Quick Hits …
(A few short items to get us started this week)
• The 2020 SEMA Manufacturer of the Year is Redline Detection.
• The 2020 SEMA Person of the Year is Myles Kovacs of DUB Publishing.
• The 2020 SEMA Gen-III Innovator of the Year is Brendan McGrath of Dyme Performance Systems.
• The 2020 AAPEX Shop Owner of the Year is Brian Sump, president of Avalon Motorsports and Urban Auto Care in Denver.
• The 2020 AAPEX Service Adviser of the Year is Jason Sexton of Dynamic Automotive in Frederick, MD.
• The 2020 AAPEX Technician of the Year is Norm Schultz of Interstate Auto Care in Madison Heights, MI.
Automotive Communications Awards
Women in Auto Care presented its 2020 “Automotive Communications Awards” last week during the Virtual AAPEX Experience. The program recognizes companies and agencies that provide automotive information through outstanding advertising, marketing and public relations efforts. This year’s winners are …
BUSINESS-TO-BUSINESS CATEGORIES AND WINNERS
Best Ad Campaign to Distribution/Retail Audience
• Continental for Continental Autodiagnos ad campaign
Best Ad Campaign to Technician/Repair Audience
• DRiV Inc. for Walker Way campaign
Best Ad to Either Distribution/Retail or Technician/Repair Audience
• Raybestos for Ultimate Stopping Power ad
• DRiV Inc. for Garage Gurus Mobile Automotive Training Center
Article/Blog/Content Piece – Technical
• DRiV Inc. for Monroe Conversion Kit Servicegram
Article/Blog/Content Piece – General Market/Special Interest
• EasyCare for EasyCare Dealer Blog
• DRiV Inc. for customer-specific monthly newsletters
• GWC for GWC logo
• Advics/MBE Group for Advics website
Promotional Goods, Gear, Marketing Collateral
• Snap-On Tools/Traction Factory for Tiny Ratchet
Special Promotion and/or Promotional Event
• NAPA AutoCare for NAPA AutoCare Virtual Conference
Trade Show Booth
• Brake Parts Inc./Raybestos for Brake Parts Inc. AAPEX booth
Best App for Mobile Device
• KYB for 3 Minute Mile Road Test App
Use of Video – Technical
• DRiV Inc. for Fel-Pro PermaDryPlus Technology animation
Use of Video – General Market/Special Interest
• Snap-On Tools/Traction Factory for Kick-Off Anthem
Best 360-Degree Marketing Campaign
• DRiV Inc. for Moog Problem Solver Technologies campaign
BUSINESS-TO-CONSUMER CATEGORIES AND WINNERS
• AutoNetTV Media Inc. for TV commercial templates
• Pep Boys marketing team for fleet ad
Digital Display Ad
• AutoNetTV Media Inc. for digital display ads
Direct Mail Piece, Brochure, Booklets, Handout
• AutoNetTV Media Inc. for Evergreen Car Care brochure
• DRiV Inc. for Wagner Brake Pad Buying Guide
• Topel’s Service Center for In This Together
Repair Facility/Store Customer Promotion
• NAPA AutoCare for First Responders oil change offer
• Pep Boys marketing team for Keys to Progress
• Pep Boys marketing team for Red Door
• DRiV Inc. for all-new Garagegurus.tech site and LMS system
Website (Specifically for Independent Repair Shops)
• NAPA AutoCare for NAPA AutoCare website for consumers
Social Media Campaign
• Pep Boys marketing team for Tech of the Year
Social Media Campaign (Specifically for Independent Repair Shops)
• Robert Bosch for social media campaign for independent repair shops
Media Outreach To Non-English-Speaking Audiences
• Bosch/Bailey Lauerman for No Rain Checks wiper campaign
Radio Or Podcast
• Pep Boys marketing team for Reconnect Radio
Outreach to Female Audience
• Ziebart International Corp. for Z-Moms campaign
Co-Op Advertising (Repair Shop Partnered with Manufacturer/Distributor to Market)
• Pep Boys marketing team for Summer Road Trip campaign
Merchandising (Point of Purchase, Displays, On/Off Shelf Merchandising)
• NAPA AutoCare for NAPA Believes in All Heroes shirts
Best 360-Degree Marketing Campaign
• Bosch/Bailey Lauerman for No Rain Checks wiper campaign
SEMA360 New Product Awards
SEMA’s annual “New Product Awards” competition recognizes outstanding achievements in the development of products being introduced to the automotive specialty-equipment market at the association’s annual trade show. Products are judged in 16 award categories, and each category has one winner and two runners-up. Awards are given to the most innovative and cutting-edge automotive aftermarket products that will be consumable in 2021. The SEMA360 “New Product Award Winners” winners are …
Collision Repair & Refinish Product
• Winner: adasTHINK for adasTHINK
• Runner Up: CollisionRepairTools.com for FAN 220 MIG/MAG/Brazing welder
• Runner Up: P&S Detail Products for Iron Buster Wheel Decon
Engineered New Product
• Winner: AEM Performance Electronics for VCU300 EV Control Unit
• Runner Up: AFCO Performance Group for AFCO Air Adjustable Eyelet System
• Runner Up: QA1 for New 3″ MOD Series Shocks
Exterior Accessory Product
• Winner: Curt Group for Tri-ball Universal Coupler Lock
• Runner Up: Go Rhino Big Country Truck Accessories for SRM 500 Roof Rack
• Runner Up: TrailFX for Roof Rack for Jeep JL
Interior Accessory Product
• Winner: Speedway Motors for Omega Avant 6 Gauge Set Electric
• Runner Up: T.V.K. Industries Inc. for SURESHIFTER
• Runner Up: Dometic for Dometic CCF-T Center Console Refrigerator
• Winner: Go Rhino Big Country Truck Accessories for Go Rhino Point of Purchase Display Rack
• Runner Up: Quadratec Inc. for Quadratec Merchandising Promo Kit
• Runner Up: RaceDeck for RaceDeck Charred Oak Showroom & Garage Flooring
