Genuine Parts Company enters definitive agreement to acquire Europe’s Alliance Automotive Group

Genuine Parts Company (the Company) and Alliance Automotive Group (AAG), a leading European distributor of vehicle parts, tools and workshop equipment, announced today that they have entered into a definitive agreement under which Genuine Parts Company will acquire Alliance Automotive Group from private equity funds managed by Blackstone and AAG’s co-founders. The acquisition is valued at a total purchase price of approximately $2 billion, including the repayment of AAG’s outstanding debt upon closing. The transaction has been approved by the Board of Directors of GPC and is expected to close in the fourth quarter of 2017, subject to the satisfaction of customary closing conditions and applicable regulatory approvals.

AAG is the second largest parts distribution platform in Europe, with a focus on light vehicle and commercial vehicle replacement parts. Headquartered in London, AAG has 7,500 employees and over 1,800 company-owned stores and affiliated outlets across France, the U.K. and Germany. AAG has a consistent track record of organic revenue and earnings growth supported by strategic investments based on a proven M&A strategy to gain scale, efficiencies and geographic coverage.

AAG is expected to generate gross annual billings of approximately $2.3 billion (US$) including supplier direct billings, or $1.7 billion of revenue on a U.S. GAAP basis in 2017. Additionally, the Company expects the acquisition to be immediately accretive to earnings in the first year after closing. For 2018, incremental diluted earnings per share is estimated at $0.45 to $0.50 and adjusted earnings per share is estimated at $0.65 to $0.70, which excludes the amortization of acquisition-related intangibles. The Company expects to incur one-time transaction costs in the fourth quarter of 2017.

Paul Donahue, Genuine Parts Company’s President and Chief Executive Officer, stated, “We are excited to combine with AAG and enter the European markets with critical scale and a leading market position in the automotive aftermarket. AAG is poised to contribute significant sales growth and earnings accretion to Genuine Parts Company and also serves to enhance the GPC platform for long-term, sustainable expansion across the global automotive parts industry. AAG has a strong management team and a deep bench of talent, and our similar cultures and histories make this acquisition an excellent strategic fit. We are confident this business investment will create significant value for our shareholders, and we welcome the AAG team to the Genuine Parts family. We look forward to their future contributions to our ongoing success.”

Jean-Jacques Lafont, Chairman, Chief Executive Officer and co-founder of Alliance Automotive Group, said, “The AAG team has tremendous respect for Genuine Parts Company and its well-deserved reputation as a long-standing leader in the automotive parts industry. We are very pleased to combine our two great businesses and leverage our collective resources and expertise to accelerate growth. AAG’s success is a testament to the hard work and dedication of our wonderful employees, without whom this transaction would not be possible. I am confident that, together, we will achieve great things and continue to provide the highest quality parts and service to our combined customers across the globe.”

Lionel Assant, Head of European Private Equity at Blackstone, said, “Over the past three years, AAG has experienced tremendous growth and transformed into one of Europe’s leading automotive parts distributors. We would like to thank AAG’s management team led by Jean-Jacques Lafont and Alistair Brown for their vision and leadership as well as all its staff for their exceptional efforts. We have no doubt that the business will go on to further growth under Genuine Parts Company, which is the right partner to support AAG’s continued success.”

The Company intends to finance the transaction, including the pay-off of AAG’s existing debt arrangements, with approximately $2 billion of debt financing. This will include the combination of new term loan agreements, new multi-currency debt and an upsized revolving credit facility.

J.P. Morgan is acting as financial advisor to Genuine Parts Company and Davis Polk & Wardwell LLP is acting as legal counsel. Lazard and UBS are serving as financial advisors to AAG and Linklaters LLP is providing legal counsel.

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IAAF provides latest aftermarket update

The latest Industry Briefing, hosted by the Independent Automotive Aftermarket Federation (IAAF), took place at Haynes International Motor Museum in Yeovil on Thursday 21 September.

IAAF Membership Development Manager Mike Smallbone again steered proceedings, updating attendees on the latest industry developments and also again welcoming Quentin Le-Hetet, General Manager of GiPA UK, as guest speaker.

Attendees enjoying the excellent facilities provided by Haynes International Motor Museum

Members were updated on current industry issues as well as IAAF’s current developments with the “Connected Car” and “Type Approval”. Smallbone acknowledged the industry’s current ‘deadlock’ position following 18 months of discussion from the C-ITS forum (Cooperative Intelligent Transport Systems) on a technical framework for connectivity on vehicles. Unresolved issues are now being examined by a TRL study and key to the discussion is how to access in-vehicle data, with three technical solutions being put forward.

