manufacturers to optimize their operations and unlock new business opportunities. There are robust secular growth opportunities for these technologies and how they're being driven by customer shifting business outcomes. We believe that our business in Motion and as far as our solutions, are well-positioned to capitalize on these opportunities.
Full value solution providers such as Motion are increasingly being sought out by industrial manufacturers to help them optimize their operations and unlock new business opportunities. There are robust secular growth opportunities for these technologies and how they are being driven by customer shifting business outcomes. We believe that our Motion business is well-positioned to capitalize on these opportunities. Recent trends show that investment in automation for digital transformation in factories is growing at a compounding annual growth rate of 20%. This growth is driven by the need for companies to increase their efficiency, improve product quality, and reduce costs. 80% of North American manufacturing companies are likely to restore manufacturing, bringing supply chains closer to North America from Asia Pacific. These manufacturers bring their operations closer to home, they are increasingly looking to adapt advanced technologies to enhance their operations and remain competitive.
Another important driver of the adoption of automation technologies is the labor shortages in the manufacturing industry. According to a report that the U.S. manufacturing industry is projected to have 2.1 million unfilled jobs by 2030 due to a lack of skilled labor. Automation technologies offer a way to bridge this gap by replacing tedious, repetitive, and dangerous manual labor with more efficient, reliable, and safe automated systems. We see a robust secular growth opportunities driven by customers shifting to business outcomes supported by solution providers. Here at Motion, we have the solution providers across three different segments, Mi Conveyance Solutions, Mi Fluid Power Solutions, and Motion Automation Intelligence, Motion Ai. Also manufacturing light and heavy-duty weight belting, repair and services for our customers in the solution space.
Additionally, Mi Fluid Power Solutions is positioned for hydraulic specialization with 60 retail stores across nationwide, providing design concepts across hydraulic implementations, creating solutions that are connected in industrial manufacturing environments to provide hydraulic power solutions in the adoption of Industry 4.0 across these sectors. Last is the Motion Automation Intelligence, Motion Ai team of high-tech automation product providers that include robotics along with inspection systems, which include vision, IoT for networking, alongside with complete engineered systems in the marketplace across North America.
The path is clear for us to grow in automation, to take part in future growth around the digitization of manufacturing environments, really having a connected factory floor that will provide us with more Motion solution opportunities across all these three different business units as we categorize how we can really bring value in bringing efficiency, improve productivity and quality as the rise of automation and robotics and power technologies are applied across the marketplace.
The markets. We continue to invest in distribution channel and partner with GPC to provide the broadest catalog coverage, strong end user relationships and scale, all advantages helping GPC and Gates win in the aftermarkets. Last summer, we were honored to be named Motion Industries 2021 Supplier of the Year. The award recognized Gates for our exceptional commitment to Motion through quality products and services, as well as earning the highest score in the multifaceted supplier stratification rating system. Our Gates in region, for-region manufacturing and distribution footprint aligns well with GPC network across North America, Europe and Australasia. This enables us to provide superior support to GPC locally with products and technical expertise. GPC has a long track record of steady and consistent growth and is a market leader. This makes GPC an attractive long-term partner for Gates, as their growth is also positive for us.
We look forward to continuing these partnerships for decades to come and deliver above market growth driven by new products and focused investments in our growth initiatives such as chain to belt, oil and gas, diversified industrials and vehicle electrification. Working through the challenges of the past few years further highlights the strength of this relationship, as well as our optimism for our future combined success.
Now for the Business Unit Presidents panel, please welcome President and Chief Operating Officer, Will Stengel, and the Business Unit Presidents, Franck Baduel, Randy Breaux, Rob Cameron, Kevin Herron, and Alain Masse.
This is Canada.
Who knows what it is?
First and foremost, I think the video that we just saw, what a great reflection of some of the things that we were talking about earlier, this idea that our strategic supplier partners view GPC on both our automotive and industrial side of our business as a real partner of choice as they think about growing in their industries and into the future. We could have had many, many other video clips like that. A special thank you to our partners at Gates, who I know are listening. We appreciate the partnership and the support and look forward to profitable growth together as we move forward.
I thought what we would do, or we thought what we would do here is really give the audience a better perspective of some of the things that we talk about often as a team, help you get a better perspective of the business units through the lens of our great leaders here. I hope you found the showcase to be incredibly helpful. We had great engagement. A special thank you to a lot of people that worked hard to make that come to life. I hope it was additive to the comments that we shared with you earlier this morning. Here we are. We've got in my opinion, the best team in the industry on the stage. It's my privilege and honor to be here facilitating this discussion.
As I said, maybe we'll frame it around some of the topics that both we talk to our investment community, the investors about, as well as what we're working on each day. Frank, maybe since you're sitting closest, we'll start with you. Frank leads our European automotive operations, obviously a lot happening in Europe, but maybe give us your perspective on the market over there and what you're seeing and how you're winning.
For sure. Thanks, Will, for asking. GPC operates in Europe in a market that is very comparable to the U.S. in many aspects, both macroeconomic and also automotive market-specific indicators. With 27 countries, Europe is composed of 500 million inhabitants to be compared to 330 million inhabitants in the U.S. The European GDP accounts for 75% of the U.S. GDP, knowing that the first three European economies are also well-ranked globally. Germany is the fourth largest economy across the globe, the U.K. sixth, and France seventh. These three countries being the three most important GPC countries in Europe in terms of business. About European automotive indicators, the number of cars on the European roads is more than 300 million to be compared to 285 million in the U.S.
The European market in value is very large, approximately EUR 70 billion, meaning 80% of the U.S. market, with an average age around 11 years, slightly lower than the U.S. In a nutshell, the potential in Europe is significant and comparable to the U.S., the only one notable difference is that the European market is 90% DIFM-oriented, with only 10% DIY. Thanks to its track record over the last years compared to many European competitors, its high level of excellence, profitability, a talented team, a presence in nine countries, GPC has all the assets to continue to grow in the European market.
Frank, you know, we talked this morning about the role that M&A plays in our fragmented markets. You've had a ton of success on that front. Maybe talk a little bit about how that plays into your strategy.
Yeah, you're right, Will. The European market remains highly fragmented. If we consider the top eight players, they only account for 25% of the overall market. The top three players 17%, including AAG, which has 5%-6% market share. Over the years, we have demonstrated our ability to generate organic growth that exits the market, but also our main competitors. We also grew through external growth, managed in a profitable way and also successful way. M&A is part of our DNA in Europe, and our team is used to integrating companies, cultures, talents, but also new assets.
If we have a look at what has been done over the last two years only, thanks to GPC shareholding, we built 30 transactions, including in 2021, a significant acquisition in Ireland to enter the country. An acquisition in Benelux with the acquisition of a digital market leader online. In 2022, a significant acquisition in Germany to have a complete coverage of the territory in the largest European automotive market. Finally, the acquisition of the market leader in Spain to enter Spain and Portugal. All these companies are now fully integrated and very profitable as part of GPC.
Well, I would tell you the slide that we shared on bolt-on M&A activity, Frank and his team do a wonderful job on buying a business and really bringing incremental value to that target when they come into the AAG and GPC family. Frank, you also have a lot of really nice momentum. Obviously, we talk a lot about NAPA.
Yeah
in Europe. You know, we think about that sales effectiveness pillar. Maybe comment on a couple things.
Yeah, for sure.
in particular NAPA.
Yeah, for sure, Will. I mentioned that we have been outperforming the market. Why? As part of the largest automotive company with a global footprint, we are able to differentiate ourself from competitors. Two main examples. NAPA, very powerful brand in the U.S. We found the inspiration and duplicated the offer in Europe, launched in the middle of 2019. Nowadays, sold in eight countries. We reached $300 million in the end of 2022, we are on the right track to achieve $400 million in the end of 2023, thanks to the NAPA offering. GPC in Europe is the only one company with a unique and solely owned brand throughout the European footprint.
In addition, this is an important point, the NAPA volume has an accretive effect by 500 bps on the overall gross profit rate of the company, thanks to a common global sourcing organized with our peers. The second good example is key accounts. It has been representing 70% growth over the last four years, and now accounts for close to 10% of the European revenue. We reached $260 million in 2022, we ambition to reach $300 million by the end of 2023. Key accounts in Europe are looking for at least a European player, but more and more a global player to partner with. GPC is ideally positioned to grow in this segment, not only in Europe, but globally.
This is the reason why we foresee, I would say, a bright future and a potential growth above +50% by 2025.
Do you know, Will, when you think about the power of that NAPA brand, there's not too many businesses, in fact, there's very few number of businesses in the world, where the sign above the door can actually be the sign on the product as well.
Mm.
NAPA, you know, Kevin, has that powerful brand to be able to do that. We've got Repco in Australia that can do that as well. That power of that NAPA brand actually translates internationally. We've seen, Frank, you've seen it in Europe. We've seen it in Australia as well, as we brought the NAPA brand to life. We've got, you know, I think 75 branches now.
