Carl Icahn Ups His Bet by Buying Precision Auto Care

Icahn has been expanding the reach of its auto service network in recent years

By

Austen Hufford

This is a great example of reacting to changing market dynamics and trends

Carl Icahn is raising his bet that Americans won’t fix their own cars, and that eventually many might not even own one.

Mr. Icahn has spent the past few years making deals aimed at extending his automotive-service network nationwide, as increasingly complex cars have their owners relying more on professionals for repairs. On Friday, Icahn Automotive Group LLC agreed to buy car-service chain Precision Auto Care Inc. for about $35 million. The deal would add 250 locations to the billionaire investor’s 1,000 existing shops.

“We’re positioning ourselves well to take advantage of an increase in fleets,” Mr. Icahn said in an interview, as he expects ride-hailing and -sharing services to displace some personal-car ownership and sees rental-car fleets expanding to accommodate those without their own autos.

Mr. Icahn’s goal is to build a company with nationwide reach that can make, sell and install parts, having recently bought parts-and-repair chains Pep Boys and Just Brakes as well as auto-parts distributor Auto Plus. He also took parts maker Federal-Mogul Holdings Corp. private earlier this year after owning a significant stake for a decade.

He also owns stakes in ride-hailing service Lyft Inc. and car-rental company Hertz Global Holdings Inc., which has a partnership through which Lyft drivers can rent vehicles if they don’t have their own. Mr. Icahn thinks far-flung fleet chains and ride-hailing companies could benefit from national service providers in an industry that is often served by local shops and regional chains.
“I have a whole team out there buying installers,” he said. “We want to build a really large national footprint servicing the fleets.”….

…Many cars are more tightly packed under the hood than in the heyday of do-it-yourself mechanic work, and some cars with more complex electronics can require expensive tools to diagnose and fix problems. That can even squeeze out some mom-and-pop shops for whom the investment in those tools might not be worthwhile.

A recent report from market-research company IBISWorld Inc. said the increasing complexity of auto repairs requires mechanics who are more highly trained, which drives up wages. The report also said that it is becoming more expensive to obtain more complex repair information from manufacturers.