Mobile Electronics Product
• Winner: Cedar Electronics – Escort/Cobra for Escort Redline 360c
• Runner Up: AutoMeter for DashLink 2.0 with late-model Ford enhanced PIDs
• Runner Up: Energizer Holdings for Energizer Arc3 Lithium-iron Phosphate 300Wh, 350W Portable Power Station
Off-Road/4-Wheel Drive Product
• Winner: Warn Industries Inc. for HUB Wireless Receiver & App
• Runner Up: ARB 4×4 Accessories for Air Compressor – Pressure Control Unit
• Runner Up: Westin/Superwinch for Overland Cargo Rack
• Winner: TS Booster for TS Booster
• Runner Up: All-Fit Automotive for All-Fit Rim Trim – V2
• Runner Up: AERO Detail Products for AERO Shield Flight Ceramic 6 PACK
Performance – Racing Product
• Winner: AEM Performance Electronics for PDU-8 Power Distribution Module
• Runner Up: Performance Electronics for Dual Channel PE-Wideband O2 Kit
• Runner Up: Performance Electronics for PE3-IG8 Ignition Controller
Performance – Street Product
• Winner: DashLogic for SensorTap IAT/Baro Relocation Module
• Runner Up: Red Roberts Inc./Driveline Component Company for ACCUVALVE
• Runner Up: Edelbrock Group for Powerhouse Retainer Degree Gauge Tool
• Winner: Mickey Thompson Tires & Wheels for Baja Pro X
• Runner Up: Brandmotion for SummitView UTV Dual 1080p Camera System with High Definition 7” DVR Monitor SUTV-2020
• Runner Up: Wehrli Custom Fabrication for 2019-‘20 Honda Talon 2- or 4-Seat X/R Front Bumper without fair-lead mount
Street Rod/Custom Car Product
• Winner: FRI Exhibits/Flaming River Industries for Microsteer Electric Power Steering with speed sensor
• Runner Up: Speedway Motors for LS Swap Radiator Hose Adapter
• Runner Up: Vintage Air Inc. for FrontRunner for the LT1 and LS
Tire & Related Product
• Winner: Mickey Thompson Tires & Wheels for Baja Boss A/T
• Runner Up: Bartec USA for Tech600Pro
• Runner Up: ATEQ TPMS Tools for Quickset X Summer/Winter Tire Reset Tool
Tools & Equipment Product
• Winner: Colourlock North America for Colourlock Scanner
• Runner Up: Beta Tool USA for Beta Tools C27 S-Green Folding Tool Cart
• Runner Up: CollisionRepairTools.com for ASTRA PowerLift & Move
• Winner: Tire Stickers for Cerebrum Boost – Smart Tire Sensor Solution
• Runner Up: Warn Industries Inc. for Warn Ascent XP Bumpers
• Runner Up: AutoMeter for ‘95-‘98 Chevy Truck InVision Dash
Wheel & Related Product
• Winner: Forgeline Motorsports for F01 Flow Formed Wheel
• Runner Up: Design Infini for Drifz D09
• Runner Up: BBS of America for BBS CI-R Bronze Anniversary Edition
Roland Hence Wins SEMA Launch Pad Competition
Roland Hence, founder and director of FrontLane Inc., won the eighth annual SEMA Launch Pad competition. Hence’s product, the Impulse – Emergency Brake Light, is a wireless, battery-powered emergency brake light designed to reduce rear-end collisions by pulsing eight ultra-bright LEDs under extreme braking situations to alert the following driver more quickly. Impulse can be installed on any passenger vehicle with a standard back windshield.
Hence will receive a prize package that includes $10,000 to be used to benefit his business, exposure to elevate his business and product, exhibit space at the 2021 SEMA Show, a free ad in SEMA News, access to business tools and resources, and more.
This year’s SEMA Launch Pad competition had more than 80 applicants.
NPD Aftermarket Performance Awards
The NPD Group has announced the winners in its second annual Automotive Aftermarket Performance Awards. The program recognizes brands with the highest increase in U.S. market share in key super categories over the past 12 months. The 2020 winners are …
• Accessories & Appearance: Meguiar’s.
• Chemicals, Additives & Fluids: Peak.
• Maintenance & Repair: NGK Spark Plugs.
NPD also presented an overall award to Slime for top brand growth during the second quarter of 2020, recognizing strong performance during the coronavirus pandemic, according to NPD’s Retail Tracking Service.
“Right to Repair” 2.0 Passes In Massachusetts;
Expect Federal Legislation Next
Massachusetts voters overwhelmingly passed Ballot Question 1, a pro-aftermarket “Right to Repair” measure designed to preserve motorists’ right to have access to and control of their vehicles’ mechanical data for the purpose of service and repair.
“Approval of Question 1 ensures that car owners can control the mechanical data that is being transmitted by their vehicle through telematics,” said Bill Hanvey, president and CEO of the Auto Care Association. “This referendum also means that, despite advances in technology, owners will be able to have their repair data shared directly with their trusted independent shops.”
Question 1 requires vehicle manufacturers to make available all mechanical information needed to diagnose and repair cars, as well as perform routine maintenance, starting with 2022 models. This is to be accomplished using a secure, open-access platform that independent repair shops can access when authorized by a vehicle owner.
Tommy Hickey, director of the Massachusetts Right to Repair Coalition, said this new digital platform can easily be implemented for the 2022 model year.
“The automakers and their army of lobbyists will make noise and make up stories saying ‘it can’t be done,’ just like they did during the campaign,” Hickey said. “But remember, they said the exact same thing about implementing the first ‘Right to Repair’ in 2012 and now admit that they were wrong.”
