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The best of two worlds – The merger of Parts Holding Europe and Oscaro

Parts Holding Europe acquired Oscaro in mid-November 2018, resulting in them adding another international aftermarket operator to their portfolio alongside Autodis Group.  Parts Holding Europe was founded by the private equity firm Bain Capital in order to bundle their aftermarket activities in Europe.

Bain Capital's strategy is to strengthen the market position of Parts Holding Europe, and it is hoped that the planned IPO of the Autodis Group will bring in fresh money to enable further investment and expansion.  This will put them in a good position to be able to keep up with their “super distributor" competitors such as LKQ and GPC.  The parts distribution sector has undergone a considerable amount of change in many countries, resulting in the consolidation and decline of the traditional second- and third-tier distribution structures, and the emergence of larger players with real scale and presence across their markets.

At the same time, B2C parts webstores have grown significantly.  In the UK, many major parts distributors have already set up and operate their own B2C webstores, but in continental Europe, traditional parts distributors are often perceived as suppliers to B2C webstores “behind the scenes”.  However, some large B2C webstores are now beginning to build their own logistics hubs, and so to compete with the distributors.

Oscaro’s cross-docking approach uses the warehouses and delivery infrastructure of various parts distributors and manufacturers, and only holds relatively few parts in its own stock.  Using analytical tools to calculate real-time parts demand and price elasticity, Oscaro is often able to offer the best online price, and deploys technicians to support its customers with parts identification.  This has enabled Oscaro to grow to be the largest B2C parts webstore in Europe, with an annual revenue in 2017 of €320 million, although with some question marks over their actual profitability.

Recently, there have been many rumours around Oscaro being a target for acquisition, with speculation that vehicle manufacturer PSA might add Oscaro into its overall aftermarket "push to pass" strategy.  There has also been interest from various private equity companies, and now Bain Capital, a business with many years of aftermarket experience, has been successful in its bid.  The transaction now places Parts Holding Europe in a good position to combine the best features of both companies.

Following the merger, there are immediate savings available to PHE from comparing the prices being paid by both companies and asking suppliers to apply the lower price to the combined entity, and from being able to use the combined volume of purchases to hit higher levels of volume bonus.  Through the group’s online channels, different brands, such as their own ‘AD’ private label, can be promoted via search engine marketing, and webstore customers can be steered into AD’s multi-brand workshops for their parts purchases to be fitted.  At the same time, Oscaro can draw on the stock and outlets of the whole Autodis Group to provide rapid delivery.  And finally, taking advantage of Oscaro's dynamic parts pricing capability, Autodis Group can build this into its own parts e-catalogue.

This integration could finally complete the merger of the two ‘worlds’, the traditional B2B parts distribution business with the B2C e-commerce business.