New Owner for Pep Boys: Auto Parts and Service Market Undergoes Major Changes
The automotive parts and service sector is vast, and over the past month, significant events have taken place. The latest news is that the Pep Boys chain has a new owner.
Mavis Tire is acquiring this chain from Icahn Enterprises for approximately $700 million in cash. Under the terms of the deal, Icahn will retain the real estate previously transferred to Pep Boys, as well as the AAMCO Transmissions and Precision Tune Auto Care businesses.
Pep Boys has nearly 800 locations across the United States, performing all types of work — from oil changes to complex repairs. The company also sells tires and batteries.
Mavis Tire Expansion and Deal Details
This acquisition will expand Mavis’s presence to over 4,400 service centers in Canada and the United States. It appears the company sought to acquire Pep Boys for growth in the western states, but it is noted that the deal covers both new and existing markets.
Icahn bought Pep Boys in 2016 for approximately $1 billion, so it seems Mavis is getting a favorable deal. Mavis Co-Executive Director David Sorbaro stated:
Pep Boys is one of the most respected names in the automotive parts market, and we look forward to welcoming it to the Mavis family of brands.
He also added that the company has “a loyal customer base, a deeply rooted market presence across the United States, and a distribution network that will significantly strengthen our supply chain nationwide.”
O’Reilly Seeks to Acquire NAPA Auto Parts
The sale of Pep Boys is not the only notable event. As Bloomberg reported earlier this month, O’Reilly Auto Parts offered $10 billion to purchase the auto parts division of Genuine Parts Company. This would give them control over competitor NAPA Auto Parts.
Genuine Parts did not mention this offer in its second-quarter earnings report published today. However, CEO Will Stengel said:
Our teams delivered good results despite a dynamic global environment, and we remain on track to complete the planned separation in the first quarter of 2027.
In addition to confirming the expected separation, GPC reported a 6% increase in sales to $6.5 billion. However, net profit fell from $255 million to $228 million.
These two deals indicate active consolidation in the U.S. automotive services and parts market. The sale of Pep Boys at a price lower than Icahn’s original acquisition cost may signal a shift in strategy for large investors seeking to optimize their portfolios. At the same time, O’Reilly’s aggressive bid for NAPA demonstrates players’ desire to strengthen their positions and compete for market share, which is likely to continue growing due to the increasing average age of vehicles and spending on their maintenance.