Addressing the ongoing debate regarding proposed MOT changes, GIPA UK’s Le Hetet also discussed this year’s fall in the number of registrations for new vehicles and the subsequent increase in used car registrations.

Smallbone said: “Now with our third session under our belt, these regional meet-ups are proving to be incredibly well-received by our members, with numbers significantly increasing since the event was launched in March. The feedback we are getting shows that they are already providing real value to members in terms of industry insight. We are expecting another highly engaging session at next month’s briefing.”

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Book now for the next IAAF Industry Briefing Session

The IAAF has announced that the next event will be held on Thursday 26th October 2017 at the FPS National Distribution Centre in Sheffield.

Mike Smallbone, membership development manager, will be looking at the impact 4-1-1 MoTs will have on the UK automotive aftermarket, as well as the future of parts distribution in the UK.

FPS’ NDC in Sheffield

Guest speaker, Quentin Le Hetet (GIPA UK), will examine the impact of extending the MOT period to four years on the industry, while also looking at the future of parts distribution in the UK and the global consolidation taking place across the automotive aftermarket.

Smallbone said: “These sessions are an essential and useful way to engage with members and ensure they are up to date on the most recent issues affecting the aftermarket. We strongly encourage members to attend our briefings.”

The regional sessions begin at 10.00 am offering the chance to network over a coffee, then finishing at 1.00 pm with lunch.

The fourth Industry Briefing Session will take place at the FPS National Distribution Centre in Sheffield on Thursday 26th October; the format and timings will be the same as for previous sessions and a tour of the NDC has been arranged following lunch for those interested.

To book places, please email Ann Silvester at the IAAF anns@iaaf.co.uk.

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How autonomous brake technology is securing commercial vehicles

Autonomous emergency braking (AEB) systems technology uses either one or a combination of a camera, a radar or a lidar (laser light sensor) to monitor the road ahead for obstacles that could lead to a collision – typically the rear-end shunt kind. When they detect what looks like an accident, most AEB systems (but not all of them) prompt an audiovisual warning in the cabin; if the driver still doesn’t react, the system takes over and automatically hits the brakes.

Now assessed as part of Euro NCAP’s crash test, vehicles fitted with AEB are 27% less likely to be involved in an accident, according to safety body Thatcham, and have a 38% greater chance of avoiding a “real-world rear-end crash” according to a Euro NCAP and Australasian NCAP study.

In March last year, the Society of Motor Manufacturers and Traders (SMMT) reported that 58.1% of all new cars registered in 2015 were available with some form of autonomous technology, including AEB which was sold either as standard or optional fitment on almost two in every five cars.

The technology is less prevalent in light vans than it is cars or other forms of commercial vehicle, but it is making inroads. Volkswagen Commercial Vehicles became the first LCV manufacturer to fit the technology as standard across its range in June this year. AEB, at least in VW’s case, requires no adaptation between cars and vans, so the LCVs use the same, radar-based system as the passenger cars.

The manufacturer said AEB had been “proven to cut third party injury insurance claims by 45%”, which, in the case of cars and vans where it is not yet a legal requirement, can lead to lower insurance premiums for individuals and fleets operating vehicles fitted with the technology as standard.

As for lorries, AEB has been mandatory for vehicles sold in Europe since November 2015 (it’s also the case for coaches and buses). There are some exceptions such as vehicles with steel suspension and four-axle HGVs where the operation of the vehicle could theoretically affect the performance of the sensors, but for the average road going truck, AEB has been standard fare for almost two years.

The technology gets a bit smarter for buses and coaches. Even in a coach with 50 or more seats and the same number of seat belts, there will always be two or three passengers on the way to the toilets or to their luggage – some of them will always stand in the aisle, for those people, sudden braking can be more dangerous than the avoided situation.

In a coach, Daimler for example, knowing that there could be passengers in the aisle, have a very low jump [early warning jab of brakes], then a phase of about two seconds where deceleration increases, then once this stage is reached, there is the option for higher brake forces or full application of the brakes.

In June, Daimler announced its latest generation of commercial vehicle AEB, known as Active Brake Assist 4 (ABA 4), with a pedestrian recognition system. It will be available on Mercedes and Setra coaches from spring 2018 and uses a long and short-range radar system to identify objects smaller than conventional vehicles – i.e. pedestrians and cyclists. AEB with pedestrian recognition can be found in passenger cars, but this is the first time it has been applied to anything as large as a coach at a production level.

