Toronto, Ontario — Advance Auto Parts sells its Worldpac unit to a private equity firm and Canada announces tariffs on Chinese-made electric vehicles in this weekly Tuesday Ticker.
Selling Worldpac
Advance Auto Parts has sold its Worldpac unit for US$1.5 billion, the company announced last Thursday. The sale is part of Advance Auto Parts’ latest attempt at streamlining operations, reported Reuters, as the company reduced its annual results forecast.
The Worldpac unit will be sold to private equity firm Carlyle Group in cash, with the deal expected to close by the end of this year. Carlyle formerly owned Axalta Coatings System.
The announcement came just before Advance Auto Parts’ previously scheduled webcast to discuss Q2 2024 results. Shares dropped more than 15 percent after Advance Auto Parts cut its forecast. As of Monday at 10:15 a.m. ET, shares of Advance Auto Parts traded at US$49.49, down 18.65 percent over the last five days and down 20.10 percent year-to-date.
Annual sales and profit forecasts were cut due to lower parts demand, anticipated maintenance-related headwinds and lower discretionary spending. Advance Auto Parts now expects net sales for 2024 to be between US$11.15 billion and US$11.25 billion, down from prior expectations of US$11.3 billion and US$11.4 billion.
Net sales for Q2 2024 were US$2.683 billion, compared to US$2.686 billion last year.
Advance Auto Parts acquired Worldpac in 2014 by purchasing General Parts International.
Wes Bieligk, partner with Carlyle Global Industrials’ inventing team told Reuters that the company likes Worldpac as “the professional market, the repair shops, and the trend longer-term is for that market to grow and the economic resiliency makes it an attractive part of the industry.”
Let’s talk tariffs
Canadian Prime Minister Justin Trudeau has announced that Canada is imposing a 100 percent surtax on Chinese-made EVs, including hybrid vehicles, trucks and buses.
The 100 percent surtax, applied to all Chinese-made EVs, will take effect Oct. 1, 2024. A 25 percent surtax on imports of steel and aluminum products from China will also take effect Oct. 15, 2024.
The Prime Minister also accused China of violating international trade rules and attempting to have an “unfair edge” in the emerging EV market globally. He said these tariffs will “level the playing field for Canadian workers” and allow for a competitive Canadian and North American EV industry.
“Actors like China have chosen to give themselves an unfair advantage in the global marketplace, compromising the security of our critical industries and displacing dedicated Canadian auto and metal workers. So we’re taking action to address that,” said Trudeau.
The tariffs are not necessarily targeted at Chinese brands like BYD, which previously announced its intent to enter the Canadian market. Tariffs will currently apply to vehicles like Shanghai-made Teslas already sold in Canada.
A senior government official clarified that Canada is not enacting these tariffs under U.S. pressure, but that the government has been considering the prospect of Chinese automakers overtaking the Canadian EV industry for months, long before the U.S. announced its own tariffs in May.
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