Mm-hmm
... with that NAPA brand and the, you know, the acceptance of the brand in the marketplace has been inspirational really to us. It's a, it's a very powerful brand.
You're right, Rob. We see tangible global value in the NAPA brand, thanks for your comment. Needless to say that our consolidation of the European market means also purchasing and productivity gains, leading to an improvement of the overall profitability in Europe. Even if the profitability in Europe is already very high, we are also striving to make the company leaner, better, more efficient, by implementing initiative. All of them are fully embarked in our strategic plan, Vision 2025, GPC roadmap. We have several pillars as examples. Logistics efficiency with 2 mega DC projects, with automation robots provided by Exotec, the automation solution, both in France and the U.K.. Digitalization, including a state-of-the-art e-catalog, Parts360, already implemented in Benelux. IT projects by implementing Microsoft Dynamics 365 to generate productivity gains.
Last but not least, several HR projects as well, addressing culture, training, communication, digitalization, and talent to be able to attract talent and retain our talent. Just to conclude about Europe, if I may, Will, I just would like to mention a few words about electric vehicles. Electric vehicles will come faster in Europe than the U.S. or Australia. If we have a look at the new cars sold in 2022, it accounts for 15%, considering only EV. It will be 50% in 2030. The switch seems to be massive. And we can consider that this transition is gonna be significant. We have to keep in mind as well that ICE will remain predominant with 84% of the old car park still ICE.
As a major player, we are already working on this transition to address the opportunities and to stay ahead of the pack. We have EV experts everywhere across the globe, including in Europe, working for GPC on parts identification, parts availability, partnership with premium suppliers, very well introduced in the OE world, but also agreement with car makers. Above all, we have rolled out our NexDrive concept, addressing training, certification, outlets, marketing, technical support, parts notification and supply, a global concept deployed in each country. We reached 150 NexDrive point of sales in 2022, and we ambition to have 500 NexDrive point of sales in Europe by the end of 2023, the largest network in Europe to cope with EV.
Franck, if I can jump in. You know what? It's been fantastic for us in Canada to be able to piggyback off the tremendous work that you did in Europe. You're two years ahead of us, but we launched it early first quarter in 2022, and the response has been incredibly positive from our repair shop customers. They were looking for a solution for the future, training, a vision, and it was great to work together. Thanks, Franck.
Alain, maybe we'll stick with you. Alain runs our Canadian business and does a wonderful job, great leadership position up in that segment of the market. Maybe for those who aren't quite as familiar with the Canadian market, give a little bit of perspective on how we're organized and, how it's similar or different to the United States model.
Sure. Be happy to, Will. Thanks. Well, first and foremost, UAP was founded back in 1926. We're known as a stable, strong business. We have strong margins that are accretive to Genuine Parts Company. We have a great corporate culture with, you know, fantastic team members across the country. We have the strongest aftermarket brand in the automotive space in Canada, and we're gonna be celebrating 100 years very soon, very similar to what you've done last year, Rob. Really, really good brand. We rolled that out back in 2002 after being acquired by Genuine Parts Company back in 1998.
I would tell you that on the automotive side, we are definitely the market leader by a large margin with a 19% market share. Despite the 19% market share, there's plenty of room to grow. Maybe a bit of some statistics in terms of our footprint on the automotive side. We have 570 NAPA Auto Parts stores, over 2,000 NAPA AutoCare Centers across the country, and we have 625 NAPA AutoPro centers, which is our highest tier. Speaking of NAPA AutoPro, we're really proud of that network. It was founded 40 years ago, so it's gonna be a good celebration this year. We're really proud as well because once again, in 2022, we won the J.D.
Power and Associates Overall Customer Satisfaction among independent repair shops in 2022. Of note, that's the 7th time that we've won over the last 13 years, so a really strong brand in Canada taking great care of consumers. On the major account side, you've talked about it, Frank. For us in Canada, it's also a big part of our business, and it's continuing to grow. It's 30% of our overall business on the automotive side, so significant portion of our business. Just maybe one last point on the EV side. For us, it's important. We're much more closely aligned, Will, to the European market in terms of adoption rate. To give you an idea, in 2022, 11% of new vehicle registrations in Canada were either electric or hybrid.
In certain markets, that percentage is a lot higher. In Vancouver, British Columbia.
20% of new vehicle registrations last year were EV, or hybrid, so significantly higher, and then 15% in the province of Quebec. It really varies across our geography.
It also demonstrate our ability to work all together on such significant topics. NexDrive is a good example. We have been collaborating everywhere, and providing the EV experts, to prepare our roadmap and to be able to roll out this NexDrive concept everywhere now across the globe.
Absolutely. Thanks for the reminder, Frank.
Alain, anything else in terms of your initiatives, as you think about kind of the uniqueness of the market that's driving growth as we move forward?
Yeah. Well, at UAP, we were very strong on the automotive side. We have two other important differences. The most important one is on the heavy duty side. The strength of our heavy duty business accounts for 35% of our overall sales for UAP. We're also the number one in the number one market share position in that space. We're, you know, the way it's split across the country, we have 120 Traction heavy duty stores from coast to coast. We have 132 Truck Pro locations. Traction is super well established in Canada. In fact, we're gonna be celebrating this year our 60th anniversary of the Traction banner, so a very solid part of our business.
I'd say similarly to NAPA, in the heavy-duty space, our major account and key account, large national fleets across the country are a very important part of our business. It's normal that they partner with us because we're uniquely positioned to satisfy their needs from coast to coast. I'd say the second most important difference is everything to do with the collision space. We have a specialized team, everything to do with collision and paint. Again, specialized team, and we go to market through our NAPA/CMAX banner in our country, and that positions us as well as the number one collision and accessories supplier in the country. Those are the areas, Will, that stand out for us in Canada.
Maybe, you know, if I can just say on behalf of the team here, it's been really good. It really accelerated over the last several years how we work together as one GPC, leveraging not only NexDrive, in our case, where we just talked about that, Frank and I, but everything to do with technology, logistics, automation. It's a good time to be a part of GPC.
Well, I appreciate you saying that, Alain. It obviously relates back to a lot of the comments that we made about the culture. You know, obviously big, strong, inspirational leaders, but the willingness to work together and partner and share ideas. Hopefully you can see that here on the stage today. Randy, I know you don't wanna stay quiet for too long.
I wanted Frank to catch a breath here, you know? The boy just kept going and going and going. You know?
Well, Randy, you certainly.
now your turn, Randy.
You certainly have turned some heads with the performance of the industrial business, including the acquisition of KDG. You know, tell us a little bit about your great business and perhaps continue to educate us on maybe what people don't really appreciate about.
Sure
sweet your business really is.
Well, thanks, Will. You know, we think there's a lot to like about the industrial business and the customers that we serve in the various markets. You know, when we consider the market dynamics for industrial, Motion serves a very fragmented market, about $150 billion. We're the number one player in the market today at about $8 billion, and our closest competitor is about half our size. Just like in automotive, size and scale are very powerful in the industrial market. The addition of Kaman in 2022 with its incremental volume, the customer relationships that they had, which really didn't overlap with ours, the technical talent and the other capabilities they provided have truly been transformational to our business in the last year and will be in the future.
Our team did a tremendous job last year managing the integration. We took that Motion, the Kaman business, and we integrated into the Motion business over the last 15 months, and we originally said we would do it in three years, and I'm here to tell you we're gonna do it in about half that time. As a result, you know, we had an exceptional year in 2022, without the Kaman integration, if you'd have looked at it that way, but with the Kaman integration, really a fantastic year. We're well positioned to perform through the cycles in the years ahead, and we will provide industry-leading growth and profitability. On the market side of it, you know, we participate in a lot of diversified markets.
Motion sells into just about every industrial market in North America, but we really focus on 15 end markets. The end markets would include things like machinery and equipment, iron and steel producers, food and beverage, one of our larger markets, and that's just to name a few of the ones that have been mainstays. There are some new and fast-growing markets that we participate in, like logistics and distribution centers. We talked a lot about EV vehicles today, and the EV manufacturing is a big market for us, as well as the battery manufacturers that are coming online. That is a very fast-growing market for us.
We've been able to get into these markets early, and we've demonstrated the solutions that we can provide and the capabilities, and I'll tell you, this should be good business for us for many, many years to come and provide us great growth opportunities for a long time.
Well, Randy, you bring up a point that maybe I'll jump in on. You talk about EV manufacturing and some of the battery manufacturing plants that you all are there from day one. Those are great door openers for the NAPA team here in the U.S. We've built relationships early on based on the relationships the Motion Industries team has with those, and it's really helping us open up some doors and drive some business through the NAPA store.