Aaron Lowe, senior vice president of government and regulatory affairs for the Auto Care Association, said the association hopes that vehicle manufacturers will now work toward the implementation of Question 1.
“The Auto Care Association has worked with cybersecurity experts to ensure that in-vehicle data can be securely made available to car owners and independent shops,” Lowe said. “We stand ready to provide the manufacturers with any technical assistance necessary for effective and timely implementation of this referendum.”
To build on the momentum of the Massachusetts vote, AASA and the Auto Care Association are working together to draft federal legislation — the Right to Equitable & Professional Auto Industry Repair (REPAIR) Act — designed to provide a long-term national solution that protects aftermarket access to vehicle repair and maintenance data.
If approved, the associations contend that the REPAIR Act would resolve current and future data issues that prevent consumers from pursuing vehicle service at the business of their choice, as well as preserve the intellectual property rights of vehicle manufacturers and ensure cybersecurity for critical vehicle systems.
That being said, the associations have stated that they remain open to constructive agreements with automakers to achieve this outcome for all consumers, but without an agreement of that sort, the associations will continue to push for federal legislation.
Doug Coates Is Joining Uni-Select Canada;
Jason Best Moves To Expanded Role
Former Lordco Parts CEO Doug Coates is joining Uni-Select Canada as senior vice president and western region general manager starting Dec. 1. Coates retired from Lordco in 2018, capping a 34-year tenure with the company that included time in sales, marketing and store management, as well as senior leadership.
“Doug will be a great addition to the team, as he brings with him a wealth of market experience and store knowledge to support our corporate stores and members partners,” Uni-Select President and CEO Brent Windom said.
Additionally, Uni-Select has appointed Jason Best to the expanded role of senior vice president and eastern region general manager. This comes as Uni-Select is transitioning to an east/west structure model.
Best’s appointment is part of an effort to provide greater in-market focus and improve market harmonization efforts between customers and members partners, according to the company.
“As with our most recent acquisition of Pieces d’Auto St-Jean two new stores, we are confident that today’s strategic organizational changes will continue to improve our focus and execution in order to pave the way to our continued success in the Canadian market,” Windom stated.
Automotive Parts Headquarters Expands Its Twin Cities Presence
St. Cloud, MN-based Automotive Parts Headquarters Inc. (APH) has acquired Jack McClard & Associates (JMC), an automotive equipment sales and service business located in the Minneapolis suburb of Hopkins, MN. JMC is billed as one of the largest automotive equipment distributors in the Upper Midwest.
The JMC location will become a part of APH’s BENCO Equipment division, with an eye toward future growth and market expansion. In the coming months, APH plans to merge its BENCO location in Shakopee, MN with JMC to better serve the Twin Cities and its surrounding markets.
BENCO is a five-store network specializing in the sale, service, installation and inspection of automotive service equipment. Once an affiliate of John Bean, today BENCO is the equipment division of APH.
APH is a third-generation, family-owned aftermarket auto parts distributor and store group established in 1920. It supports a network of 132 corporate and 31 independent Auto Value parts stores in Minnesota, Wisconsin, North Dakota, South Dakota, Michigan and Montana. The company employs more than 1,200 people.
Tenneco’s Aftermarket/OES Revenue Decreased 8.1%
Tenneco Inc. reported $730 million in Motorparts (aftermarket and OES business) revenue for the third quarter of 2020 — a decrease of 8.1% compared to the same period a year ago, which was more weighted toward European markets and the OES channel, attributable to slower recoveries from the coronavirus pandemic, as well as the decision to exit certain product lines in various regions.
Excluding currency, Motorparts’ value-add revenue decreased 6.8% to $740 million. According to management, Motorparts’ revenue grew month-by-month over the course of the 2020 third quarter and into October, with sales into the retail channel outpacing those into the traditional channel.
Motorparts’ adjusted EBITDA rose 8.3% to $131 million on a year-over-year basis. As a percent of sales, the segment’s adjusted EBITDA margin increased 270 basis points to 17.9%. This uptick in adjusted EBITDA despite a decline in revenue came from cost reductions made in manufacturing and distribution as well as lower selling, general and administrative (SG&A) expenses.
CEO Brian Kesseler told analysts on the company’s Nov. 2 earnings call that Tenneco’s global operations largely returned to normalized production during the third quarter. “Production schedules are close to pre-pandemic levels, and low inventories in the U.S. gives us a good line of sight for the fourth quarter,” Kesseler said. “When we last spoke in early August, we were confident that the third quarter was going to be better than the second quarter. However, we were pleasantly surprised with the pace and magnitude of the global automotive recovery.”
On the call, Kesseler noted that Tenneco is working to optimize its business portfolio in an effort to enhance margin and cash flow performance over the long term. “We are strategically positioning our business lines to optimize portfolio growth, returns and cash flow,” he explained. “Ultimately, some businesses may not stay with the company long term if they do not align with our long-term product and market-strategic objectives.”
Looking ahead, management expects fourth-quarter 2020 aftermarket revenue to be slightly lower than the recently completed third quarter because of “normal seasonality.”
Tenneco Sells Interfil To Premium Guard
Premium Guard Inc. (PGI) has purchased Tenneco’s global aftermarket filters business in Mexico. The transaction includes a manufacturing facility in Tultitlan, operations, the Interfil and Engine Clean brands, and filter inventories. Financial terms of the Oct. 31 deal were not disclosed.
Interfil, a 40-year-old company, is billed as be the second-largest filter manufacturer and supplier in Mexico. It’s a supplier of its own Interfil-branded products, as well as private-label filters for the aftermarket and OES/OEM sectors.