AEB’s benefits run beyond crash reduction, too. Heavy commercial vehicle fleets are unlikely to see instant discounts, but those using the technology could reasonably expect their insurance premiums to drop over time because typically it has a positive effect on accident rates and claims.

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Vehicle Safety Recalls: August 2017

These are the vehicles, parts or accessories recalled by manufacturers for a safety reason during July 2017.

You can check for vehicle, part or accessory recalls or find out more about vehicle recalls and faults by CLICKING HERE.

DVSA ref. no. Make and model Issue
R/2017/151 Polaris: RZR 170 Risk of fire
RSPV/2017/010 Polaris: RZR 170 Fuel tank may crack / risk of fire
R/2017/232 Mercedes-Benz: Sprinter & Vito Vehicle safety systems may malfunction
R/2017/233 Mercedes-Benz: S-Class (222) Some occupant safety systems may malfunction in the event of a collision
R/2017/234 Toyota: Hilux Wrong driver airbag inflator is fitted
RM/2017/024 Husqvarna: FC, FE, FX, TC, TE & TX Brakes may fail
RM/2017/025 Kawasaki: KLE300CH Rear brake light may fail
R/2017/235 Maserati: Ghibli, Levante, Quattroporte Possible short circuit of driver seat wiring
R/2017/236 Maserati: Levante Unexpected loss of engine power
R/2017/237 SEAT: Ibiza Possible steering malfunction
R/2017/238 Ford: Kuga B-pillar trim insulation could catch fire in the event of a collision
R/2017/239 Mercedes-Benz: Citaro Short-circuit may cause electrics to fail
R/2017/241 Ford: Kuga, Focus, CMAX Side and/or knee airbag may fail to deploy in a collision
R/2017/242 Mercedes-Benz: Actros, Antos, Arocs & Econic Screw/bolt in the range group catch bolts of gearshift system may come loose, causing gearshift system failure
RSPV/2017/011 Polaris: Scrambler 1000 Throttle may stick
RM/2017/026 Honda: CRF450R Gearbox may fail
R/2017/243 Nissan: Micra Engine may shut down without warning and fail to restart
RM/2017/027 Lexmoto: Hawk 125 XGJ, Falcon 125 XGJ Brakes may fail
R/2017/244 BMW: 6-Series Gran Coupe, Convertible & Coupe , 4-Series Convertible & M4 Convertible Front seat fixing mechanism may be insecure
R/2017/245 Mercedes-Benz: Smart ForTwo, Smart ForFour Handbrake failure
RM/2017/028 BMW: K21 (R Nine T) Reduced rear wheel guidance
R/2017/246 Mercedes-Benz: Vito Missing spot welds could impair crashworthiness of vehicle
R/2017/247 Mercedes Benz: Arocs, Actros, Antos & Atego Unpredictable braking performance
R/2017/248 Mercedes-Benz: V-Class Missing spot welds could impair crashworthiness of vehicle
R/2017/249 Mercedes-Benz Arocs Rear axles may fail
R/2017/250 Hyundai: Santa Fe Bonnet may open unexpectedly
R/2017/251 Toyota: LC100, LC200 & Lexus IS200 Driver and/or front passenger airbag may fail to deploy as intended

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Comline at the double! – Comline celebrates A1 Motor Stores Component Supplier of the Year award

Comline Auto Parts (Comline), the award-winning British distributor of all-makes replacement parts, has added to its list of accolades by being awarded the A1 Motor Stores Component Supplier of the Year for 2017 for the second successive year.

Comline UK Sales Manager, Nick Weir, collected the accolade on behalf of the brand at A1 Motor Stores’ annual convention held at Hotel Kompas in the stunning and beautiful surroundings of Dubrovnik, Croatia. A1 Head of Operations, Simon Salloway, announced Comline as the recipient of this award during a ceremony held in advance of the convention’s gala dinner.

In receiving the award, voted for by the A1 membership, Comline has once again demonstrated its commitment to the A1 factor group. It also underlines the overwhelming acceptance of Comline product by A1 members, driven by its core filtration and braking ranges, and underlines the exemplary service the brand provides in support of A1 Motor Stores.

