It’s been a year marked by undercurrents of unease in the car industry. From layoffs at automakers to beloved aftermarket brands declaring bankruptcy, headlines have left enthusiasts wondering where doom and gloom will come from next, and as it turns out, it might be from where you buy your car parts. Hundreds of Advance Auto Parts locations are shutting down in the next few months, meaning there’s a good chance you could lose a local auto parts store soon.
Actually, it’s bigger than that. In addition to hundreds of Advance Auto Parts locations, the company is also getting out of franchise locations, and downsizing its distribution network. As Reuters reports:
As part of its turnaround efforts, Advance Auto Parts announced plans to close 523 corporate stores, exit 204 independent locations, and shutter four distribution centers by mid-2025. The company aims to improve its adjusted operating income margin by over 500 basis points through fiscal 2027.
Holy crap. If my math checks out, 727 retail locations will be affected by this restructuring, including a whopping 10.6 percent of all corporate-owned Advance Auto Parts stores. Those are some massive cuts that could result in hundreds of job losses, and it makes you wonder what exactly happened.
Well, the truth is that Advance Auto Parts has been struggling for a while. In November 2023, the company reported losses of $0.83 cents per share, and considering it had more than 59 million outstanding shares at the time, we’re talking total losses in excess of $48 million. Clearly, something had to change, and it had to change relatively quickly.
Flash forward roughly a year to now, and Advance has found a lifeline by selling business-to-business subsidiary WorldPac to private equity firm Carlyle Group for $1.5 billion. Depending on how WorldPac is managed going forward, this might be an even bigger deal than closing a huge number of retail locations, because pretty much every shop that works on European cars uses WorldPac to source OE parts using the company’s speedDIAL portal, shown above.
At the same time, things have turned around enough for Advance Auto Parts to be nigh-on breakeven. For the third quarter of 2024, the company reported losses of four cents per share, considerably better than the situation a year before but still not in the zone of profitability. While closing hundreds of locations ought to swing things in the right direction, what headwinds put Advance here in the first place?
Well, Reuters claims that fewer people are repairing cars at home, and while there’s likely some truth to that, it probably isn’t the only explanation. For starters, as commerce in general has shifted from brick-and-mortar to online for many industries, auto parts has followed suit. This means that companies with less overhead in their models, such as RockAuto’s plan of being entirely online, can be competitive on a nationwide scale. Even Amazon is cashing in on auto parts, with its Automotive Part Finder function. If it isn’t in stock at the local auto parts store but you can get it from Amazon the next day, how many people would go through Amazon?
The other side of things is a supply chain crunch. It’s no real secret that auto parts suppliers have been under some serious pressure over the past few years, from inflation affecting cost of materials to reduced automaker demand hurting the OEM side of the business to shipping issues affecting timeliness, these are all hurdles that end up being passed onto retailers, and if you’re a retailer that doesn’t use a lean model, you have less ability to absorb some of those fluctuations.
Of course, heading into a more tumultuous era like the past four years, it probably helps if a company doesn’t spend big. In 2019, CNBC reported that Advance Auto Parts purchased the DieHard battery brand from Sears for $200 million in cash. Oh, and then Advance paid Bruce Willis to start in a “Die Hard”-themed TV ad in 2020. At the same time, Advance continued expansion in 2021, inking agreements to lease 109 Pep Boys retail stores in California, converting them to Advance Auto Parts locations. Keep in mind, this was fully in the depths of a digital-first era, so it might not have been the most prudent capital decision.
It’s worth noting that the physical parts store of old still has a place. If you need a part right now and it’s in stock at a local auto parts store, chances are you’re taking the bus, going on a bike ride, or taking another car down to the store to get what you need. If your daily driver breaks at 3:00 p.m. on a Sunday and you need to clock in at 8:30 a.m. on Monday, you’re looking to get the job done if you can wrench, and the extra cost of going local is worth it compared to the alternative of calling into work.
Still, in a digital-first era, perhaps scaling back isn’t such a bad thing. Maybe it’s time to be more conscientious about the parts in stock, pay better wages for greater knowledge behind the counter, and find ways to be more price-competitive with online retailers. The losses that come with shuttering hundreds of Advance Auto Parts locations will have a serious impact, but for a situation to end up like this, it usually requires people in charge not seeing the forest for the trees.
(Photo credits: Advance Auto Parts, WorldPac)
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The Advance by my house has been staffed by the same 5 people for pretty much the entire time I’ve been going. They know my cars, and in fact they KNOW cars. It’ll be a shame to lose that crew.
I like Advance, but my little town of 20k has Advance, Auto Zone, O’Rileys and NAPA. I think I’ll be alright if the Advance closes down.
Well, I get all my auto parts from Callahan Auto!
“We make the best parts money can buy”
“I make car parts for the American working man because that’s what I am, and that’s who I care about”
“Fat guy in a little coat”
(I actually like Advance and am glad they’re not closing entirely)
Get your facts straight! Zalinsky was the “hard working man”
All jokes aside, I like Advanced as well. Though really none of the auto parts chains in my area employee anybody who knows anything aside from typing crap into a computer and reading off the screen.
Yup!
Us: “I need a clutch”
Them: “Automatic or manual?”
This actually isn’t as stupid as it once would have been, depending on the model, of course…
Gotta admit I bought all my recent repair parts online. Not having to face the local arrogant parts guy who acts irritated if I don’t know the “proper” industry part name/number/term, plus having them delivered direct to my door despite the wait time, won my voting dollar. Seems there’s a point where personal service isn’t better.