PGI on Nov. 2 announced plans for a significant investment at Interfil’s Tultitlan facility to fulfill customer requirements and volume in addition to remaining a strategic supplier for Tenneco’s Champion brand. The company said it expects “a smooth transition of ownership with no changes to staff or management at this time.”
PGI President and CEO Anan Bishara said the purchase is important for PGI’s international growth and a key part of its expansion into Mexico, Central America and South America. “PGI has already established a robust and diversified global supply chain,” Bishara noted. “Our resources and capabilities in Mexico will become a key part of our supply chain, which will allow us to cut the lead time and hedge against further escalation in the trade war with China.”
PGI specializes in designing, manufacturing and distributing products for the automotive, diesel, powersport and specialty filter markets. Headquartered in New York, with a main distribution center in Memphis, PGI also offers a platform for a private-label products and packaging design in addition to engineering, quality control, supply chain management, distribution, logistics, marketing and professional field support.
Alltech Automotive Bolsters Sales Team
Alltech Automotive (Libertyville, IL) has added Ilario Cirillo to its sales organization as territory sales manager for the Midwest. Cirillo is responsible for Alltech’s aftermarket sales channel and for developing the potential for Alltech through the traditional WD marketplace in the Midwest. He also provides secondary support to the company’s other sales channels as needed.
Cirillo brings over 25 years of aftermarket sales experience to Alltech, most recently with Cardone Industries, where he managed all sales for the Midwest.
LKQ Reports Higher Net Income Despite 3.2% Decrease In Q3 Revenue
LKQ Corp. saw its net income rise 27.1% to $193.93 million in the third quarter of 2020 despite its consolidated revenue decreasing 3.2% to $3.05 billion. And, while the company’s gross profit slipped 0.1% to $1.20 billion, its gross margin grew from 38.1% a year ago to 39.3% for the three months ended Sept. 30, 2020.
A closer look at LKQ’s topline results shows that total parts and services revenue declined 3.4% to $2.89 billion. Organic parts and services revenue was down 4.5%, with decreases reported from its North American and European operations. However, the company’s Specialty business reported a low single-digit increase in organic parts and services revenue.
“It’s hard to believe that, just six months ago, in early April, we were facing revenue declines of 40% to 45% as economies around the world went into lockdown. Today, we’re enjoying a material improvement in demand, year-over-year margin improvements in each of our segments and over $1 billion dollars of free cash flow generated in just the first nine months of this year,” President and CEO Nick Zarcone told participants on the company’s Oct. 29 earnings call. “In light of the challenging environment we have confronted throughout the year, our team delivered a terrific outcome in the third quarter. These results clearly highlight the true strength of LKQ.”
NORTH AMERICA … For the third quarter of 2020, LKQ’s North American parts and services revenue fell 12.1% to $1.01 billion, as collision and liability repairable auto claims were down 24.4% (according to data from CCC Information Services), primarily because of the coronavirus pandemic, which had an adverse impact on sales volumes in LKQ’s North American wholesale operations. This volume decline in collision parts was partially offset by outperformance in claims trends attributable to share gains, mechanical part sales, and self-service parts sales and admissions. LKQ’s North American organic revenue declined 11.3%.
“When looking at product-specific data, while both were down, our salvage revenue trends outperformed aftermarket largely due to the demand of our mechanical parts, predominantly engines and transmissions,” Zarcone said. “Still, our aftermarket collision-based revenue performed materially better than the CCC statistics for repairable claims, suggesting that we continue to experience share gains in the collision marketplace.
“There was particularly strength in our remanufactured product line, as many market participants were disrupted by the component suppliers’ ability to provide product. Given the depth and breadth of our remanufactured parts inventory, we were able to keep pace with demand and believe we gained share from our direct reman competitors in the third quarter.”
He told analysts on the call that, from a supply perspective, LKQ has had minimal issues sourcing product for its aftermarket crash parts business, noting that its Taiwanese supply partners are well-positioned in preparation for the winter season.
“We have seen some tightness getting adequate space on ships for our containers causing some delay on product coming in from Taiwan and an uptick in freight expense,” Zarcone said. “Depending on the supplier and product, we have witnessed delays anywhere from one week to 30 days. Having said that, our overall inventory is in good shape and heading in the right direction.”
North American EBITDA rose 23.2% to $204.96 million in the third quarter of 2020, which management attributed to operational efficiency and rightsizing actions, favorable precious metals pricing, and net sequential increases in scrap steel prices in the company’s salvage and self-service operations.
Segment EBITDA margin climbed from 12.8% to a record 17.6% on a year-over-year basis.
EUROPE … LKQ’s European parts and services revenue rose 2.3% to $1.48 billion in the third quarter of 2020, and segment organic revenue decreased 0.7%, as pandemic disruptions adversely affected volumes. Yet, according to management, not all regions were impacted by the pandemic to the same degree, creating a different growth profile for each of LKQ’s European businesses. The United Kingdom, Netherlands and Germany recovered at a faster rate and posted single-digit organic revenue growth on a per-day basis, while the recovery in Eastern Europe and Italy lagged behind.
European EBITDA increased 9.2% to $136.17 million. It’s worth noting that this included a $6.00-million positive year-over-year impact from currency exchange. On a constant-currency basis, European EBITDA was up 4.7%. Segment EBITDA margin increased from 8.6% to 9.2% on a year-over-year basis.
It’s worth noting that, in the United Kingdom, LKQ has completed its restructuring of the Andrew Page branches, with nearly 30 unprofitable branches closed and all remaining branches running on Euro Car Parts’ IT infrastructure.
SPECIALTY … LKQ’s Specialty parts and services revenue increased 1.4% to $399.55 million in the third quarter of 2020. Organic revenue was up 1.1%, attributable to continued strong demand for recreational vehicle products and high drop-ship fulfillment. According to management, the Specialty segment’s organic revenue increase would have been more favorable had it not experienced issues with the availability of supply, as certain suppliers were not able to meet demand, leading to significant gaps in the supply chain.
