South Africa’s largest automotive parts retailer, AutoZone, has escaped business rescue, and things are looking up for the company.
This is after it was saved from business rescue by the JSE-listed Metair.
AutoZone has a vast network of over 200 retail stores and 33 franchisee branches across South Africa, distributing auto parts, spares, and car accessories.
This broad reach was driven by a massive boom in the new and used car markets during South Africa’s strong economic growth throughout the 2000s.
However, after this period of strong growth, AutoZone was sold to a private equity firm in 2014, in a deal that relied heavily on continued high growth.
A stagnant economy made this unsustainable, while a combination of factors including the loss of a key government tender, global geopolitical instability, and the COVID-19 pandemic led to further instability.
AutoZone was no longer able to meet its debt-servicing obligations, and by the end of 2021, it was no longer able to break even.
Relief from its primary lender, Absa, enabled AutoZone to break even, but growth remained stagnant.
By June 2024 the company found itself “financially distressed” as defined in terms of Section 128(1)(f) of the Companies Act 71 of 2008.
This was after a failed attempt to sufficiently recapitalise, and Absa declining to give it another extension, putting AutoZone at risk of liquidation.
The directors placed AutoZone into business rescue on their own accord as it could no longer service its debts, and began seeking a buyer.
“By the time we entered business rescue, the need to rebalance our debt had become critical,” said Dion De Graaff, CEO of AutoZone.
“Business rescue gave us the legislative space to stabilise and find a buyer who could set us on the right trajectory.”
In October 2024, it was announced that Metair, a JSE-listed manufacturer, distributor, and retailer of automotive components since 1961, would acquire the entire issued share capital of AutoZone.
“Metair is of the view that following the restructuring of AutoZone in terms of the Business Rescue Plan and investment in working capital, the business can return to profitability and be value accretive for Metair,” said Metair at the time.
Metair acquired AutoZone in December 2024 for R278.5 million, bringing it out of business rescue and setting its sights on a better future.
AutoZone has now implemented a fit-for-purpose funding structure with a renewed customer focus and strategic alignment with the Independent Aftermarket (IAM) sector.
“Thanks to transparent leadership and open communication, we’ve emerged stronger,” said De Graaff.
AutoZone says it is focusing on its relevance by expanding its product offering, penetrating deeper into the IAM value chain, and exploring new markets in Africa.
Metair is critical in this journey, as it helps to drive efficiencies and unlock long-term growth for AutoZone.
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