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Icahn Automotive Group Continues to Expand Aftermarket Footprint
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By OReilly Auto Parts
SPRINGFIELD, Mo., Oct. 23, 2024 (GLOBE NEWSWIRE) -- O’Reilly Automotive, Inc. (the “Company” or “O’Reilly”) (Nasdaq: ORLY), a leading retailer in the automotive aftermarket industry, today announced record revenue and earnings for its third quarter ended September 30, 2024.
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By Counterman
link hidden, please login to view announced the launch of link hidden, please login to view, a new automotive aftermarket distribution platform. The launch coincides with Driven Distribution Group’s acquisition of the auto parts and accessories distribution business of Chicago Parts & Sound, following the recapitalization of Tri-State Enterprises, Inc. in November 2023. Financial terms of the transaction were not disclosed. By bringing together CPS and Tri-State under the Driven Distribution Group umbrella, HCI said it “aims to establish a leading platform in the automotive aftermarket industry by equipping its brands with shared resources, strategic vision, investment and advanced technology to enable its companies to deliver best-in-class customer service.” Both CPS and Tri-State will continue to operate under their respective brands, while benefiting from the shared resources of the Driven Distribution Group platform.
“We are thrilled to welcome the CPS team to the Driven Distribution platform. Consistent with our original platform thesis, CPS represents a geographically strategic beachhead in the Midwest and is a great complement to Tri-State’s existing product categories. We look forward to working together to achieve our shared vision for growth,” said Scott Gibaratz, partner at HCI.
Chicago Parts & Sound, based in Elk Grove Village, IL, with additional locations in Illinois and Wisconsin, is a warehouse distributor focused on automotive aftermarket parts, batteries, consumables, and accessories. The company serves auto dealerships, independent repair shops, municipalities/governments and company fleets.
Bob Lederer, co-owner of CPS, said, “the growth of Tri-State Enterprises parallels that of CPS – just in a different part of the country. Opportunities to combine businesses of such similar backgrounds, culture, and customer focus make tremendous sense for all stakeholders in each company.”
“We are extremely impressed with the stellar business and established market reputation Bob and Jackie Lederer have built over the past 22 years. The combination of CPS and Tri-State as part of the Driven Distribution Group platform will enable us to expand our resources and capabilities to better serve our employees and customers,” said Tristan Taylor, CEO of Tri-State.
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By Hardik Patel
Looking for top-quality automotive and marine parts at unbeatable prices? Sherco Auto and Marine Supply has been a reliable source for Automotive Parts & Accessories, Electrical Wiring Supplies, Tire Supplies, and more for over 30 years!
We offer a full range of American-made products, including:
Wire Connectors & Terminals Heat Shrink Products Copper Battery Cables Cable Zip Ties Tire Patches & Plugs Valve Stems & Air Line Fittings All of our wiring supplies are made in the USA and come at the lowest prices online. We also stock shop and repair products to meet your every need.
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By Counterman
“Humans think AI is going to replace them,” says Mike Mohler, executive vice president and chief purchasing officer with the Automotive Parts Service Group.
“It won’t. Somebody using AI to be better than you will replace you.”
The integration of artificial intelligence in the aftermarket is more advanced than many people might realize, according to Mohler. It’s already yielding impressive results for those who are using it effectively. The primary challenge is not just the availability of data, but the effective use of that data to drive actionable insights and decisions. Mohler cites a report from Accenture showing that AI-driven price optimization can result in a 5% increase in gross margin and a 15% boost in revenue.
“You look at some of our competitors, and they’re able to post comparatively outrageous profit margins,” says Mohler. “They’re using AI for logistical prowess. They’re using it for customer service. They’re using it to get the right pricing in play.”
The ability to make informed decisions based on comprehensive data analysis is a major advantage of AI. Data scientists in the aftermarket industry are increasingly using the technology to turn large sets of data into actionable insights. This includes identifying market trends, customer preferences and operational inefficiencies. The application of AI in this area can lead to better strategic planning and improved business outcomes. Mohler says those applications can have a significant impact on profitability.
“Let’s say the average WD would have a 25-45% gross profit margin, given their business model. Some competitors are posting 58%. AI is going to be the tool to help them catch up. We’ve got to get to 53% minimum, I think. That’s a rarefied position, but it’s been tested by some of the smartest people that I know, and it should be achievable when we’re planning and we’re hoping that it is,” Mohler explains.
A Customer Experience Revolution
AI’s application extends to customer service as well. Chatbots and virtual assistants are now commonplace, offering customers quick and efficient service. These AI-driven tools have evolved to the point where they can engage in conversations that are increasingly indistinguishable from human interaction.
“I wonder how many people know that they’re talking to a chatbot when they’re talking to a chatbot?,” asks Mohler.
Navigating the Risks
Despite its advantages, AI’s integration into the aftermarket raises several concerns. Cybersecurity is one of them, as increased reliance on data systems introduces new vulnerabilities.
“We have employees with access to the internet at a thumb’s notice, and if we’re not careful, they can mistakenly click on something that could disrupt our business for months,” Mohler explains.
Mohler also expresses concerns about protecting intellectual property. Misuse of data or inadequate protection against competitive eavesdropping could undermine trust and impact the industry’s integrity.
“Once the data hits the public domain, how do we protect it and how do we make sure that it’s not being used against us? How do we know that we’re not enabling our competitor who’s able to electronically eavesdrop on one another like never before?,” asks Mohler.
Envisioning AI’s Next Steps
Mohler stresses that AI’s influence on the aftermarket is only in its infancy. Over the next 5-10 years, he envisions an advancement from a basic understanding of AI as an algorithmic tool to more specialized applications tailored to industry-specific needs.
“So my thought would be that companies would have their own internalized GPTs and industries would have their own internalized GPTs. My hope is also that we will become as skilled at selling to disembodied customers via e-commerce as we are at selling to them when they’re across the counter from us or in our stores,” Mohler says.
Mohler references the seven stages of AI when looking ahead to the technology’s impact on the aftermarket.
“When it comes to supply chain, when it comes to logistically moving products around, when it comes to optimizing sale price, optimizing customer service, my hope is that we will be a little closer to stage seven. Right now, we’re really at stage one and a half, maybe two,” says Mohler.
As the technology evolves, moving beyond its current capabilities, AI’s exact impact on the aftermarket, and countless other industries, will be even more profound. Companies that invest in AI and adapt to its changes will be well-positioned to thrive in the future of the automotive aftermarket.
“It’s incumbent upon us to understand AI and to become data scientists ourselves, because everybody’s got access to the data. Whoever can use the most disparate sources for the best outcomes is going to win in my overall view of it,” says Mohler.
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