“That said, we believe that our market-leading position allowed us to fare better than our competitors, and, as you would expect, we’re in constant communication with our suppliers to work with them and help wherever we can to get more product out on the road,” Zarcone said on the call. “Over the past few weeks, we have seen an increase in product receipts, and we have finally started to increase our Specialty inventory levels, with sales growth rates increasing as a result. In particular, we’re encouraged by the extended RV season, with this particular product group continuing to perform well.”
Specialty EBITDA rose 6.3% to $48.34 million in the third quarter of 2020, with segment EBITDA margin growing from 11.5% to 12.1% on a year-over-year basis.
LOOKING AHEAD … Management expects LKQ to face continued pressure on revenue with coronavirus infection rates rising in a number of its geographies. Nonetheless, according to a Nov. 3 filing with the SEC, management believes that LKQ’s profit margins will remain above the prior year because of margin and overhead cost initiatives implemented this year. Additionally, management expects the company to generate higher free cash flows for the full year of 2020 than LKQ generated a year ago.
Analysts with Jefferies LLC made the following forecasts for LKQ in a report dated Oct. 29 …
• Jefferies is modeling moderating North American segment margins of 15.9% for the fourth quarter of 2020 due, in part, to increased freight expense.
• The analysts wrote that they remain encouraged that the company’s One LKQ Europe program remains on track with streamlining operations in the region. They are modeling a European segment fourth-quarter 2020 EBITDA margin of 8.4% — up 80 basis points year-over-year.
• Jefferies is calling for LKQ’s Specialty segment to report an organic sales increase of 5.0% for the fourth quarter of 2020. — Marc Vincent
Aftermarket Analytics Partners With Dayco
Aftermarket Analytics of Pueblo, CO has announced a new agreement with Dayco to assist the company with inventory management. The partnership is designed to provide Dayco with continuous global car part analysis and trends to better serve its aftermarket business and customers’ requests.
“We are proud to have been chosen by Dayco to build the first truly global inventory decision support system,” said Justin Holman, CEO of Aftermarket Analytics. “For the first time, part catalogs, VIO, replacement rates and demand forecasting analytics for every major world region will work together seamlessly on a single platform.”
“Our scripting language empowers users to calculate SKU-level inventory recommendations across all stores and distribution centers, and allows for the creation of a custom script on a per-team basis to calculate returns and orders,” said Robert Valentine, Aftermarket Analytics’ lead developer. “We overlay VIO, demand, sales history, current inventory levels and climate data to create logic rules as complex as the user needs.”
Delphi Deal Expected To Raise BorgWarner’s Q4 Sales By Nearly $1 Billion
BorgWarner Inc.’s net sales increased 1.7% to $2.53 billion in the third quarter of 2020, as rising demand for its products offset lower industry production volume. Excluding the impact of foreign currency and the net impact of acquisitions and divestitures, consolidated net sales were up 1%. Engine segment net sales decreased 2.5% (down 3.6% adjusting for currency), while drivetrain segment net sales increased 8.3% (up 7.7% excluding currency).
BorgWarner’s gross profit decreased 1.3% to $517 million in the 2020 third quarter, while its net income declined 37.7% to $129 million largely because of an increase in the company’s effective tax rate.
Management forecasts that BorgWarner’s fourth-quarter sales will come in between $3.46 billion and $3.61 billion, assuming no additional production disruptions arising from the coronavirus pandemic. This includes the impact of the Delphi Technologies acquisition, which is expected to increase fourth-quarter sales by $950 million to $1.00 billion.
For the full year, net sales are expected to be in the range of $9.70 billion to $9.85 billion, also assuming no additional pandemic-related production disruptions. This implies a year-over-year decrease in organic sales of between 12.5% and 13.5%. Notably, the divestiture of the thermostat product line decreased year-over-year sales by roughly $30 million, and foreign currency is expected to result in a year-over-year decrease in sales of approximately $18 million.
In related news, the SEC announced a settlement with BorgWarner on Aug. 26, 2020 that fully resolved an investigation related to the company’s historical accounting for asbestos-related claims not yet asserted. Without admitting or denying the SEC’s charges, BorgWarner agreed to the entry of a cease and desist pursuant to the reporting, books and records, and internal controls provisions of federal securities law in connection with its historical accounting for unasserted asbestos-related claims from 2012-’16.
During the third quarter of 2020, BorgWarner paid a civil penalty of roughly $1 million.
PerTronix Purchases Aeromotive, Waterman Racing Components
PerTronix Performance Brands — parent company to the PerTronix Ignition, JBA Performance Exhaust, Doug’s Headers, Patriot Exhaust, Compu-Fire and Spyke brands — has acquired Aeromotive Inc. and Waterman Racing Components. Financial terms of the transaction were not disclosed.
Aeromotive is a high-performance aftermarket manufacturer specializing in fuel-delivery and fuel-system components for the off-road, late-model and muscle car, street rod, drag racing, tuner, sports car, marine, and powersports markets. Waterman Racing specializes in manufacturing high-performance products for drag racing, NASCAR, IndyCar, sprint car, midget and many other forms of racing.
Aeromotive will continue to operate out of its Lenexa, KS manufacturing and development facility, while Waterman will continue to operate out of its Concord, NC and Brownsburg, IN locations. Additionally, Aeromotive’s leadership team will continue to manage the business.
Boston-based Lineage Capital invested in PerTronix in 2016 and has continued to support PerTronix’s growth with the Aeromotive acquisition. Lineage invests exclusively in owner-managed businesses. It focuses on quality lower-middle-market businesses with at least $4 million in EBITDA in order to facilitate future growth.