Well, it's great, Kevin, I do appreciate the comments, we will continue to collaborate every time we can. These type of crossover sales opportunities are a huge advantage for GPC, as are the opportunities with global suppliers like Gates, that you saw earlier, I'll be seeing Evo tonight at a sales meeting we're having in Denver. We try to look at any opportunity like that we can to help each other out, and I'll tell you, this is a great collaborative team we have up here. In addition, we look at best practices in our operations, for example.
While we're employing automation in some of our distribution centers, all these guys are doing the same, and we cross-pollinate, if you will, to make sure we're getting the best piece of machinery and equipment in our distribution centers and fulfillment centers. There's great collaboration, and all that just benefits the operating, you know, leverage that we get in all of our businesses. We really, really think this is very beneficial.
You know, Randy, you are so right. I mean, I think what really brings one GPC to life for me is the collaboration that you and I have had.
Absolutely
... you know, with your North American Motion business and what we're doing in Australia as well. You know, the learnings that we've got from you in terms of the way that you go into market, the processes that you've got, the best practices that you've got, the collaboration amongst our teammates...
Yep
... has, as well, has just been extraordinary, not to mention suppliers, too. We're really creating a global industrial business under that Motion banner, working really closely together. I think that kind of brings one GPC to life, Will.
Yeah, I agree with you, Rob. I mean, we enjoy working with your team. We do a good job. We're usually down in Australia a couple of times a year.
Yeah
... I'll be coming down in October, so it's always great to get together. We always learn something from each other. Will, maybe just a few more highlights on the industrial business. you know, we have a fairly high concentration of what we would call national accounts or corporate accounts. you know, at the beginning of a year, 45% of our business is under contract today, and those are multiyear agreements. We like to think that at the beginning of the year, we come out of the chute on January 1 knowing that the tank's about half full, and that's a good feeling to have, you know? And we will continue to do that. We think that mix is about right too, about half of our business under contract, half not.
The other thing is, from a technical side, we bring a lot of technical competencies to our customers. In many cases, you know, we operate on the plant floor with our customers, and we know what's going on in the plant and the applications better than they do. Our job is to really find solutions that will help them keep their downtime to a minimum, reduce their operating expense, and at the end of the day, let them focus on building the product that they manufacture and us focus on keeping their plants up and running on a timely basis. That's a big part of our business, and that's why we don't see ourselves as a just a distributor. We are truly a solutions provider. To take it one step further, we are very service oriented.
When you were out in the vendor fair, the displays, you saw that we have four vertical business units within Motion that we focus on, and these business units combined now are representing just about $1 billion in revenue. They've become very important, not only to us, but also to our customers. Automation, fluid power, conveyance, and repair, these are critical to allow us to bring solutions to the customers that our competitors can't. They work hand-in-hand with our branches, and our branches will, in many cases, bring these vertical businesses into our customers, so there's great collaboration within Motion. I think we've got a great model. I think we have a great team. Will, I think we're built for growth in the future.
Well, you know, you certainly had just an incredible run. I think we owe all of the teammates at Motion who did all that great work to integrate KDG and pull that timeline forward, I think it's a great case study in the ability to create a lot of value through M&A. Randy, thanks.
Certainly a team effort.
Thanks for the hard work and the performance. Maybe a good segue, Rob, for Asia Pac. You know, we bought that business as I described earlier this morning, a little bit of a platform as we think about future growth.
Right.
That was about 10 years ago.
Mm-hmm.
Man, has that been the case, one of the most consistent performers, in the portfolio over the last 10 years. Why don't you give a little bit of background and insight in terms of how you thought about evolving that business over the last decade to deliver performance?
10 years, it kind of feels like yesterday a bit. 10 years since GPC made that first investment into Australasia in automotive, then around five years ago, we made a further investment into the industrial sector as well, with the acquisition of Inenco or Motion Asia Pacific. I'll talk about, you know, maybe from an automotive perspective first. Over those 10 years, sales have doubled, and EBITDA has grown 3x. That's a sales CAGR of around 8%, and an EBITDA CAGR over the same time, about 10.5%. Really good, consistent growth. What I would say, you know, five years now with the industrial business, it's actually following a similar, you know, similar trajectory.
You like that business.
I do like the industrial business, Randy.
I know, I know he did.
Absolutely. When I think about the business now, Will, Asia Pac, we've, we're a $3 billion organization now with healthy, you know, double-digit EBITDA margins. Yeah, I'm really pleased with how our team have brought that business together and the operating that we've done. It's been a great job.
It's incredible. I'm sure everyone wants to know, how do we keep it going as you look forward and think about the future?
Well, I think, you know, what we've done in the organization has been really transformative, if you like, and that has created the conditions for ongoing sustained success. You know, when I think about what we've done in automotive, we've increased our store count by 30%. All of our stores are company-owned stores as well. We've really invested in the range that we have and the depth of inventory. Worked really closely with understanding our customer value proposition to do that. Significantly, we've restructured the business. We've really simplified our operations. We went to market with about 17 different brands 10 years ago. We've actually, you know, simplified that now down to three brands. I think that's been really important for us as well.
I think one of the other things we've done is with our Repco brand. It's an iconic brand. It's a 100-year-old brand, and we've really invested into our brand from a retail perspective as well, and the way we go to market with our sponsorships and motorsports, and that's been tremendous for us, is growing that Repco brand and notoriety. Yeah.
You know, hopefully you saw a little bit, in the showcase about how we're sharing best practices around the globe, but we're also sharing best talent. Rob's a perfect example here. About six, seven years ago.
Sharing or stealing my talent?
Yeah. Depends on whether you're the giver or the receiver.
Which is he, Kevin?
About seven years ago, Rob shared what was supposed to be a short period of time, but he's now here permanently, the leader of the retail team. Cameron, who you would have saw in the showcase this morning, has come across the pond, as they call it, and now leads our retail efforts. You know, the Repco brand is 50% retail, so they brought so much of those learnings over here. It's really helped us grow and build our strategy over the last few years and for the next few years in our retail business.
I stole your NAPA brand. I think that's pretty fair. We've also got some, you know, really market-leading motorcycle accessories business in Australia.
Yeah.
I think that differentiates us a little bit as well.
It's a great business.
We've done a lot of work, in that space. We're actually transforming the market, Will. It's, we've developed a big box retail format, and so it's fundamentally shifting the market in Australia. Look, I think we're a, we're a much simpler business now. We've got a more compelling value proposition for our, for our customers, and they're obviously voting with their feet. You know, as we've rolled out each of these initiatives, our sales and EBITDA CAGR, is actually accelerating, which is, which is quite exciting. That's automotive.
Right.
In the industrial space, we're actually following a similar playbook with branding. We've rebranded.
Yeah.
Inenco into Motion.
Absolutely.
Taken your branding and your thinking, implementing the same go-to-market models that you've done here in North America, the same vision, the same strategies. Kinda... I've got a saying, Will. I like coming over and just copying and stealing shamelessly. Putting our little bit of twist on it, and it seems to work. You know, it's early days yet, but the results are really encouraging in our Motion Industries business in Australia. Randy, we'll work really closely with you and make sure that we continue to copy and steal shamelessly from you.
You're welcome to do it. You're welcome to do it.
Thanks, Rob. Great update, and thanks to you and your team down under. It's an impressive track record. I know you're excited about the future. Kevin, that brings us, lastly to you, probably the part of our business that the investment community knows most about. Talk to us a little bit about what you're excited about and how you think about driving growth and margin expansion, you know, as we look forward.
Yeah, certainly will. I appreciate the opportunity to be in front of the group. You know, our focus starts here on this campus as we build a foundation that can service our 6,000 NAPA Auto Parts stores. Hopefully you got a feel for some of the talent that you met out in the showcase. I'll first start with pricing. Brooke, who presented is on our team here in U.S. Automotive. We're investing in talent and we're investing in tools to drive our margin at the store level. It's talent external combined with our internal talent that's really helped us produce five consecutive quarters of gross profit and margin improvement, and really seven of the last eight. This team is just getting started, it's starting to pay dividends.
We've selected a new pricing software that we'll look to implement over the next few months and years that really will provide benefit for all 6,000 of our NAPA Auto Parts stores. Sourcing, category management, huge opportunities. Again, we've invested in talent, and more importantly here, we've invested in training. We've added resources from several major companies around the globe. I don't want to talk about them here on stage 'cause we stole some really good talent from some great companies. We've also put them through training. Green and Black Belt training by Delta Associates, and we did that along with our supply partners, so we're all speaking the same language. It's really helped us improve these teams. Finally, you know, you think about supply chain.
