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Top 10 News Stories of 2006

By Amy Antenora

For the third year in a row, the editorial staffs of aftermarketNews and Counterman magazine take a look at the events that have had the most impact on the automotive aftermarket in the past year. News stories are presented in chronological order.

For the third year in a row, the editorial staffs of aftermarketNews and Counterman magazine take a look at the events that have had the most impact on the automotive aftermarket in the past year. News stories are presented in chronological order.

This was a rocky year for a couple of the industry’s biggest retailers. Pep Boys began making headlines in late 2005, after a New York-based investment firm acquired an additional stake in the Philly-based auto parts chain, and shortly thereafter began calling for the ouster of Pep Boys Chairman and CEO Larry Stevenson. By July, Stevenson had resigned.

Later in the year, another major auto parts retailer saw a shake-up in its top management. Following an investigation into accounting errors, CSK Auto’s President and COO Martin Fraser and CFO Don Watson were let go from the company, along with several others in the finance department. In addition, Maynard Jenkins, the company’s chairman and CEO, announced he would step down. He has assumed the responsibilities of the president and COO, while the search for his replacement is conducted.

The internal investigation eventually led to three class-action lawsuits, which alleged that false statements about CSK’s earnings, assets and business prospects caused the company’s stock to trade at artificially inflated levels. While the company’s stock was allegedly artificially inflated, certain company officers and directors sold 75,106 shares for proceeds of $1.1 million.

General Motors and Ford have both undertaken major downsizings this year, struggling to stay competitive with their foreign counterparts.

In late November, New Ford CEO Alan Mulally staked the company’s manufacturing facilities, automotive assets and even intellectual property, on the bet that he could turn the company around with an $18 billion loan.

Not everyone was willing to take that bet, though. In North America, 38,000 Ford UAW employees, nearly half of the company’s unionized workforce, have opted to take the company’s buyout offer. General Motors has been in buyout talks with its workers since last year.

On Dec. 1, billionaire investor Kirk Kerkorkian sold off all of his shares in General Motors, apparently because he was unhappy that his near 10 percent share in the company was not more influential in shaping the carmaker’s future. Kerkorkian had urged GM to consider an alliance with fellow automakers Renault and Nissan.

For many automotive manufacturers, this year has been about focusing on core competencies and weeding out non-core operations.

In February, ArvinMeritor sold its Purolator filter business to Bosch and MANN+HUMMEL as a 50/50 joint venture for about $170 million. Then in March, ArvinMeritor sold its North American Light Vehicle Aftermarket exhaust business to International Muffler Company, a producer of aftermarket exhaust systems and components based in Schulenburg, TX.

United Components in May finalized its purchase of Canton, OH-based water pump manufacturer ASC Industries. UCI then sold off its Neapco and Pioneer brands in July. And, in November, the company sold its U.K. based Flexible Lamps unit, manufacturer of lighting systems for commercial vehicles, to Truck-Lite.

Another notable acquisition this year was the sale of Delphi’s battery business to Johnson Controls. Part of Delphi’s ongoing restructuring plan, the sale included ownership of the New Brunswick, NJ, facility and assets, and employment of approximately one-third of the company’s hourly workforce.
Continental AG, looking to increase its focus in one of the industry’s biggest growth markets, acquired Motorola’s automotive electronics business for approximately $1 billion in cash. The sale included Motorola’s controls, sensor, interior electronics and telematics businesses, which was integrated into Continental’s Automotive Systems Division. Continental AG said it has doubled global market share of engine management and transmission control systems since acquiring the electronics operations.

Some of the biggest players in the aftermarket’s technology sector also went through some noteworthy changes in the past 12 months. In March, Activant Solutions signed a definitive agreement to be acquired by two private equity investment firms, Hellman & Friedman and Thoma Cressey Equity Partners. The firms acquired Activant Solutions Holdings Inc. and all its subsidiaries from HM Capital Partners LLC. The entire company, including the management team, was included in the deal.

Just two months later, two other aftermarket technology providers announced a strategic alliance. Pricedex Software and Illumaware Corp. will work together to offer comprehensive, scalable end-to-end PIM and data management solutions to aftermarket manufacturers, distributors and retailers. The union was designed to allow the two companies to offer solutions to companies of all sizes, utilizing their compatible business philosophies with little overlap in customer-base.

The aftermarket’s list of technology providers became even smaller when Wrenchead acquired icarz in August. The newly merged company, named WHI, now provides solutions to more than 1,500 companies in the automotive, hard goods and electrical distribution markets, including more than 21 Fortune 500 customers.