The Spartan Group LLC advised Aeromotive through the process.
4 Wheel Parts Retail Store Sales Rose 6% In Q3
For the third quarter of 2020, Polaris Inc.’s aftermarket business generated $237.20 million in sales — an increase of 0.4% compared to the same period a year ago. Transamerican Auto Parts (TAP) sales increased 0.5% to $194 million.
“Retail sales remains a bright spot for TAP, as sales at 4 Wheel Parts retail stores were up 6% in the quarter,” CFO Mike Speetzen told analysts on Polaris’ Oct. 27 earnings call. “The TAP team continues to right-size the wholesale business for improved growth and profitability.”
Sales from Polaris’ other aftermarket brands (Klim, Kolpin, ProArmor, Trail Tech and 509) decreased 1% compared to the third quarter of 2019, attributable to low inventory availability.
Aftermarket gross profit increased 3.1% to $63.70 million. As a percent of sales, aftermarket gross profit grew from 26.2% a year ago to 26.9% for the three months ended Sept. 30, 2020, primarily because of lower promotional costs and lower tariff costs.
Mayhew Hires National Account Manager
Mayhew Steel Products/Mayhew Tools has added Beth Lawless as a national account manager, responsible for developing and maintaining named, national and key account relationships. She also is tasked with identifying product and market trends, gaps and cross-selling opportunities. Lawless reports to Vice President of Sales and Marketing Eric Mills.
Prior to joining Mayhew, Lawless was an account specialist for New Balance.
Mayhew manufactures tools for the industrial, automotive and hardware markets. Its automotive offering includes tie rod tools, hose clamp pliers, pry bars, punches and chisels.
Vontier’s Diagnostics, Repair Technologies Revenue Grows 3.3%
Vontier Corp. reported $168.10 million in revenue from its diagnostics and repair technologies segment for the third quarter of 2020 — an increase of $5.30 million, or 3.3%, compared to the same period a year ago. Sales from existing businesses within the diagnostics and repair technologies platform increased mid-single digits, attributable to strong demand across most product categories, most notably specialty and hardline tools, with sequential growth in tool storage, according to management.
The diagnostics and repair technologies business manufactures and distributes vehicle repair tools, toolboxes, automotive diagnostic equipment and software, and wheel-service equipment. It includes Matco Tools and Hennessy Industries.
Myers’ Automotive Aftermarket Unit Reports 10% Net Sales Increase
Myers Industries’ distribution segment (its automotive aftermarket business) saw its net sales increase by $4.13 million, or 10%, to $45.52 million in the third quarter of 2020. The year-over-year rise in revenue breaks down as $1.20 million from higher volume in its domestic legacy business along with $2.90 million in incremental sales from the August 2019 acquisition of Tuffy Manufacturing.
Distribution segment operating income rose 50.5% to $5.09 million. Adjusted operating income was up 41.3%. Segment adjusted operating income margin grew from 8.7% a year ago to 11.2% for the three months ended Sept. 30, 2020, attributable to higher sales volume and lower expenses.
Because automotive aftermarket demand has improved, management has raised its full-year 2020 guidance for distribution segment sales. Its previous expectation was for a low-single-digit decline. Management now anticipates a low-single-digit increase.
Myers’ distribution segment — mainly Myers Tire Supply — is engaged in the distribution of tools, equipment and supplies used in the tire, wheel, and under-vehicle service of passenger, heavy-truck and off-road vehicles, as well as the manufacturing of tire repair and retreading products.
Auto Care Association Plans Spring In-Person Event
The Auto Care Association plans to host a new in-person gathering May 2-8 in Orlando called Auto Care Connect. The inaugural event will co-locate four of the association’s events: Spring Leadership Days, ACPN Knowledge Exchange, YANG Leadership Conference and PBES Conference.
Auto Care Connect will include networking and education opportunities, vendor showcases, and resources from the association’s communities. Attendees will have the opportunity to explore each of the four event’s schedules for content relevant to them and will be able to customize their participation during the week.
While Auto Care Connect is being planned as an in-person event, the association will follow governmental requirements and recommendations regarding the health and safety of attendees. Visit autocare.org/connect for more information about Auto Care Connect.
Three-Day Virtual Tech Training Event Planned For January
A number of industry associations, including the Automotive Service Association (ASA) and Automotive Service Councils of California (ASCCA), are joining with the Carquest Technical Institute, WORLDPAC and the WORLDPAC Training Institute to host a three-day virtual training event for automotive professionals Jan. 8-10.
The Professional Automotive Virtual Education (PAVE) event is geared toward shop owners, managers, service advisers, technicians and collision professionals. PAVE will feature four-hour technical classes and two-hour business management classes with downloadable handouts. More than 30 live training sessions are planned.
All sessions will be recorded and available on-demand for four weeks after the event. For more information, visit PAVETraining.com.
Participating industry organizations, in addition to ASA and ASCCA, include …
• New England Service Station and Automotive Repair Association.
• Northwest Automotive Trades Association.
• ASA Pennsylvania.
• ASA Northwest.
• TST Training.
• ASA Illinois.
• ASA Florida.
• ASA Texas.
• ASA Ohio.
Bolt On Technology Expands ‘Text To Pay’ Capabilities
Bolt On Technology has announced BASYS Processing as a payment processing partner for its Text To Pay fully integrated payment gateway. Text To Pay allows shops to service consumers who prefer to transact business via their mobile devices. The function is available on Bolt On’s Mobile Manager Pro and NextGear offerings as part of the Bolt On Pay feature.
In related news, Bolt On reports that more than 50 million repair photos have now been sent to drivers through its Mobile Manager Pro and cloud-based NextGear platforms.