We've got a tremendous amount of work to do here in the U.S. We're starting to build out what does our model look like as we think about supply chain going forward. Again, three parts of our business, we're investing in talent, external and internal, with all of those working towards driving profitability through the NAPA Auto Parts store. I think about our market share, 7%, $130 billion market, and I think about our NAPA AutoCare Centers. You heard a little bit from Bert and Wayne. 18,500 NAPA AutoCare Centers here in the U.S. That's the backbone of our DIFM business. You know, we're 80% commercial. We like that. As the complexity of vehicles continues-
We think that puts us in a leading space. Hybrids and BEVs, bring them on. We're starting to get ready. We love hybrids, right? It's two systems, more opportunities for things to break, so who wouldn't want that in our space? You think about the NAPA AutoCare network, again, 18,500 auto care centers. You heard Bert talk about the value-add services. NAPA TRACS, our standalone business unit, business management system, 8,000 here in the U.S. That helps our independent owners run their business. Training is critical. We trained 50,000 technicians around the globe, 40,000 of those here in the U.S., and I'm really proud of our team for getting that done.
There's 860,000 technicians in the U.S., so that just tells me there's a huge opportunity for us to continue to train technicians. We know there's a shortage, and we're also investing in new technicians. Again, you heard this from Bert. Our apprenticeship program, been on, in the works for about three years, and we couldn't be happier with 1,000. We can't stop at 1,000. We have got to continue to build out technicians. Again, we're so excited about where we stand in our DIFM market at 80% and, more importantly, our NAPA AutoCare centers across the country.
It's a great update. Those really do kind of wrap up. Hopefully, everybody got a perspective wrap up our thoughts from the business unit leaders. As I said at the beginning, Genuine Parts Company is very lucky to have five great inspirational leaders working with our teams and our customers each and every day. Hopefully, you got a flavor of their perspective on why we're excited about what we're working on and the path forward. With that, we will move the presentation and the show forward.
Good job, Kevin.
Huh?
Good job, Kevin.
I wouldn't be sitting here today if it wasn't for NAPA. I wouldn't be the leader of this company because I wouldn't have the money and the funds and the inventory and the programs that is brought to us by Genuine Parts Company. I am the President CEO of McKay NAPA Auto Parts located here in Central Illinois. In 2012, I became the principal owner, and we've not looked back. In 2003, we had 14 stores, we did an annual business around $9 million. We joined NAPA, we doubled our business in 2012, in 2022, we doubled our business again. Last year, we did $36.5 million. We have competitors in every market that we're in. All the big box stores are there.
At the end of the day, it's relationship building that set us apart. I have a great relationship with our general manager out of Mount Vernon and the sales manager and our TSM, and I can actually pick up the phone and call Kevin Herron, or I can call Paul Donahue. They answer my calls. They listen to us. The support we receive from NAPA Auto Parts in training and marketing is second to none. We spend a ton of time in training, not only our people, our counter staff, but our technicians. We're doing things in our training facility here at Litchfield. We can host 50 people, and we do that, not only with our technicians, 'cause we're talking about hybrid vehicles today, we're talking about electric vehicles today. We're preparing for that. Our business development group is involved, so we're doing training at the shop level. Why?
We need these shops to be in tune and up to date what's going on. Automotive parts are changing daily. We know that, and we gotta stay in touch with that. Without NAPA and not the inventories, the nationwide warranty, the involvement with our 100+ AutoCare Centers, that is the reason we're successful. They have provided us the programs, the avenues, the growth through being a growth cap. Marketing, I'm telling you, we have the racetrack in St. Louis. It says NAPA all over it, so I get that nationwide advertising, NAPA Auto Parts, NAPA AutoCare Center, that draws customers into the track, and then they see us on our stores on Monday morning. We can only do so much as a small company, so having Genuine Parts Company and NAPA brand helps us tremendously.
What excites me about the future of teaming up with NAPA Auto Parts and Genuine Parts Company is I know they got my back. I've got a young sales team. I got an office staff that says, "Hey, are we viable? Are we relevant? Are we gonna be here?" I have no worries when I take the field every day saying, "Growth is in our future.
Please welcome Executive Vice President and Chief Financial Officer, Bert Nappier.
Well, good morning. I'm still the newest of the new, so I got the last spot. I don't have a lot of clout left with my colleagues, so I get to take the last straw here and close things out. I first wanna thank Earl for his passion in our business, and hopefully that came through, and you can see that. It's also the same passion that we all have that you've seen this morning. We're really excited about GPC and this business and where we are. We're energized about what we're doing. I'm thrilled to be able to take the stage and share our financial targets with you. It's a privilege to be a part of this business. I've been here almost a year as CFO.
I'll be a one year CFO as of May first. I've gotten a chance to know many of you over the year. Thank you for your warm welcome. Look, we have a unique business. As Paul and Will and the rest of the team have outlined, we're really well-positioned as we look ahead. Our business mix, we have a unique value proposition with our business mix, our team, and our strategic initiatives, and we're able to lean as we think about going.
Going forward, able to lean into a very strong legacy around this business, one that is rooted in financial discipline of growth and financial performance and capital allocation. We have an outstanding culture. You've heard a lot about that this morning when you heard Will talk about our team and how we're investing in team, and we're making these investments for our future and talent. We harness a culture that's all around the world, and that teamwork is an intangible that helps us be able to execute through today, but also into our future. Our disciplined capital allocation is also a part of a hallmark that we have on the financial side. We're proud to take all of these things forward and share with you today where we're headed from a financial perspective.
It's been great to see what's going on in the business strategically, I wanna show you what the financial expression of that looks like as we look ahead. I first wanna start, though, with where we've been. Paul talked about this a little bit this morning in terms of our history, but I also wanna underscore the backdrop of where we're headed in the next three years is rooted in a very strong track record of performance. When you look at this slide, you see performance through many cycles, over a 20-year period. You see a sales CAGR of 5%. You see an EPS CAGR of 8%.
More importantly, as Paul highlighted this morning, you see an inflection in the performance of the business over the last three years with a sales CAGR of 9.3% and an EPS CAGR of 16.7%. This performance and our ability to execute over the last three years positions us to take the momentum for what we're talking about today financially and go execute. We believe it's a really nice mix of ambition and GPC execution mixed against a bit of a macro backdrop that's mixed and a little uncertain right now, and we see an ability to move past that as we look ahead. I do wanna call out a few specifics when we think about what's happened since 2019. We've had a strong track record over the last three years.
A few more things to call out in addition to some of the things you've heard about this morning already. We've delivered eight consecutive quarters of top-line growth. You combine that with three straight years of EBITDA margin expansion, two highlights that are important as we look ahead. We also have been able to fuel, with that performance, $2.1 billion of returns to our shareholders through our dividend and share repurchases. That's at the same time while continuing to invest in CapEx and M&A. You've heard about our M&A strategy this morning, and we'll talk a little bit more about capital here shortly. These investments, this performance, is generating a return on ROIC and on TSR. When we think about ROIC, we have a long-standing focus internally on ROIC, but it's something that we haven't necessarily talked a lot about externally.
I wanna call it out on this slide. Our three-year average ROIC is 34.3%, highlighting the discipline that we have when we're making capital investments across the business. Collectively, we take all of this together, our TSR over the last three years, 21.2%, capped off by 2022 with a 26.8% TSR, placing us in the top 9% of the S&P 500. Think about that for just a moment. We all know what happened to the equity markets. When you look at the capital markets more broadly, an analyst I saw published a piece in January that said the bond markets were the worst in 250 years, so the backdrop for GPC's performance last year was truly outstanding when you think about the equity and bond markets.
We look forward to continuing to drive this kind of return as we move ahead. Now the moment you've all been waiting for, you saw the press release this morning, and I know you've been dying to hear a little bit more color about it, the targets that we have set forward for 2025. I wanna start with a very important point. We are reaffirming our guidance for 2023, from our earnings call last month, we start from a place of reaffirmation of that target for this year, and we build from there. Again, this is also the first time we've ever done this, we're stepping out a bit with three-year targets.
We believe that what we're doing is rooted in the strategies that you've heard about across the morning through the expo, through Naveen's presentation, Paul's comments, Will's presentation, and the great comments you just heard from the strength of a global business. We believe that sets the backdrop for where we're headed to 2025. Broadly, when I look at our outlook, it comes from two levers, revenue growth that will be above market and operating leverage that will come through gross margin expansion and SG&A leverage as well.
As you can see here on the slide, we're forecasting top-line growth of approximately 6%-7% CAGR, which will translate into expected EBITDA CAGR of 10%-11%. This will result in our expectations for EBITDA margin to reach double digits for the first time in the history of GPC, something we're very proud of. This execution will lead to an EPS forecast that we've shared today, it's here on the slide, of $11-$11.50 and a 10%-11% CAGR over the three-year period. I'll drill down into some of the specifics in just a moment to give you this new trajectory for our business.
As we think about the targets more broadly, we're very mindful of the macroeconomic environment, and I shared these comments last month on the call, but I'll reiterate them again. We do have risks. There are risks in the marketplace around inflation. Paul said it this morning, is it a recession or not? We're not gonna call that. I think we could all agree it's recessionary conditions. We have capital market disruption over the last couple of weeks, and we know we have ongoing geopolitical conflict across the globe. We're balancing all of that against our very bullish view on the execution of the strategies you've heard about today. They're outlined in our expo, they were outlined here on the stage, and we put that with strong industry fundamentals, and we're very, very optimistic about where we're headed.
