Advance Auto Parts Sells Wholesale Arm for $1.5 Billion

Advance Auto Parts has sold its wholesale operation Worldpac for $1.5 billion.

The sale, to funds managed by the Carlyle Group, is expected to be finalized by the end of the year, Advance said in a Thursday (Aug. 22) news release.

“The sale enables our team to sharpen their focus on decisive actions to turn around the Advance blended box business,” said CEO Shane O’Kelly.

“Proceeds from the transaction will provide greater financial flexibility as we continue our strategic and operational review to improve the productivity of the company’s remaining assets and better position the company for future growth and value creation.”

According to the release, Worldpac has generated around $2.1 billion in revenue and approximately $100 million in EBITDA over the last 12 months.

A report on the sale by Bloomberg News notes that Advance had been facing pressure from activist investors to divest Worldpac to boost compensation and compete with the likes of O’Reilly Automotive and AutoZone.

Worldpac, that report says, stands to benefit as automobiles and their care grow more and more complex and older cars accumulate mileage.

“This industry is in particular very resilient because it’s not tied to new car production,” Martin Sumner, Carlyle’s head of global industrial and transportation, told Bloomberg. “It’s tied to the car parc, which is huge and continues to age.”

Consumer attachment to older vehicles — with the average car on the road 12 years old — had helped companies like Advance and AutoZone.

In other automotive news, PYMNTS wrote earlier this month that the industry’s major players had seen a “blend of triumphs and trials” during the second quarter of 2024.

“As traditional automakers and innovative disruptors alike navigate a landscape marked by rapid technological advancement and shifting consumer preferences, their quarterly performances offer a snapshot of broader industry trends,” that report said.

For example, the quarter saw electric carmaker Tesla set new records with $25.5 billion in revenue, a 2% year-over-year increase, fueled by energy storage deployments and higher regulatory credit revenues.

Meanwhile, Stellantis had a challenging second quarter, incurring a significant 48% drop in net profit, a 14% revenue decrease to $92 billion, with U.S. sales falling 21% year over year.

Stellantis CEO Carlos Tavares described the quarter as “disappointing and humbling,” citing three key factors for the setback: excessive R&D, CapEx and M&A expenses; internal operational flaws; and ineffective marketing strategies, particularly in the U.S.