In previous discussions with Ratchet+Wrench, Lang said that Carl Icahn, as the owner of Pep Boys, Just Brakes, Auto Plus and Federal-Mogul, was practicing vertical integration. His network of 1,000 shops would buy their products from the Icahn-owned Auto Plus, which would buy its parts from the Icahn-owned Federal-Mogul, stretching Icahn’s pull in the marketplace.
According to Lang, many people had questions on the feasibility of such a vertical integration, not only on a practical standpoint, but also a legal standpoint. But his recent sale of Federal-Mogul to Tenneco looks like a shift in strategies.
“The integration from manufacturer to installer level will not continue with the acquisition of all these products and brands from Tenneco,” Lang says. “It still remains important that Icahn is involved in the installation and parts distribution levels.”
Lang believes that by forgoing manufacturing, Icahn can better consolidate his position in the marketplace. Beyond this, Lang says the parts market is experiencing a major shift amid increasing competition, which may make it harder for Icahn and Tenneco to have a major hold on the market.
“Import distributors, people like WORLDPAC, have introduced a much greater range of products than even 8–10 years ago,” Lang says. “There’s much greater competition among brands than ever between domestic brands, foreign brands, OE installer brands than ever before.”
Additionally, Lang said that by 2020 more than half of all cars and trucks on U.S. roads will be foreign nameplates, which will have a significant impact on where services are performed, along with the types of products and brands that are used in repairs.