It's a nice mix of ambition while being very prudent on the dynamics we see in the marketplace and the macro. Let me give you a little bit more color and drill down just a little bit more into the details of the forecast. As we look at the sequential, I wanna start at the very highest level with a broader macro, we see a moderated growth environment in 2023 with a macro pressure that's there, no different than the view we shared last month on the call. As we look ahead to 2024 and 2025, we see that dissipating and getting past some of that recessionary pressure and providing a little bit more of an environment tailwind as we look to those two years.
When we look at the top line, as you can see here on the slide, we see the market driving about 3 percentage points of growth and our core driving between 2 and 3 percentage points of growth, with M&A kicking in about another 1 point as we look into the future. That's a very modest assumption on M&A as you look at our historical performance across the last several years. I'll break down the sales in just a few more components, and moving across the lines there with some color on the market. As you look into the market growth, we would expect industrials to grow somewhere between 2% and 4% and auto to grow somewhere between 1% and 3%. That assumes that inflation returns to a more normal level next year. I know you all have questions about inflation.
You've heard me talk about where I think we'll be for this year. We're assuming we return to something more normal as we get into 2024. When we look at core growth, we expect our core growth to outpace the market by 2-3 percentage points. That really comes down to, and this is why we invested the time today to show you what we're doing in this business, not just tell you, that comes down to the ongoing transformation of customer solutions across both segments, across both businesses, that's powered by data, that's powered by analytics, and it's going to collectively improve our customer experience and drive that loyalty across the business and continue to unlock incremental value, as you heard when Naveen talked this morning. If I shift to EBITDA and think about EBITDA, we expect operating leverage in this business.
That includes gross margin improvement and SG&A leverage as we look ahead. Our current expectation is that that will be about 50/50. You all know, you've worked with forecasts before, that's our current expectation. We'll keep you updated on how we see it, as we look over the three-year period, we really see a 50/50 mix today between those two levers. Collectively, when I look at our profit improvement out over the period, and we continue to lean into transformation and execution of strategy, we see the initiatives you've heard about today and that Will outlined in his presentation contributing about half of our EBITDA growth as we look into the future. Let's talk about these margins.
Many of you who've talked to me over the last year as I've taken the chair as CFO, you like to ask me those first gotcha questions, and many times it's been, "How are you gonna get to double-digit EBITDA margins?" I'm glad to say on the stage today that we're presenting double-digit EBITDA margin to all of you. We believe it. We've been on a transformation journey, as Paul talked about, and that has resulted in continued expansion of our margin over the last several years, including in 2022, where we saw a segment margin of 9.4% and an EBITDA margin of 9%. That was year-over-year improvement on segment margin of 60 basis points and EBITDA margin of approximately 15 basis points. We've laid the groundwork for the focus of our team on continued expansion of margin.
As we look into our forecast period, we're looking at 100 basis points of EBITDA margin expansion over the next three years. Those benefits come from gross margin expansion. That's through pricing and sourcing, many of those things you heard about this morning when you were with James and Brooke. We're also going to get SG&A leverage, that comes from productivity benefits as we lower our cost to serve. We're going to modernize, automate, and optimize our supply chain. You heard about that from Joe and Jeff. That modernization and investment in technology carries over into our back office, where we'll continue to modernize and drive out cost. The value lock from IT can't be understated. What Naveen talked about this morning, that thread of IT is underpinned across everything we're doing and drives incremental value in the business.
One other point I would make, maybe a little bit understated and underestimated, is the power of the industrial business in driving the overall margin up. Randy talked about there's a lot to like about industrial, there is. As that mix of profit continues to grow, it will continue to drive the overall margin of the business up, you can see that here on the slide. Our initiatives are a significant portion of where we're headed, we're excited about that, we're looking forward to continuing to execute on those, we've seen some of those benefits already in the business as we look at 2023. That's why we spent a lot of time sharing those with you today.
Collectively, we'll drive the improvement through those levers, and that makes us a little less reliant on external factors to look and drive the business as we move ahead. All of that performance drives a great foundation for our financial flexibility. When we think about where we're headed, we think about it through a prism of starting with a very strong financial position. I can really break that down into three buckets. One, we have excellent liquidity. We have great cash balances, and we have the ability to tap into a $1.5 billion revolving credit facility as needed. We also enjoy access to the capital markets. Prior to the pandemic, that wasn't true for GPC. When we talk about things that were beneficial through the pandemic, Paul talked about transformation and cost savings.
We also talk about the fact that during COVID, we got our first-ever credit rating, an investment grade credit rating that we're very proud of and committed to maintaining. That gives us access to the capital markets during periods of dislocation and stress, and we have that ability as needed. Finally, I would say that we're in great shape from our leverage. We're 1.7 times. That's well below our stated range of 2-2.5 times, and that gives us a lot of dry powder as we look ahead for opportunities across the globe. We like the position we're in of financial strength, and that will continue to be seen as we look ahead.
Our forecast calls for $4 billion of operating cash flow over this period, with nearly $3 billion of free cash flow over the same period. That cash generation allows us to be faithful to our very long history of being disciplined on capital allocation, and we're not going to change the priorities that we have in the business. Those remain the dividend, M&A, share repurchases, and CapEx. I wanna just reaffirm that we stay very focused on those four prisms, and this cash generation allows us to do so. We'll talk this morning about the M&A strategy, so I don't wanna spend a lot more time on that. Share repurchases, we're looking ahead to continue share repurchases to offset dilution.
As you think about where the allocation of capital will go there, it will look very much like it will this year in 2023. I do wanna focus on two other areas I think of note and of interest to this group, the first being CapEx. As we look at CapEx and we look ahead, and we look to the period of 2025, we will increase our overall allocation of capital to CapEx, moving from about 1.5% of revenue to 1.7% of revenue in the forecast period. I think you've seen today, particularly from Will's comments and Naveen's, and in the expo, where we're going to be investing additional dollars, and we see those additional dollars driving the modernization of this business forward across multiple prisms.
Overall, our investments in the business are going to underscore that EBITDA growth and that margin expansion that we're looking for. It will drive modernization of the supply chain, which you know brings productivity benefit. It will drive the investments in pricing, which you know will bring gross margin expansion. The investments in IT and lowering our cost to serve are important as well as we look ahead. All of that is intended to do one simple thing, make the experience for our customers better and with less friction, and we're excited about that as well. As you can see here on the slide, our investments have a great return. We're driving a 38.7% ROIC on a three-year average basis in 2022, and our ROIC remains well above our weighted average cost of capital.
I also wanna talk about the dividend. Just a few brief comments. Our views on the dividend remain unchanged. We have a strong commitment to our dividend, 67 years of consecutive increase, and we've done that again this year with our recently announced 6.2% increase in the dividend, right in line with our 20-year average of 5.8%. Over the last three years, we've been able to return $1.4 billion to our shareholders through our dividend. As we look ahead, we'll be growing the dividend in line and along the same lines of our increase in earnings growth. As we look at that, we'll continue to increase the dividend as our earnings grow going into the future.
Make a few comments, and then get off the stage, and we'll move to a Q&A session right after this. I know you're all anxious to ask a few questions. As you all leave here today, I want you to remember one really important thing, GPC truly is differentiated. Whether it's our business mix, our global footprint, our size and scale, the execution of initiatives or our talent, we have a unique value proposition as we look ahead for returns to our shareholders. That's gonna be highlighted by these things we've talked about today, and I just wanna remind you of our key financial takeaways, before we move to Q&A.
That's double-digit margins by 2025, double-digit profit and earnings growth over the three-year period, operating cash flow of nearly $4 billion, free cash flow of nearly $3 billion, giving us an excellent position as we look ahead for balance sheet strength and financial flexibility. We're well-positioned to execute. We're well-positioned to grow as we look ahead, deliver strong returns to our shareholders. I wanna thank you all for joining today, I hope you feel like I do along with the rest of the GPC team. There is absolutely no better time than now to be a part of GPC. Thank you.
Please welcome back the executive team and business unit presidents for our Q&A.
I think you're left one now.
Okay.
Where was I? You're on the left. On here?
Here.
Yeah.
Excuse me. Excuse me.
Excuse us. We're off the chair. This is the hardest thing we've done all day.
All right, we're gonna take the next... Yeah. There you go, guys. This is gonna be kind of an informal session. I know you're all getting a little hungry, and I promise we're gonna feed you. The fewer questions you ask, the quicker we'll get to lunch. No, I'm just joking. You guys have been a great audience, and we wanna thank all of our folks out there in the virtual world as well. The folks in the virtual world, you got a question, send it in and our guys will take it, and we'll try to get to it. Priority is gonna be this room, and we got a lotta talent you've heard from during the course of the day. I can assure you, I'll be quarterback of this session.