The lack of personal service and more importantly, knowledge is what leads me to buy more and more online. If I am not 100% sure of the part I need, I don’t go because 9 times out of 10, whoever is working won’t be able to give me any advice I don’t already know
Last time I bought a tune-up kit for my Vanagon (special order) from NAPA, I took it outside, opened the box and immediately returned it. When the guy at the counter asked why, I showed him. He then proceeded to argue with me, showing me the part # in “The Book”. I finally took him outside to show him that the Vanagon, indeed, has a four-cylinder engine–not a six, which is what the cap and wires in the kit were for.
I’m about 80% online for parts these days. Sick and tired of poor quality and just plain WRONG parts from local stores.
I can see him saying something like “well you didn’t tell me that you had engine swapped it. You should have told me what engine you had in it, not what car it was in.” But even that is probably giving him too much credit
The only engine options for the Vanagon were two displacements of flat-four Wasserboxers and a slant Diesel–also with four cylinders, but not much in the way of distributor cap or wires.
I don’t do a lot of wrenching any more. I was fortunate enough to be dealing with a couple of pretty reliable cars for most of my time in Texas. There was an O’Reilly’s half a mile from where I lived, and they had pretty much everything I ever expected to find. I (regretfully) owned a car wash in that time frame, and they had every weird tool I didn’t already own.
They were way closer than the nearest Greybar, Tractor Supply, Harbor Freight etc. So, I would say O’Reilly’s is my favorite of the bunch.
That said, I liked the prices and choices available at the local Walmart for things like batteries and wiper blades. (That’s the level of maintenance I needed to do on the cars.) Walmart even had the Delvac 1 oil that I liked to use in my Jetta TDI.
I’m retired and divorced now, don’t have the space, ramps and patience to do my own oil changes. I use a local independent mechanic for some stuff. My Honda hit 60K and its maintenance minder said it was time for an oil change and an ATF service. My local Honda dealer had a coupon for the oil change and the $200 for the ATF bit seemed reasonable. And they washed and vacuumed the car. When I told the service advisor I can source and change the air filter and cabin air filter myself, he didn’t try to sell me a bunch of unnecessary stuff.
I’ve been going to one Advance for three decades, but put way less mileage on better cars, and don’t wrench on the side anymore so I’m not in there weekly nowadays. I do consciously go to Advance because their headquarters are less than a mile from that store
I recently picked up a water pump at Advance Auto for my GMC Canyon. It cost a little more than Rock Auto or Amazon, but I used a 15% off promo code and got for an out-the-door price of $63.06 including sales tax. Plus, about 5 minutes after I ordered it, I got an e-mail saying it was ready to be picked up. A seven-minute drive later, and I had the water pump in my hand.
If I order from Rock Auto, they do dumb things like shipping the water pump from one location, and the gasket from a different location, charging me separate shipping for each item. Plus, I live in a small town, where even Amazon Prime 2-day shipping takes 6 days to arrive.
I like the convenience of having Advance Auto nearby,
The employees at Advance Auto are extremely annoying tbh. Every time I go in there they are always acting like they know more about my vehicle then I do. This guy tried to tell me that my civic didn’t have an 2.0 n/a because “the 2.0 is only in the type r”. I was like yeah that one is turbocharged and showed him on his own computer that the 2.0 na is the base engine.
Advance Auto is the Kohls of the car repair world. Their prices only make sense if you use one of their coupons. Otherwise you’re better off hitting up Napa or Autozone.
Every NAPA I’ve ever been to A – has not had anything suitable to task (tool or part), and B – charges much more than every other competitor. The only time I can think of an exception to this was a battery a few years back… Always the very last place I check.
NAPA = Never Any Parts Available.
Back in the ’80s, I went to a local NAPA for a thermostat for a Chevy 350 and they didn’t have one in stock. That’s when we came up with the acronym. (I’m sure we didn’t invent it, but it was new to us)
I generally do O’rielys first, AutoZone second, and Advance third.
I like NAPA, they had a points file right behind the counter. The other place I had to explain what it was. There is another place that’s a local three store chain that delivers. I never have them deliver, but it’s nice to know it’s there if I need it. Both places also have parts for 70 year old farm equipment and machine shops in the back. The big chains drive places like them out of business
It’s like when radio shack drove out all the electronics parts stores , then when they went out of business there was nothing.
Points file? Fancy!
I used to use mom’s emery board or the fold out file in a pair of nail clippers.
I always kept a few books of matches in each car with points: rough gauge and fine file in one
Good point!
The little CarQuest store in my podunk town actually took over a former Radio Shack. There’s still a few aisles at the back with their remaining stock, complete with all the original price tags/barcodes. It’s actually come in handy a few times over the years.
I’d care more if there was an Advance Auto Parts near me. For planned stuff I use Rock Auto, if I need it now NAPA is nearby and we now have three O’Reilly stores in a city of 100,000
Hope they can make it work. But I will say… O’Reilly tends to have cleaner stores with employees that are more knowledgeable (at least around me), and online whether it’s RockAuto or Amazon, parts are much, much cheaper. Plus, if you need something even the slightest bit unusual, especially for an older European car, chances are a local auto parts store won’t have it. But online with everything from eBay to FCP Euro, someone will have it.
I’m sure everything will work out with private equity involved. /s
Hey, private equity is the go to for a reason! When has private equity let us down? /s
Ooof hope they can recover. They’re my preferred auto parts store by a good margin, and their rewards program is pretty good. The website is a bit heavy but it’s probably the easiest to navigate of the big brands.
Autozone could largely go the way of the dodo. Other than their advertisements and being a competitive force to keep O’Reilly and Advance (and Napa I guess) leaner and meaner I’m not a big fan of theirs. If you see duralast part nowadays you know it’s actually a “never-gonna-last”.
They have a good tool loan program. For that reason I like Autozone.