Carl Icahn plans to acquire thousands of auto-repair shops – New York Post

Carl Icahn has big plans for the US auto-parts sector — and big retailers like AutoZone, O’Reilly and Advance Auto Parts aren’t going to like them.

The billionaire investor is looking to acquire thousands of auto-repair shops, with the idea that they will buy products directly from his own distributor, AutoPlus, instead of the national car-parts chains, sources told The Post.

AutoPlus, in turn, will buy its parts from Icahn-owned Federal-Mogul and other manufacturers. Icahn’s pitch is that the new arrangement will greatly increase the profits of the repair shops that install auto parts, sources said.

Icahn on Friday announced he will acquire Precision Auto Care’s 250 service locations. With that deal, Icahn Automotive Group said Friday it will now control more than 1,000 auto-repair shops.

“He wants to do thousands,” a source said, anticipating more acquisitions of small- and medium-size repair-and-installation chains. “Let’s assume Icahn becomes the only major national installer chain.”

Icahn’s chain will offer warranties to customers, the source said, generating repeat business.

“Vendors are going to figure out ways to work with Icahn directly [through his distributor],” the source said.

Presently, national auto parts chains pay manufacturers a roughly 20 percent mark-up on their products. The retailers typically double the prices when selling to installers, a manufacturer told The Post.

Icahn, meanwhile, plans to sell parts to repair shops for much lower margins, sources said.

AutoZone and its peers presently operate at roughly 50 percent profit margins.

In another threat to entrenched retailers, Amazon is aggressively growing its auto-parts business, and has begun buying parts directly from manufacturers for more than the retailers pay while selling them online for less.

It is possible Amazon could partner with Icahn and supply his stores, sources said.

Icahn declined to comment.

Comments

Write a Reply or Comment:

Your email address will not be published.*