My intent is just to get your question to the right person up here so that they can answer. All right? We've got folks roaming with mics. Campbell over here. You ready, Tim?
Yes.
Okay. Did I miss anything, Tim? We're ready to roll.
We're ready to roll.
Sid, we're good? Okay, fire away. Is that Chris right here in the front row? Chris?
Need my reading glasses.
All right. Here's a mic right here.
Thank you. I guess the first question would be on the dividend and the balance sheet that you're building. You're sitting on a lot of cash. You're below your leverage level. In the past two years you raised your dividend at a fraction of the rate of earnings growth. I guess my question is, and it's not a gotcha question, it's a real question. Like, my question is why? How should we interpret this? Should we be thinking that you see a big acquisition, something out there that you wanna add to the business, another vertical, another competitor, or is it just prudence because of the environment? I guess as a dovetail to that is, like, how are you feeling about the broader environment today versus the last time we spoke to you on four Q earnings?
I have a follow-up.
Yeah. I'll take the first shot, and then I know Bert's itching to jump in here as well. Look, Chris, I think given the current environment, to your point, the prudent thing for us to do is just stay conservative, preserve our cash. We are always on the lookout for good acquisitions. I think as you saw last year where we did the biggest acquisition in the industrial space in our history with the acquisition of Kaman, we're not afraid to step out. In the meantime. If you look at our track record over the last 15 years, those big strategic acquisitions, so Australia 10 years ago, Europe five years ago, Kaman last year. It's been kind of on an every five year. That wasn't intentional. It just kinda as they come.
In the meantime, we'll continue to invest in our bolt-ons. You saw a slide from Will how much we've invested in bolt-on acquisition. We'll continue to do that. I do believe in the environment we're in right now, the prudent thing to do is just stay a little, stay a little conservative and keep our powder dry. You wanna comment on the dividend discussion, Bert?
Sure. Look, I think I'd pull it up, Chris, just pull it up a little bit. When we think about, we don't exclusively think about the dividend, we think about the basket of capital allocation, and we look at all the different levers. Our dividend increase this year, 6.2%, again, as I just said, above our 20-year average. We think that's a pretty healthy pace of a 6.2% increase this year. We're not changing our philosophy on being fully committed to our dividend. I don't want that to be the takeaway. We're gonna continue to increase the dividend as our earnings increase.
That pace will pivot from year to year, because as you've heard today, and hopefully as you've seen today, we've got some great opportunities in the business that have high returns. When you're looking at ROIC in the 30s, our discipline around capital investments is pretty strong. We've got great opportunities to invest, I would just tell you that as we look ahead, we've got to pivot here to CapEx. We're gonna make a little bigger investment, as I said, 1.5 in 2022% of revenue for CapEx. We'll be looking in the forecast period of 1.7%, a little lift there. We think that comes with the profit benefit that I talked about as these strategic initiatives will contribute nearly half of the improvement to EBITDA.
I wouldn't over-index on, you know, how we're thinking about the dividend and that there's something different going on. It's just that we have a lot of dials, and we're able to adjust the dials as we go to make sure we're putting it in the right place in the business. As you look across the forecast period, there's other things to think about. Paul's right, we are being a little conservative right now. We've got debt maturities, one this year and one next year, that we need to be mindful of. We're really trying to stay very balanced as we think about that. As we can make the right choices across the way to change other aspects, we will. I feel good about where we are.
You asked about, you know, the environment over the last few weeks. Look, I don't know what to say. I mean, I've listened to a lot of folks talk about what's happened in the last two weeks in the banking world, and I would just say that I'm of the view, and this is Bert's view, that I think that's two very specific episodes related to two very specific banks. It's caused a lot of noise and disruption and pain to some of the deposit holders at those two.
Two institutions. I don't think that that's changed the overall broader view of the world. This period of dislocation and disruption will move on, and I think we'll get back to where we're focused on more normal circumstances.
And then my-
Maybe some of our bankers would like to opine further on that. We have a couple in the room right here.
They didn't know this was a sharing session, right?
Right. Right.
Is compliance here? My follow-up question is, you know, one of the most common question that I think we all get about your business is the industrial side of the business and 'cause you have some of your peers talking about, like, what they're seeing in end markets, and that seems to be the biggest, I think, overhang as it thinks about your overall business. Maybe you could share a little bit about, you know, your latest thoughts about what's going on in the industrial side. Thank you.
Ro, let me take a quick shot, then I'll let you jump in or you as well, Will. You know, Chris, we've been getting asked every time we get together with some of our investors and analysts, are we seeing a slowdown in the industrial business? Historically, our motion business tracked with PMI. After an incredible run of increases, you know, anything greater than 50, industrial world is growing, expanding. Manufacturing is expanding. We've seen a slowdown in the last, what, four months, Ro, five months? I'm pleased to tell you our business continues to be really strong. I think I mentioned at a during one of our recent conference calls that our business, our motion business has shifted over the last five years.
In essence, we were a bearing distributor for years and years, maybe safety supplies, commodities. That's not our Motion business today, and I think what you saw in the showcase and what you heard from Randy up here, we're much more a service and solution provider, all things conveyance, automation, robotics. So I don't know that we are gonna be directly tied to a slowdown in PMI, which would directly relate to a slowdown in our business. Randy, maybe I missed a point or two. You wanna jump in?
You're spot on, Paul. I mean, when you think about the industrial business, our customers, more than half the time, don't know they need the product until it fails in the plant. We have to be Johnny on the spot there to take care of them. What we've done over the last two years is really positioned ourselves well with our inventory to make sure that we have the right inventories on-hand. We have seen our customers start to pull back a little bit on CapEx. Just like everybody's maybe a little cautious in the market, our customers are cautious, but on the CapEx side, but they still have to operate their plants. When something breaks, he who has the product to replace it wins. On top of that, we have more solutions that we offer now.
When you saw it out there with automation, with conveyance, with fluid power and repair and services. You know, repair and services is a perfect example where if something of high dollar value fails, they might take it to us to repair it versus buy new. We kinda are a buffer there when things get a little tough. We've got an alternative solution for them. As Paul said, our business, we saw, you know, a nice January and February, and March is holding up. You know, if we see something that really is going to slow, I think it'll be in the second half of the year, but not in the first half of the year so much.
Okay. Thank you, Chris. Go ahead. Yeah.
Hi, Greg Melich with Evercore ISI. You had a nice pie chart, a lot of good pie charts, but at the beginning, you talked about the white space and the fragmented business. That $200 billion automotive and I guess $150 billion in industrial, could you give us a little more granularity as to where that fragmentation is, both geographically and maybe by product line?
It's a great question. Why don't we go by business unit? We did a little bit of it in the BU panel, but maybe summarize it. Frank, your market inside of the $200 billion, you know, you talked about your share %. Give a little bit of perspective of, you know, how your market breaks down underneath some of those.
Yeah, for sure. The European market accounts for EUR 70 billion, meaning around $80 billion. If considering our presence in nine countries, we have access to 66% of this $80 billion market. The three largest markets are Germany, the U.K., and France by far, which represent more than half of the total. If we consider the most significant, this is Germany by far, which is the largest market, reason why we decided this year in 2022 to complete the coverage of the German territory to have access to the largest market in Europe.
Kevin, you wanna do the breakdown of the U.S.?
Greg, you know, we put ourselves at about a 7% market share here in the U.S. You think about it, there's four public competitors that are less than 50%, let's say. That just tells you how fragmented the market is. You saw Will's slide up there that showed our concentration of distribution centers and stores and NAPA AutoCare Centers. It's pretty full, but there's still tremendous opportunity, not only on the store side, but also on the NAPA AutoCare Center side.
Alain, just 'cause I know you had your statistics in your prepared remarks.
Sure.
-share a little bit, and then we'll go to Rob.
Happy to, Will. For us in Canada, we measure it on the automotive side. The market size is $9.2 billion. We're at 19%, and we analyze that throughout the country down to the shop level. We actually analyze it and look for areas for improvement every single day. On the heavy-duty side, the market size is $4.1 billion, and we have over 16% market share on the heavy-duty side. Also the same granularity, the same work behind driving the business forward. There's ample opportunity in both industries for growth.
Greg, in Australia, New Zealand, our automotive market is around about $10 billion, and we got 23% market share in our automotive business. It's really a market of three. We're the clear leader. If you add up the three big players, that's again, like Kevin, like here in the U.S., it's less than 50% of the market. Randy, if I think about our industrial business, again, in the markets, the end markets that we play in, we're a clear market leader and, you know, we have, you know, less than 15% market share, plenty of white space for us.
Great. I guess the follow on to that or Randy, if you wanna opine more on Industrial, I guess.