This year, the National Automotive Service Task Force (NASTF) became formally incorporated as a non-profit organization in the District of Columbia. Established in 2000, NASTF works to address the availability and accessibility of automotive service information and tools to independent repair shops. Some of the organizations involved in the founding of NASTF (and the handshake agreement with automakers that led to its formation) see the task force as a non-legislative alternative to the proposed Motor Vehicle Owners’ Right to Repair Act (see Right to Repair story below).

In March, NASTF voted to have ASE manage the task force and a Board of Directors was established. Charlie Gorman, of the Equipment & Tool Institute, was elected to serve as chairman for the first year.

In April, those in favor of the Motor Vehicle Owner’s Right to Repair Act (HR 2048) celebrated a milestone: The bill had surpassed 100 congressional co-sponsors. Then, in May, the Commerce, Trade and Consumer Protection Subcommittee voted in favor of the legislation in an open mark-up session on Capitol Hill. While it was amended during the meeting, the bill’s primary goal remained intact, requiring the FTC to enforce requirements that independent repair shops have access to the same information and tools that are available to new car dealers.

Despite this progress however, for the fourth time in a row, another Congressional session comes to a close without the Right to Repair Act coming up for a final vote.

However, in October, the New Jersey Assembly’s Consumer Affairs Committee unanimously voted to pass A-931, the New Jersey version of The Motor Vehicle Owners’ Right to Repair Act. The next step in the process is a second reading on the Assembly Floor, which had not happened as of press time.

Home Depot began testing the sale of automotive products at 10 of its stores in the Jacksonville, FL, market this past spring. The retailer has dedicated about 500-square-feet of floor space to auto products, including motor oil and fuel additives.

A spokesperson for Home Depot indicated that the company is pleased with the results of the test, and plans to further update its product mix before expanding into any additional markets.

While Home Depot is still testing the waters, Internet shoppers can select from an inventory of 1 million new, used and remanufactured parts from’s new online Auto Parts and Accessories Store.

Since Uni-Select and MAWDI announced their merger in 2004, Uni-Select’s U.S. operations have undergone significant growth.

The company acquired nine new businesses in 2006, most notably Auto Craft Automotive Products and Tier Parts Warehouse.

In July, Grand Rapids, MI-based distributor Auto-Wares, Inc. acquired Certified Automotive warehouse and the Lee Parts Stores of Chicago. With the addition of Certified and Lee, Auto-Wares and its subsidiaries now have a major aftermarket presence in Michigan, Ohio, Indiana, Illinois and Wisconsin.

Every day, new reports show the rapid and expansive growth of China as a major producer of auto parts. The Motor & Equipment Manufacturers Association estimates the value of China’s aftermarket to triple to $12 billion by 2015.

The significant growth and subsequent opportunities available in China were an influencing factor in the development of the new Asian Initiative announced by AAIA at AAPEX this year. The Asian Initiative will include hosting the Asian Automotive Aftermarket Expo in Macao, China, as well as a seven-day Executive Enrichment Program to be held in Shanghai and Beijing, China in March 2007.

Following closely behind China, and anticipated to be the automotive industry’s next fastest growing market, is India. The number of cars sold in India is projected to double by 2010. India’s government, looking to position the country as a destination for automotive manufacturers and suppliers, recently announced a 10-year plan to grow its $34 billion automotive industry to $145 billion by 2016.

A number of the aftermarket’s leading manufacturers announced bankruptcy filings or major restructuring efforts this year.

In January, Visteon announced a three-year, $800 million restructuring plan as part of a larger agreement reached in 2005 with Ford. As part of the cost-cutting plan, Visteon is looking to close, sell or revamp 23 plants.

In March, Dana Corp. declared bankruptcy after the inability to get more credit and fend off mounting debts. Affinia Group Inc., the aftermarket division of Dana that was sold off in 2004, has been undergoing restructuring efforts as well, including closing a number of plants in the U.S. and Canada.

In November, ArvinMeritor said it will undergo a $50 million restructuring program to realign its light vehicle Emissions Technologies (ET) business. The company said this program will be executed over the next 12 to 36 months.

On Oct. 30, Dura Automotive filed for protection under Chapter 11 of the U.S. Bankruptcy Code. According to, this is the third largest bankruptcy filing this year and the seventh largest automotive parts manufacturer filing of all time.

For global manufacturer Federal-Mogul, this was the year the company began to see the light at the end of the bankruptcy tunnel. In an exclusive interview with Federal-Mogul CEO JosÉ Maria Alapont, the top executive shared that he expects the company to begin the process of emerging from Chapter 11 within the next few months.

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