Fixed Ops Journal - August 2016 - (Page 30)

FIXED OPS JOURNAL " "When we talk to independents, they want more brands. They are looking for a one-stop solution." BRETT WHEATLEY, executive director of Ford's customer service division LIFE BEYOND FORD, GM ■ New investors aim to make OEConnection 'bigger, faster, stronger' JIM HENRY foj@autonews.com W hat will Providence Equity Partners do with its recently acquired controlling interest in OEConnection, an online parts marketplace? The private equity company's successful investment in AutoTrader might offer clues. General Motors and Ford Motor Co. - which co-owned OEConnection and now hold minority stakes - hope the company will rapidly grow under Providence Equity, similar to what the investor accomplished with AutoTrader. They anticipate that Providence Equity's role will encourage other automakers and their dealers to use OEConnection more. OEConnection provides training and software to promote retail and wholesale sales of original-equipment parts by franchised dealerships, independent dealers and aftermarket shops. Dealers pay a monthly subscription fee for each technology solution OEConnection provides. OEConnection gives solutions for free to outside shops, since they feed parts orders to paying dealers, the company says. One such solution gives dealerships information about online pricing and parts availability as well as illustrations of parts, which independent shops can use to order parts. OEConnection also enables dealerships to check each other's parts inventory and place orders, and to update pricing with the latest automaker discounts. OEConnection says it serves more than 20 light-vehicle and heavy-truck makers, as well as two-thirds of the 18,000 or so franchised new-car dealerships in the United States and about 100,000 repair shops. Providence Equity said in June that it would buy a 70 percent stake in OEConnection - 35 percent apiece from Ford and GM. Each parent company retains a 15 percent stake. Financial terms were not disclosed. The deal closed in late June. Chuck Rotuno, CEO of OEConnection, of Richfield, Ohio, said "GM and Ford are happy investors of OEConnection - their dealers are our major customers." "But for us to get bigger, faster, stronger, PAGE 30 AUGUST 2016 Still changing Key events in the development of the online parts marketplace OEConnection OEConnection is founded as a joint venture of Ford, GM, DaimlerChrysler and Bell & Howell, later Snap-On Business Solutions. OEC is an early entrant in the business of e-commerce parts ordering. Its CollisionLink solution enables collision shops to order originalequipment parts from dealerships. OEC's customer base grows to 10,000 dealerships with the launch of D2DLink, a tool to specify and source original-equipment parts. The company's automaker customers grow to 9. OEC expands into Mexico. OEC introduces "dynamic" list pricing for original-equipment collision parts, based on timing and local market conditions. GM is the service's first customer. Private equity investor Providence Equity buys a 70% stake in OEC. GM and Ford, which each owned half, retain 15% each. 2000 2001 2002 2009 2015 2016 Source: OEConnection even better, we needed to bring another partner into the mix," Rotuno said. Money to grow Davis Noell, Providence Equity's managing director, said the Providence, R.I., company plans to invest in OEConRotuno: Investment in OEC means growth. nection's growth. "They get more capital to go launch more products," Noell said. "There could also be some interesting acquisition prospects out there, and also to expand internationally." OEConnection does business primarily in the United States, and to a smaller extent in Canada, Mexico, Australia and New Zealand. It has almost no presence in Europe, Asia and South America. OEConnection had sought a new partner for several years, Rotuno said. OEConnection, Ford and GM chose Providence Equity in part because of its record with AutoTrader, an online shopping site, he added. The private equity firm bought a 25 percent stake in AutoTrader from Cox Enterprises Inc. in 2010. When it sold its stake back to Cox in 2014, AutoTrader had acquired Haystak Digital Marketing, HomeNet Automotive, Kelley Blue Book, vAuto and VinSolutions, which became parts of Noell: Look to AutoTrader as AutoTrader Group. "It was a really success- model for OEC ful transaction all around, one that we view as highly relevant to OEC," Noell said. Providence Equity generally invests in companies for five to seven years on average, he said. Track record Brett Wheatley, the executive director of Ford's customer service division, said OEConnection wanted an investor with a record of success in automotive e-commerce, in mergers and acquisitions, and in overseas markets. "We looked at a number of different equity firms," Wheatley said. The AutoTrader deal was a "proof point" for Providence Equity, he added. OEConnection's software helps dealers sell original-equipment parts made by all automakers. But Wheatley acknowledged that the company's sole ownership by Ford and GM likely has SEE CONNECT, PAGE 32

Table of Contents for the Digital Edition of Fixed Ops Journal - August 2016

Fixed Ops Journal - August 2016
Contents
Editor’s Letter
Service Counter
Legal Lane
Treading confidently
'Tis the season
Profit Builder
Valet service
Richard Truett
OEConnection
Changing oil:
Photo story
Trade-off
Toyota way
Feedback
Lone star
Airbag recall
Forging links
Top 50
5 Minutes With
Shop Talk
Fixed in Time

Fixed Ops Journal - August 2016