Well, I'll just say industrial, you know, it's $150 billion in North America, and that's really the footprint we cover. About 6%-7% of that. You know, we took out our number two competitor when we acquired Kaman. They're still a formidable competitor that's about half our size. Once you get below that, there's just a ton of what I would call regional players, as well as a lot of independents in the market that we compete in. They're typically local, you know. That's kind of how we split up the market.
you know, at one point, the market was defined at about $200 billion. When you start to look at it, there's a lot of product that falls into categories that we don't play in. The true market that we play in is about $150 billion.
It's not a gotcha question. The setup would be with that sort of framework, when you think about M&A as part of growth, is that staying within those regions and product lines, or would you consider going back to Mexico or South America or other parts of the world geographically or by product line?
Well, I'll take a shot at that. We certainly wouldn't rule that out, Greg. I think what you're hearing, the opportunities that we've got in our existing markets is huge. I would tell you before we do a significant step out, whether it's, you know, we're often asked, you know, is there a, Go back to a third leg, you know, outside of industrial and automotive. Honestly, I don't see that in the cards. When you think about the market share that each of these guys just mentioned, huge opportunities to continue to expand our footprint in the existing markets. Okay.
Thanks.
Bert, right here in the middle.
Kate, next.
Kate, you're next.
Hey. Bret Jordan with Jefferies. You talked a lot earlier about data and digitization and pricing analysis, how do you bring the independent NAPA stores over the hump on that? I mean, obviously, to get that to face the end customer, you know, what's the strategy? Have you seen any sort of adoption on the initial stages?
Go ahead.
I'll take it.
Yeah.
Look, what I would say is we look at it as a NAPA store, right? Whether it's an independent or a corporate store, they want those tools to drive business. We look at stores by market share, and if those help us drive the market share at that store, it really doesn't matter to us whether it's independent or corporate. Independent owner like Earl Flack, who there is thousands from Portland, Maine to Portland, Oregon, they'll take all that information to help drive their business. We don't really see a difference between our independent or corporate when it comes to that.
Pretty consistent adoption. You see them taking it up across the board?
Absolutely.
Kate.
Thank you. Kate McShane, Goldman Sachs. Bert, I was wondering if you could talk a little bit about the cadence of the adjusted EBITDA expansion. Is it fairly even over the next few years, or is it more weighted towards the end, 2025? Second, we just wondered more specifically, can you put a finer point on when you think the dynamic pricing strategy will start to yield better profitability at the enterprise level?
Mm.
I'll start with the beginning on the EBITDA cadence. You know, the initiatives that we talked about have a varying degree of adoption and burn-in. Some of the things that Naveen's working on have a little quicker uptake than maybe the things you heard about from Jeff and Joe this morning, where the physical transformation of DCs has a little longer lead time. The net sum of all that is that you know our guidance for 2023, there'll be a step change in terms of how we get to 2024 and then 2025. I'd say, you know, it's a little bit more weighted towards the last two years than this particular year in terms of how that initiative delivery will be realized.
We certainly have some of it in 2023, both in technology, and across the sales effectiveness dimension, and some supply chain benefits too. I would say probably weight them a little bit more to the 2024 and 2025 period in terms of the overall pricing. We're already seeing benefits from pricing now. To the second part of your question, we're seeing benefits from the work that James and Brooke described this morning. We're seeing that today, and that's a part of our improvement in 2023 and our outlook, and that will continue to ramp as well across the years, along with, in the forecast period, that being spread out further than just Motion and U.S. auto as the teams continue to look to adopt that technology over the period.
That one, I would say, you know, in terms of timing of when it gets to full maturity, I don't know that opportunity has a very long runway, and I think it actually might extend beyond the forecast period that we're looking at today in terms of how data and analytics can be used in our business, not only in pricing, but in other dimensions. I wouldn't limit the period of time for that to something just for the next three years. The horizon for that, I think, is much longer. Naveen, I don't know if you wanna chip in.
Yeah. I mean, in data analytics, I would say we are in probably the first innings. We have a long way to go. This is not wait for five years, this is every month, that goes by we leverage data. We will see a step function here very soon.
Go ahead, Tim.
Scot Ciccarelli, Truist. Paul, this morning in your presentation, you talked about taking out $450 million of expenses on a permanent basis. Kind of looking over the years with GPC, you guys would take out costs, and then costs would kind of creep back in. Can you help us better understand kind of like the mentality change that's occurred at GPC that this is gonna be a more sustainable kind of a change in the cost structure as you guys target new margins?
I want to clarify one point that you made, Scott. Your numbers are correct, the $450 million. The $150 million was permanent. That was largely headcount, and that was latter part of 2019 into early 2020. When we got hit with the pandemic, like probably every business in here, we pulled every lever to get cost out of our business. So that $150 million and $300 million, that $300 million, I hate to use the word temporary, but it was pandemic-related costs we took out immediately. So you're right, the $450 million was our total expense reduction. $150 million was permanent reduction.
I would tell you that there, the disciplines and the impact that we saw, when we pulled those levers in 2019 and 2020, that has stuck with all, I can assure you, everyone on this panel. It took an incredible amount of effort, hard work. It's not fun to take costs out of the business. We will all absolutely have a heightened level of discipline to ensure those costs don't creep back into the business. That's, as a leadership team, that's on us. I would tell you, I see that discipline at a higher level today than I've seen it in our business probably ever.
Thank you. Thank you for that. Then, Bert, related to when you're talking about the SG&A leverage, is it actually cost coming out or is it just kinda the natural sales leverage as you kind of grow your EBITDA dollars?
It's a, it's a combination, Scot, of a few things. I would say, one, I'll build on Paul's point. This discipline to take costs out, is augered into this leadership team in a way, as a newcomer, I haven't seen it in a business. That's always gonna be a part of it. We're always looking to take the cost out. And I think we all see collectively the power of reinvestment of a, of a portion of that in other parts of the business. That continuous transformation improvement cost reduction will always be there. The SG&A leverage will also come from many of the things you heard about this morning. It's not just about taking cost out, it's also about being smarter about how we're running the business and being more productive.
The tailwinds we'll get from the optimization, automation, and transformation of supply chain will provide a benefit in terms of productivity that will be there, and you saw some of that when you talked to Joe and Jeff this morning. The other one that I would say is the modernization of our back office and the continued transformation of technology and the use of technology and some of the things that we're doing, that when you make an investment in a particular system, and then you can eliminate dozens of others because of our legacy, that's a real transformation and modernization that also brings other benefits in terms of how people work and how much more productive they can be. I would say it's across multiple dimensions in terms of how we'll see that leverage come through the business.
Okay. Other questions.
Mario.
Mario.
Yeah. Mario Gabelli. extraordinarily well done, and I commend you for the details in your annual report. Just a couple of minor questions. First, you're assuming constant currency, over the next three years in your models?
Mario, I would say this year we've got a little bit of a currency headwind that we described on our call. We've got a very slight headwind for currency in 2023, and then the currency impact in 2024 is pretty negligible.
Okay. The cash taxes, as opposed to books taxes, any unusual we should be aware of?
There's nothing unusual in the tax profile on a cash basis.
The ability to take cash out of the non-U.S. operations back?
That's always a challenge, Mario.
Yeah. A couple more, just a couple more little thoughts like this, and then I just ask you kind of.
Look, we work.
I entered the month of March thinking it was gonna be B2B, you know, a Basketball Madness. Now it's B2B, Basketball of Banks Madness. I have to ask the question. I'm assuming when you look at your pricing on your core, you said historical norm. If I had constant volume, constant mix, constant customer, blah, blah, are we talking about a 1% inflation or are we talking about 2% or just your Just?
Yeah, look.
Pick a number.
We talked about inflation on the Q4 call, and I'll just reiterate the thoughts there. We certainly came out of Q4 with inflation moderating into Q1 as we saw the early innings of this quarter develop. That was our expectation. We do have the expectation that global monetary policy will be effective and do what it's supposed to do. As you tick down through the course of the year, we see mid-single-digit at a GPC level inflation moderating across the quarters, closing out the year in the low single-digit range, and then probably getting to and staying at the 1%-2% range as we look in 2024 and 2025. Again, I'm not an inflation expert.
Hey-
You said pick a number. There's my assumption.
I got it. I got it. I'm, ... I had Purdue, but I'm knocked out.
Yeah.
Independent of that.
I still got Bama in there, Mario, so.
I know. I'm getting close to your home. The balance sheet, you go page 28, you go through finance, you go through a whole bunch... I'm a vendor. I do my financing. Things have gotten pretty nasty recently in terms of floating rate. You got your own receivables outstanding. What are the vendors telling you about how much they're paying, and how does that get adjusted in the system?
I'll take that.
Thank you.
Kevin.
That's the count.
Actually, I'm gonna let Kevin answer that one.
Yeah. Well, Kevin, it's about time you... It's a three-point shot for you.
Well, first off, Mario, I had Kansas, so I've been out real early. look at the vendors-
I went with Kansas State then.
The vendors obviously bring it up, but I also remind the vendors of the good days, when interest rates were really low, and it really is a short conversation when it comes to that. I think that's probably the best way to sum up where we're at.
