MOUNTAIN VIEW, Calif. (Oct. 17, 2013) — With the ink not yet dry on the mega-deal in which Advance Auto Parts Inc. agreed to acquire General Parts International Inc. (GPII), an analyst for Frost & Sullivan expects more merger and acquisition (M&A) activity to occur.
Market research firm Frost & Sullivan's Aftermarket Program Manager Stephen Spivey said Advance Auto's acquisition of GPII's Carquest distribution chain "dramatically accelerates a trend of consolidation in the automotive parts aftermarket."
Carquest was the fifth-largest parts distributor in North America, according to Mr. Spivey, "and the acquisition now makes Advance Auto the largest participant in this market—both in terms of store locations and revenue."
He said the buyout "also dramatically enhances the role of retailers in the aftermarket. With a two-step distribution structure that includes overseas purchasing teams, companies such as Advance, AutoZone and O'Reilly Automotive have taken market share away from traditional wholesale distribution groups, such as Carquest."
The result, Mr. Spivey said, will be "a continuing spiral of acquisitions of independent warehouse distributors by larger market participants to remain competitive."
Mr. Spivey has more than 15 years of combined experience in growth consulting, market research and journalism. Since joining Mountain View-based Frost & Sullivan in 2005, he has conducted strategic consulting engagements with Tier 1 auto makers and suppliers, including TRW, Ferrari North America, DENSO, NAPA Auto Parts and Valeo, among others.