The $10 Billion Takeover That Could Turn the Auto Parts Business Upside Down, Explained

There are only four major auto parts retailers left in America, and word has it that two of them may merge. O’Reilly is reportedly looking at spending $10 billion to get NAPA under its umbrella. That would be a particularly interesting auto industry moment, because even though both brands are similarly known for being brick-and-mortar car parts places, O’Reilly and NAPA fundamentally do business very differently.

Before we get into the distinction between NAPA and O’Reilly (I always think it’s “O’Reilly’s,” but no—no apostrophe-S), here’s the important context and news download.

Why This Matters

O’Reilly is a big, publicly traded company. It runs all its stores with a high level of corporate consistency. NAPA Auto Parts has a corporate/franchise hybrid model, so many locations have a little bit more of a private-store vibe. A lot of NAPA stores (about 4,500 of the 6,000-odd locations) are owned and operated by small business people, not the corpo mothership, which in NAPA’s case is Genuine Parts Company (GPC). NAPA parent GPC also runs a company called Motion that sells industrial parts to factories.

Back in February, GPC indicated that it wanted to separate its auto and industrial operations more cleanly. I hadn’t seen much chatter about it until today, when I caught reports that O’Reilly Automotive made a bid for GPC’s car parts operations, which “could be worth $10 billion or more,” according to Bloomberg.

GPC didn’t exactly put NAPA up for sale—it announced plans to spin off NAPA into an independent entity in 2027. O’Reilly appears to be preempting the next evolution of its rival by trying to buy it.

Now, why does this matter beyond potentially changing parts-store signage? Well, let’s go a little deeper on how these brands differ from our consumer perspective.

• NAPA‘s hybrid franchise setup leans heavily on the commercial mechanic market, so enthusiasts often favor NAPA for having more experienced parts-counter workers (the old-school guys who actually know what a carburetor is) and higher-tier, OEM-quality house brands (like Carlyle tools or Echlin ignition components).
• O’Reilly is a corporate-owned powerhouse that has grown rapidly by absorbing regional chains over the decades (like CSK Auto/Checker/Schuck’s/Kragen in 2008). While it has great inventory tracking, O’Reilly stores tend to have a more standardized corporate retail experience.

O’Reilly vs. NAPA: Is One Actually Better?

As a frequent auto parts store customer, I’ve had pretty good experiences with both NAPA and O’Reilly. The green guys were my go-to when I lived in Los Angeles. I was on a first-name basis with the counter clerks at multiple O’Reilly locations, and they were always super helpful and knowledgeable. But you find some top-gun old timers behind the counters at NAPAs, too. I remember going into a NAPA near Lake Tahoe one winter and ending up discussing the merits and chemical makeup of different antifreeze brands with a NAPA employee for ages.

All that to say, if O’Reilly did buy NAPA, it would be interesting to see if it stuck with the franchise model (or even the branding) or squashed it. If indie-owned NAPAs go away, car culture could lose not just the warmth of NAPA’s local speed-shop feel, but also an avenue for enthusiast-owned parts shops to exist. Then again, maybe it doesn’t matter, since anybody can theoretically market car parts from anywhere online.

Speaking of being anywhere, GPC’s automotive division spans more than 10,000 locations globally. O’Reilly has spent the last couple of years quietly exploring expansion into Canada and Mexico—the green brand’s $10 billion bid could also be in service of establishing an international auto parts empire.

What Happens Next

Reports indicate that a NAPA acquisition deal could be done by “late summer,” but it’s tough to tell how realistic it is exactly. Antitrust and anti-monopoly laws should prevent O’Reilly from wholesale gobbling up NAPA—in fact, I found some stats on that. There are about 1,800 O’Reilly stores that are within one mile of a NAPA store. Of those overlapping areas, about 600 markets have no AutoZone or Advance Auto Parts nearby. So in those 600 neighborhoods, an O’Reilly buyout creates an immediate monopoly, making those specific stores guaranteed targets for forced FTC divestitures or closures.

The stock market’s response as of this writing is that GPC’s stock is up (people are pleased the brand was deemed validated at 10 billion bucks), and O’Reilly’s is down just a little bit (a cash acquisition would mean debt, and then there are those antitrust issues to navigate).

There are a lot of question marks around this situation that I’m going to try to keep an eye on. Maybe O’Reilly ends up inheriting NAPA parts brands and Carlyle tools, or perhaps NAPAs get shuttered and end up becoming Advance Auto Parts or AutoZone locations to satisfy regulators.

As it stands, O’Reilly has had Wall Street’s attention, carrying a market valuation of roughly $77 billion. It has the cash reserves and the credit leverage to make historic deals. Meanwhile, GPC (NAPA) has been struggling. Hit hard by high supply chain costs and economic volatility, its stock was lagging, leaving the entire GPC conglomerate valued at just around $16 billion.

I tend to think fewer competitors is worse for consumers in the long term, though I’m also expecting a flurry of comments along the lines of “I buy everything online anyway.” My neighborhood NAPA doesn’t always have the parts I need on shelves, but they can usually get them for me within 24 hours. And I’d always rather support a locally owned business than a multinational monolith if I can.

Have any auto parts industry insight? Drop me a line at andrew.collins@thedrive.com.