I might just add a little color too. Like, our programs, Mario, are being utilized at the highest level ever. While there's been pressure on rate, the structure of our program and what our treasury team has done is put together an opportunity to borrow at a cost of capital that many don't have access to on an independent basis. While we talk about rates, and we've had pressure in our P&L from the rates, at the same time, at the end of the day, the utilization of the program remains very robust. We're sensitive to this. We want it to be a good experience. Kevin and I talk frequently about this. It's a team sport.
Having said that, we're always focused on making sure the program is competitive, the most number of platforms and partners that can be there to provide the right solution for the owners.
Hey, Mario, I want to just add on to that as well. Every time I think that we have wrung out all that we can on the DPO side, we get another win. The real opportunity for us, and we've seen this over the last couple years, Europe. You know, the one thing, and I tried to convey it this morning, we've got a global supplier base. The way we're approaching those suppliers, doesn't matter whether you're in the U.S. or Europe or Australia, our expectation is we get the same payment terms. Frank and our AAG team continues to get wins in Europe similar to what we got in the U.S. five, six, seven years ago. We're not done wringing out additional wins on the DPO side. Did Carolina have a question?
Yeah. I had two questions. One quick follow-up on that. Burt, you said that I won't know the exact words that you said, but you've talked about the cost of the higher rates through your P&L. Do the factor and the programs actually go through your P&L?
On our AR factoring, we had a little bit of a P&L pressure there. I was looking at that a little more broadly. The supply chain, that's unique to those folks.
Okay, great. That was a clarification question. The second, I just wanted to talk more about the cash conversion outside of the payables that you talked about consolidating the distribution centers, but also the efficiencies you're gonna gain through optimizing your inventory through a lot of these data programs. Just kind of hoping you could go over your thoughts on cash conversion and kind of what you see in the long term as you implement those programs.
Well, it's an opportunity for us, as we think about cash conversion. I mean, we gave you a cash forecast of nearly $4 billion, and nearly $3 billion on free cash flow. Those we're being prudent, as Paul and I talked about on some of that. We've got some debt maturities that are coming up that we need to be thoughtful about. We've got a capital expenditure uptick here that we also talked about. At the same time, we've got opportunities out in the future, particularly when we think about inventory, not only in the context of the opportunity that comes from a consolidation of facilities, as you aptly point out, but just being smarter about how we manage our inventory today. We do think that we will be looking at good opportunities there.
There are probably a little upside to our forecast that we haven't baked in. As we get smarter on managing inventory, our business unit leaders know that it's a focus for us, and it's a place where we've had great success on DPO and DSO. We're turning our attention to the DIO, and we'll be looking to get a little bit of benefit there. Will, I don't...
No, it's it... You-
Yeah.
You got my answer. Tim, do you have additional questions or anything from the virtual community?
Follow up from Seth.
Oh, okay. Great. Go ahead, Seth. We'll come back to you, Tim.
Yeah.
Okay.
Quick follow-up on that, and then I have one more. Regarding your ROIC, great performance over the last three years. With the higher CapEx, do you expect ROIC to be down over the next three years in your forecast period, or will that be offset by some of the working capital and other improvements and better margins?
No, we're not projecting ROIC to go down. Our focus is on continued improvement. That's why we need to be smart and do some work here on inventory. We see it as a real opportunity to continue to improve. The capital that we're putting into the business comes with a high return, so that will continue to generate ongoing improvement in ROIC. As we look ahead, we're not seeing a headwind when it comes to the three-year target, when we're actually incorporating ROIC into our incentive compensation programs this year as well. We'll be continuing to focus on the ongoing year-over-year improvement.
Great. Secondly, I have a question around the EV slide that you had. You're looking for 1% ± impact from EVs, in 2030 in a base case non-inflation scenario. What is that relative to market growth, would be your view, ex inflation? Is it 2%?
If I understand the question, I mean, that would be in isolation from your core market that's growing like it usually does, low single digit, 1%- 2%. You know, in Europe, if you put that chart into context, if you believe that scenario, it's, you know, takes a point or two out of it or adds to it.
Fair enough. Thank you.
Thanks, Seth. Yeah. Sid, you can't ask questions. Is this from the virtual?
Of course.
audience here?
Yes.
Okay. Fire away.
This is, we've got a couple from the virtual attendees. They are listening. Good to know. This question asks, recognizing that we released earnings and provided our full year outlook last month, can we speak to what we're seeing as we're approaching the end of Q1, our performance thus far, any color, automotive, industrial, et cetera?
Why don't I take that one? Obviously, we have earnings scheduled for April 20th, we'll share all the details with everybody then. As we think about what we said on our Q4 call, we talked about on the industrial side, some nice momentum. Randy just reiterated that. I think we continue to see that through the first quarter. They started the year nice and strong. International operations continue to perform well and build on the strength to close. We also talked a little bit about weather. Weather, you know, Q4, Q1, always a bit of a wild card every year. It was a little bit of a sluggish start for North America, driven by weather, we've seen that acceleration through the second part of the quarter. We'll give everybody more details on April 20th.
As Bert reiterated this morning, the full year, we reiterated earlier today.
You know, Sid, I would just add to that. The used to be on our calls, we used to talk about weather for half an hour, didn't we, Greg? That was up. Everybody We did a weather forecast. We really haven't talked about weather. We don't talk about weather much anymore, but I will tell you, it is reality in certainly in the automotive aftermarket. I don't know in my career here I can remember as much volatility in the weather as we've seen these last number of months.
This week.
You know, the West Coast operations, Kevin Herron and I talk to on a daily basis how many stores, how many distribution centers we've had closed due to snowfall, tornadoes, rain, which out West, it just never happens. Northeast, many of you are from that part of the country, they virtually little or no winter, no snow to speak of, and maybe one or two snowfall. Here, you know, about a month ago, we had a string of couple of weeks where it was 80 degrees. The volatility in the weather this year has made it a challenge for our, not only our company stores that we run, but also our independent owners. It's just, it's been a real rollercoaster. That, you know, like it or not, I hate to play the weather card, but it does impact business.
There's no two ways around it. You had another one, Sid? Do we go back to the live audience here? Campbell, you got anybody else? Okay. Everybody's Did you have another one, Sid?
I do, yes.
Okay.
Yes, we do.
Yeah, go.
This picks up on our discussion of our value-add services, Randy, in the industrial business. The question is, it being at $1 billion now, how do we see that growth forecast, if you will, relative to the overall industrial business you serve? Have you established any targets for how large that could be over time?
Do I got the ball, Kevin?
You got the mic, bro. Go.
All right. It's a great opportunity for us. There are those four verticals that I mentioned. When we acquired KDG, basically we doubled our automation business. We also doubled our fluid power business. What we brought to them was the conveyance business and the repair and services business. There is opportunity to accelerate growth in those two areas of the business just because we now have another tool for them to go out and sell, if you will. I do believe that there is some good growth opportunity in those businesses. Yes, combined, they're approaching $1 billion or right at $1 billion. I do think that over the next three to five years, we can certainly accelerate that growth both organically and through acquisition, maybe at a little bit faster pace than we could accelerate our core business.
It's just about finding the right players. A lot of those acquisitions in that area are not going to be extremely large. They may be $20 million up to, say, $200 million. Sometimes you have to buy several of them and put them together. Our plan is to have a North American border-to-border, coast-to-coast footprint for those four vertical businesses, and I think we're well on our way now, and I look forward to seeing that continue to grow at a rapid pace as we move forward.
Perfect. Thank you, Randy. Is that good, Sid?
No other questions here.
Okay. Well, listen, we'll go ahead and start to wrap up. I've got one last slide I'll share with you. You know, we have lunch out here in the lobby, out next to the kinda where you all came in next to the NAPA race car. We've got assigned tables. I think you have your number on the back of your badge. We hope you can stick around and join us. We'll continue some of the conversation over lunch. Listen, as we wrap, we really wanna thank all of you guys. You've been great. We appreciate you traveling down here to Atlanta and spend the day with us. We appreciate your interest in and your continued support of Genuine Parts Company.
As we said at the outset, when I kinda kicked off, we really hope you leave here today with a solid understanding of our culture and how we drive value. We hope you leave here with a greater appreciation of our overall global strategy and the number of initiatives that we have in place. You've seen our talent and management team. This is just some of the talent we have out in the field and a lot of the folks in the back and a lot of the folks that you saw in the showcase. In my 20 years here at Genuine Parts Company, I've never felt better about our future, and that's because of the talent that we have in place.
Bert shared with you what I hope you agree are some pretty compelling three-year targets. Look, we got a lot of work to do, but we're very confident that we can get that done. Certainly, lastly, we hope you leave here today with just an enhanced level of confidence in Genuine Parts Company as a differentiated investment. With that, we'll go ahead, wrap up. We'll look forward to seeing you out at lunch, thank you again for your support.