Program distribution groups merge to grow, expand markets

Federated Auto Parts and National Pronto Association rocked the distribution industry with their announcement Dec. 10, 2014, that they would merge their efforts and resources in a number of key areas. The newly formed organization will be called the “Automotive Parts Services Group” or simply “The Group.”

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“Recognizing the industry is evolving faster than ever, we wanted to take a proactive stance to lead the traditional automotive distribution channel into the future, said Bill Maggs, CEO of National Pronto Association. “Both Pronto and Federated are thriving and growing organizations. By combining two of the major program groups we will be positioned to compete successfully in our rapidly consolidating industry.”

Rusty Bishop, CEO of Federated Auto Parts, said, ““We believe it provides increased value for our constituents and a foundation for continued success in serving the industry. Both Pronto and Federated headquarters will remain in place and continue to support their respective members’ needs and marketing programs while progressing to shared resources in all areas that offer efficiencies and improvement opportunities to remain competitive in a changing market.”

This merger will have combined member sales volume exceeding $7 billion with more than 5,000 outlets in North America.

Here are some details that Federated and Pronto released shortly after the announcement:

Maggs and Bishop will be co-CEOs of the new organization while also maintaining their current roles with Pronto and Federated.

The companies said they plan to maintain all current people and positions with a goal to share best practices, increase value and effectiveness. In most areas, the emphasis will be on improved programs and support with no added cost. Leadership will look to develop succession plans and an evolved organizational structure.

While final decisions have not been made, both companies said there are benefits in collaborating on national accounts, data management, electronic catalog, inventory management and availability, purchasing, warranty and roadside assistance programs, Co-Man warehouse, direct importing, Internet support and training.

For example, Pronto members will have the option of participating in the Federated Co-Man warehouse. This is an example of leveraging current resources across a larger enterprise. With enhanced volume and growth there will be increased activity in all areas of Co-Man including purchasing, warehouse, logistics, payables, and receivables. This is certainly an area where the merger will likely create jobs rather than eliminate them, the companies said.

Regarding purchasing and merchandising the merger will provide for combined line reviews and leverage of combined volumes. The goal is to be competitive with large competitors at acquisition cost, the companies said.

In terms of how the merger will impact suppliers, the companies said there will be fewer meetings for vendor partners, more efficient relationships, a more line common customer base, better partner for national accounts, more information, and an opportunity to sell more and influence mix.

The companies said there are minimal market conflicts between members of the two groups and in many markets there are positive working relationships. It is a merger of equals with a focus on equal collaboration that is fair for all. Both groups said they are dedicated to making the merger benefit all members, and that the overall focus is on selling more and operating more efficiently while sharing resources and expertise.

In terms of a timetable and vendor reviews, there are no immediate vendor changes. The two companies agreed to conduct line reviews in a logical and math-based manner to achieve line commonality where possible. Line rationalization will occur as synergies are realized. Line changes will be based on extensive analysis, coordination and communication to create the best value to members.

For more information click on Federated, Pronto announce merger or Federated, Pronto release details of merger.

On Sept. 17, 2014, Pronto and Autodistribution International (ADI) entered into a joint venture called 1Parts.

“Distribution is a challenging environment and we want to do it with a global vision,” Maggs said. “The automakers are building on global platforms and the technology to achieve this improves daily. Pronto is very strong in North America so we needed to find external growth through the global markets. ADI is Europe’s market leader in parts distribution and their strategy matches ours.”

The aim of the shareholders of 1Parts is to raise benefits and advantages for all 1Parts stakeholders, on both the trade and industry side, in key domains such as supplier management and brand strategy, marketing support, data sharing, technical support to installers – and to identify further common domains.

1Parts was designed to be a global organization with members all over the world who share the same global strategy and vision.

Omar Wesemael, managing director of ADI, said 1Parts will take independent distribution to a global level, help stop brand erosion and increase margins for distributors by focusing on premium brands with OE quality.

For more information, click on Pronto, ADI joint venture or on Pronto, ADI announce joint venture.

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