Sonic Automotive Reports 0.9% Decrease In Customer-Pay Gross Profit
For the third quarter of 2020, Sonic Automotive’s fixed operations (parts, service and collision repair) reported $320.93 million in revenue — a decrease of $31.12 million, or 8.8%, compared to a year ago. On a same-store basis, Sonic’s …
• Customer-pay revenue decreased 4.6% to $128.85 million.
• Warranty revenue declined 13.6% to $58.18 million.
• Wholesale parts revenue decreased 13.8% to $32.47 million.
Fixed operations gross profit declined 7.3% to $156.53 million. On a same-store basis. Sonic’s …
• Customer-pay gross profit decreased 0.9% to $73.38 million.
• Warranty gross profit declined 9.0% to $33.55 million.
• Wholesale parts gross profit decreased 13.6% to $5.65 million.
Charlotte-based Sonic operated 84 stores in its franchised dealerships segment and 11 stores and one delivery and buy center in its EchoPark segment, as of Sept. 30, 2020. The franchised dealerships segment consisted of 97 new vehicle franchises representing 21 different brands of cars and light trucks, as well as 14 collision repair centers, across 12 states.
PACCAR Reports Higher Q3 Parts Sales, Income
For the third quarter of 2020, PACCAR Parts reported $1.02 billion in worldwide parts sales and revenue from dealer services — an increase of $15.30 million, or 1.5%, when compared to the same period a year ago. The growth came from pricing and favorable currency translation. Volume was down, primarily because of lower demand in North America.
The segment accounted for 21% of PACCAR Inc.’s net sales for the quarter — up from 16% in the third quarter of 2019.
While PACCAR Parts’ margins decreased from 28.0% to 27.7% on a year-over-year basis, its income before taxes increased 1.4% to $210.20 million.
For the full-year 2020, management expects PACCAR Parts’ sales to decrease between 4% and 5% when compared to 2019. For 2021, PACCAR Parts sales are expected to increase between 4% and 7% from 2020 levels.
Meritor Announces Leadership Transition
Meritor Inc. President and CEO Jay Craig will transition to the role of executive chairman of the board of directors on Feb. 28, 2021. Craig has been the company’s chief executive since 2015.
Executive Vice President and COO Chris Villavarayan will succeed Craig as president and CEO and will join the company’s board on Feb. 28. Villavarayan joined Meritor in 2000. He currently has global operating responsibility for both of Meritor’s business segments, Global Truck and Aftermarket & Industrial and Trailer.
With these moves, Meritor’s current chairman, William Newlin, will become lead director of the board.
Alltech Automotive LLC is seeking a Director of Sales for the Traditional and Buying Group segments of the North American Automotive Aftermarket. This position will oversee sales to all Strategic partners from our global manufacturing footprint. … (more) … Click here to find out more.
The applicant will be responsible for developing and executing product strategies, objectives, budgets and promotions for a variety of product lines throughout the product lifecycle. … (more) … Click here to find out more.
Alltech Automotive LLC, a dynamic global automotive supplier, is seeking an experienced Catalog Manager from the automotive industry. This individual will be responsible for researching and updating data for all hard parts product lines and maintaining both a print version and online database that is compatible with Activant, Wrench Head and ACES/PIES formats … (more) … Click here to find out more.
Alltech Automotive LLC, a dynamic global automotive supplier, is seeking a Regional Sales Manager to represent products it sells into the Automotive Aftermarket. The Regional Sales Manager is responsible for the execution of the corporate sales and marketing plan. As a sales manager, you will direct all sales-related activities within the assigned region. … (more) … Click here to find out more.
We are currently seeking to hire an Aftermarket Product/Catalog Manager to join our team and improve customer support, covering current and new product introduction of aftermarket products. This individual will be an important part of developing GSP North America strategies … (more) … Click here to find out more.
Looking to augment Inside sales/telemarketing/customer support for group approved programs. Make calls to jobber level accounts from home. Great for a retired factory or independent rep looking to supplement income by working 20 to 25 hours/wk. … (more) … Click here to find out more.
People Watching 11/9/20
• Jenna Jefferies is the 2020 SheIsSEMA Woman of the Year. Jefferies — a former SEMA Businesswomen’s Network (SBN) select committee member, SEMA Cares select committee member and active SEMA volunteer — was a national account manager for Pilot Automotive and national account manager at K&N Engineering.
• Brian Reese of The Retrofit Source is the winner of the 2020 SEMA Young Executives Network (YEN) Vanguard Award. The recognition honors people, businesses or organizations that positively impact young executives’ careers within the automotive industry. Click here to find out more about the award winner.
• Thomas Harrell of AllPro Distributing is the 2020 SEMA Young Executives Network (YEN) Young Executive of the Year award winner. The recognition honors YEN members who demonstrate exceptional service, integrity, professional growth and business ethics. Click here for more information on the award winner.
• The late Henry “Tyson” Leonard of Leonard Building and Truck Accessories received the 2020 SEMA Truck & Off-Road Alliance Hall of Fame award. The recognition honors people whose creativity and industriousness have significantly enhanced or contributed to the industry’s growth. Click here for more about the award winner.
• The Global Brake Safety Council has added Carl Dolk Frojd, a diagnostic and repair specialist at EV Services in Norway, to its organization. Prior to EV Services, Frojd was a diagnostic and aftermarket engineer at CEVT Powertrain Engineering. He brings expertise in electric and autonomous vehicles, as well as galvanized brake pads.
News Briefs 11/9/20
• Uni-Select Canada Inc. has completed its acquisition of Pieces d’Auto St-Jean Inc. with two locations on the south shore of Montreal. Pieces d’Auto St-Jean is a distributor of aftermarket parts and paint. It has been a member of the Uni-Select network for over 20 years.
• GB Auto Service has acquired Texas-based Reliable Automotive, which operates shops in San Marcos, Buda and Kyle. Employees from Reliable will join GB Auto, which already serves the Austin market with 26 additional locations.