Nick reflected on a satisfying and enjoyable convention in Dubrovnik: “The convention presented Comline with the perfect opportunity to develop its already excellent relationships with both A1 members and the A1 team, and provided an excellent platform to discuss potential new business opportunities.

“Dubrovnik was an all-round great experience, topped off by receiving the Component Supplier of the Year award for a second time. I speak on behalf of everyone at Comline when I say that we are thrilled to receive this honour once again, and we are looking forward to further developing the A1-Comline relationship to achieve more success in the year ahead – here’s to a hat-trick in 2018!”

Simon Salloway, added: “In an industry where service levels are all important, Comline never fails to impress. Whether it’s in developing new-to-range, stock profiling or just delivering on a promise, our members know they can rely on Comline.”

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Mechanex Coventry – 11-12 October 2017

Mechanex 2017 is taking place at the Ricoh Arena in Coventry and visitors will be able to see the latest products from most major parts suppliers as well as what’s new in diagnostic, air and hand tools plus hundreds of special offers only available at the show. There is also an extensive free programme of workshops and seminars covering technical developments, legislative changes and specific workshop problems.

Taking place on both days of the show – Wednesday 11th and Thursday 12th October – all the sessions are completely free to attend and are all presented by leading industry experts:

Main Stage

11:00 – The Hybrid and Electric Future
Keeping up with the pace of change

12.30 – Connected & Autonomous Vehicles
Autonomous vehicle operation, connectivity and control

14.00 – Practical Diagnostic Techniques
Vehicle troubleshooting in today’s aftermarket

Exhibitor Stands
There will also be hundreds of product demos and hands-on presentations on the stands. For example:

10.30/11.30/14.45 – Dayco
Dayco will be demonstrating best practice timing belt replacement throughout the day

10.30/11.00/13.00/14.00/15.00 – Sogefi
Industry expert Peter Coombes will be on hand to highlight the key attributes of Sogefi’s product portfolio

10.30/11.30/12.30/13.30/14.30 – The IMI
The IMI will be taking an in-depth look at the latest apprenticeship standards

11.00/12.00/14.00/15.15 – BG Products
Live demos of the effectiveness of the engine oil supplement BG MOA

To pre-register for the event and attend any of the sessions that might be of interest, CLICK HERE.

Once registered, visitors will receive a money-off voucher booklet for savings at the show plus there will be a free bacon roll and a free Professional Motor Mechanic T-shirt on arrival.

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Diesel particulate filters: protecting the environment and the MOT’s integrity

The DVSA has recently issued a warning to garages and motorists on its Blog regarding the removal of diesel particulate filters (DPFs).

Since February 2014, when an MOT tester inspects a diesel vehicle’s exhaust system they have to check if there’s a diesel particulate filter. Diesel particulate filters are important in maintaining acceptable levels of air quality.  DPFs have been fitted on all diesel vehicles since 2013, as part of the Euro 5 emissions standard.

The DVSA commented that there are two main reasons that some people might want to remove a vehicle’s DPF.

1. Performance: Some garages claim removing a vehicle’s DPF will improve its performance and make it more economical to run.

2. Cost: Some garages also claim that removing the DPF is cheaper than replacing an old blocked up filter with a new one.

However, it is illegal to drive a vehicle that has been modified in that way.

The DVSA enforcement team recently investigated two linked companies, who were offering to remove DPFs from vehicles – describing their services as being “MOT friendly” and “hard to notice”.

Both companies regularly recommended each other on social media, but claimed to the investigators they had no official relationship, despite sharing the same address, staff and directors!

As a result of the investigation, DVSA found the directors of the DPF removal company were authorised testers. These MOT testers were banned from conducting MOT tests for 2 years and the owner of the MOT station was banned for 28 days.

The bans give a clear message about the importance of maintaining the integrity of the MOT. The consequences of turning a blind eye to a missing DPF (or worse, actively taking part in their removal) can be serious for an MOT tester.

A vehicle that needs a DPF and doesn’t have one should fail its MOT. If it is passed in the knowledge that it doesn’t have one, it will harm the environment and will be seen as fraud.

For drivers, the penalty for driving a vehicle with the DPF removed, are fines of up to £1,000 for a car or £2,500 for a light goods vehicle.

Undeclared illegal modifications (like removing a DPF) could also invalidate a vehicle’s insurance, so it’s not just garages who could face serious consequences.

During 2016 to 2017, DVSA issued 761 warnings or disqualifications to MOT garages or testers who carried out improper tests, putting all road users at risk.

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