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Automotive aftermarket life imitates a board game

Monday, April 25, 2016 - 07:00
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Last year I wrote a column about Icahn Enterprises purchasing Uni-Select USA and questioned what the real reasons were for a major manufacturer (Federal-Mogul) wanting to get into wholesale and retail parts distribution.

Since then Icahn Enterprises has outbid Bridgestone to acquire Pep Boys. If this were a game of Monopoly, Icahn seems to be focusing on Boardwalk and Park Place, accompanied by lots of hotels, and owns all four of the railroads as well. In the meantime, the rest of us seem to be stuck with Baltic Avenue and rely on Chance as our primary business strategy, mortgaging every property we have to stay afloat in case we “roll the dice” incorrectly.

While being in the automotive aftermarket business is by no means a game, everybody wants to be a major player and Icahn is positioning himself to do just that. He’s got the manufacturing, a distribution system to the jobber level, company owned jobber stores, and now a sizable retail chain complete with tires and repair. An automotive monopoly? Not according to regulating authorities, but old timers like me are envisioning something else – an end game. Let me explain my convoluted and comforting theory.

In the game of monopoly the first move is to roll the dice. Becoming a jobber store or service center is not very different in that respect. Each continuing roll either leads to property acquisitions, rewards or penalties.

After several trips around the board (years in business), patterns begin to emerge as participants start to carve out their corner of the board. Deals are made, properties bought and sold, losers drop out and some unfortunate souls occasionally go to jail.

But what about the malingerers? The ones that have enough to make it around the board in spite of all the taxes, mortgage fees and penalties? We can’t really get any bigger without taking the risk of “rolling the dice” again and getting hit with the rent of four hotels on Park Place. This competition has gone on so long that our kids have lost interest in watching.

My Uncle Bob, a serious Monopoly player, is drooling with anticipation when anyone rounds the corner of Atlantic Avenue, approaching the hotels on his properties.

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