• Strickland Brothers 10 Minute Oil Change has announced its first set of franchise owners in Nevada, Anthony and Natalie Olheiser, who plan to open three Strickland Brothers service centers in the Las Vegas area.
• DRiV Inc. is providing $35,000 to Women in Auto Care to establish the Garage Gurus Scholarship Program, creating 12 scholarships for women working toward careers as technicians.
• DRiV also has pledged $50,000 to support Northwood University’s efforts to adapt to challenges it faces from the coronavirus pandemic and flooding that destroyed or damaged many of its on-campus facilities back in May.
• Following its September acquisition of PartsHub, the SEMA Data Co-op has revamped the user interface for its online Product Information Management System (PIMS) to fully integrate data from both organizations. Additionally, the co-op has added enhanced search functions, an option for resellers to view recommended brands based on their type of business, and new plug-ins to allow resellers greater download access to WooCommerce and Shopify. For more information, visit demo.semadatacoop.org.
• Dixie 4 Wheel Drive is the 2020 SEMA Truck & Off-Road Alliance Retailer of the Year. The award recognizes light-truck accessory retailers that have enhanced the stature and growth of the truck and off-road industry. Click here for more about the award winner.
• Keystone Automotive Operations has added power distribution and switching components from sPOD to its line card.
• US Motor Works is celebrating its 25th anniversary.
• Standard Motor Products has announced the release of its Blue Streak variable valve timing (VVT) program, joining the company’s recently released Blue Streak high-temp blower motor resistor kits.
• Bosch is partnering with the Hunter Engineering Company to develop and sell advanced drivers’ assistance calibration systems (ADAS) in North America. The integrated calibration system will include a co-branded, Bosch-developed diagnostic tool, calibration fixture and associated hardware for ADAS system calibration for the majority of global automakers, and vehicle alignment systems from Hunter.
• ATEQ TPMS Tools has launched a real-time updating portal for every sensor maker that’s in ATEQ tools. The Live Sensor platform allows users to keep their tools updated as new information is added. And, sensor manufacturers no longer have to wait for quarterly software updates to amend their information.
• Continental has initiated a voluntary recall involving roughly 12,000 Continental- and General-brand passenger vehicle tires that were sold to automakers and the aftermarket. According to the company, the tires may experience sudden air loss or belt edge separation, which could lead to partial or full tread loss. Continental reportedly has not received any reports of accidents or injuries resulting from this condition. The company estimates that 39 of these tires are defective. Click here for more information on the recall.
• Openbay’s automated online chat technology Openbay Otis now includes support for a wide range of major tire suppliers and wholesalers, including American Tire Distributors, TireHub, NTW, U.S. Autoforce, Max Finkelstein and TR Wholesale.
Financial Briefs 11/9/20
• The Goodyear Tire & Rubber Company saw its retail services and service-related sales increase 7.4% to $146 million in the Americas in the third quarter of 2020. For Goodyear, retail services and service-related sales consist of automotive services performed for customers through its company-owned retail channels and includes service-related products.
• Illinois Tool Works (ITW) reported a 10% increase in organic revenue from its automotive aftermarket businesses in the third quarter of 2020, primarily attributable to growth in its North American tire repair, engine repair and car care businesses.
• For the third quarter of 2020, Littelfuse Inc.’s automotive sales came in at $104.72 million, essentially unchanged on a year-over-year basis, as $2 million in favorable changes in foreign exchange rates and increased volume in auto sensor business were offset by decreased volume in the passenger car products and commercial vehicle businesses.
• Organic revenue from the Motion Technologies segment of ITT Inc. decreased 13.3% to $271.80 million in the third quarter of 2020 as friction sales declined 14%, driven by continued weakness in automotive demand primarily in Europe, partially offset by strength in OEM sales in North America and China. Weakness in the global automotive market also negatively impacted Wolverine Advanced Materials, resulting in a decline of 16% for the quarter.
• The Snap-on Inc. board of directors has declared a quarterly common stock dividend of $1.23 per share payable Dec. 10 to shareholders of record on Nov. 20. This represents an increase of 13.9% over the company’s previous quarterly dividend. Snap-on has paid consecutive quarterly cash dividends, without interruption or reduction since 1939, even through times of serious turbulence.
Event & Trade Show Briefs 11/9/20
• David Shapiro of the SRS Marketing Company will moderate a panel discussion during the AWDA Opening General Session on Monday, Nov. 16. Participants will discuss the events of the past year. The panelists will be AWDA Chairman Mauro Cifelli of Vast-Auto Distribution, AWDA Vice Chair Ryan Samuels of Samuels Inc./Buy Wise Auto Parts, AWDA Secretary Ashlee Arnold of the Arnold Oil Company and AWDA Executive Director Larry Northup. The event also will feature the association’s industry awards. Click here for more information about the AWDA Business & Education Conference.
• PDM Automotive, Classy Llama, ThreeKit and Magento will host a free webinar on the future tech of automotive e-commerce on Nov. 17. Panelists will discuss managing product data, starting an e-commerce website, 3D merchandising techniques, and industry trends and insights. The presenters will be Johannes Crepon, CEO and founder of PDM Automotive; Brandon Urich, head of solutions at Classy Llama; and Marc Uible, vice president of marketing for ThreeKit. Click here for more information about the webinar.
• Organizers of Heavy Duty Aftermarket Week 2021 have announced Drew Hofley, senior vice president of sales – Americas at Accuride Corp., and Andy Robblee, president of Six Robblees Inc., as co-chairs for HDAW 21. They are tasked with representing the needs of suppliers and distributors. The 2021 conference will be virtual, taking place Jan. 25-28. The theme is “Improvise. Adapt. Overcome.” Visit hdaw.org for more information or to register.