Over the past few decades, private equity has come for just about everything under the sun. It’s bankrupted Red Lobster, gobbled up automotive media brands, and led to merger after merger in all sorts of industries. Obviously, it was only a matter of time before private equity turned its attention toward self-service junkyard operations, and it just signed to acquire one of the big ones.
If you’ve purchased used car parts, you’re probably familiar with LKQ. The largest auto recycling operation in America, the firm buys more than 600,000 cars to part-out every year, and owns 63 self-service yards from coast-to-coast. That last part is about to be past-tense, because private equity just gobbled these yards up. As LKQ announced via an investor relations news release:
LKQ Corporation (Nasdaq: LKQ) (“LKQ” or the “Company”) today announced it has entered into a definitive agreement to sell its Self Service segment (“Pick Your Part”) to an affiliate of Pacific Avenue Capital Partners, LLC for an enterprise value of $410 million, subject to customary post-closing purchase price adjustments. This proposed transaction was the result of a robust competitive bid sale process that attracted interest from several parties.
Oof. Part of the appeal of having so many self-service junkyards owned by LKQ is that the people in the C-suite knew the market well. Reasonable prices, good selection of cars, you know the drill. However, LKQ President and CEO Justin Jude recently said, “While Pick Your Part has played a meaningful role in our history, we believe that it no longer aligns with our long-term strategy.” That doesn’t paint a great picture, and it offers up a reason to approach this transfer of Pick-Your-Part ownership with caution.
See, private equity has a particular way of doing things. Buying up underperforming entities, merging them to increase market cap, and if that doesn’t work, saddling them with debt, and then stripping them for parts. We’ve seen this process happen when Hoonigan was acquired by a private equity firm, bundled with WheelPros, and sent through Chapter 11.
This playbook has been run so often that it is worth having some genuine trepidation for how this sale of junkyard facilities could go. How it could affect your experience hunting for used parts, and what sort of change is going to happen. With acquisitions like this, the everyday customer experience rarely remains the same.
While Pacific Avenue Capital Partners does have auto parts experience, notably through the ownership of Fram parent company Purflux Group, there is a notable difference between the manufacture and distribution of new car parts at scale and the harvesting of old car parts. One’s straightforward for anyone familiar with manufacturing, while the other is fundamentally a recycling business.
For now, plenty is still unknown about the effects and potential outcomes of selling a huge chain of self-service junkyards to a private equity firm. However, don’t be surprised if changes are afoot for your local junkyard. It’s possible that this lifeline could extend the existence of these Pick-Your-Part yards, but it’s also possible that private equity will private equity if they don’t find themselves in a profitable position for a clean exit.
Top graphic image: LKQ Pick Your Part
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Meh. LKQ was fine a 10-15 years ago, but in that time frame they bought more stuff, diversified into the commercial automotive parts side, and nearly every salvage yard they bought or owned that I’ve dealt with has had a poorer selection at a higher price – the last time I went to PYP it was a hot mess of entry fees, picked over vehicles, and extortionate pricing. I don’t doubt that private equity can make things worse, but their starting point is already pretty low.
The good thing about being purchased by private equity is that they don’t have industry connections in a lot of the businesses they get into. So they won’t hear back when you’re looking for a job at a competitor.
I am a little disappointed that there is a national chain of scrap yards. A lot of the local yards were relatively closely tied to organized crime, so I guess it was kind of the same. Sometimes things were interesting, but the prices were always reasonable.
Enshitification comes for all
Ruh roh Raggy…
I don’t get to self serve yards much these days, after I got rid of my XJ there hasn’t been much reason to. But I did always enjoy just walking around them and seeing what there was to see, even if I didn’t find parts I needed.
Here in 2025, we find private equity, completely devoid of good ideas, literally trying to extract maximum profit out of junk.
So, basically, LKQ is going to get loaded up with debt, floated in a new IPO in 2030, then collapse in bankruptcy in 2032?
Pick your Part is. The rest of LKQ isn’t part of the sale.
Aw man, that’s crappy news. Private equity = death.
In San Diego we used to have two self serve junkyard chains and one of them closed a few years back, so all we’ve got left is Pick Your Part, and their prices keep going up.
I’ve spent probably hundreds of hours in those yards. Most of them are down near the Mexican border not far from where I grew up, and when I was in my late teens and early 20s I was in those yards at least once a month buying parts to fix my cars or to sell on eBay. I made a few thousand bucks selling Merkur Scorpio window switches and Sterling 825 corner lights and 1st gen Mazda RX-7 glass sunroofs over the years. Then in my late 20s when I started my own Lemons racing team, I procured lots of junkyard parts which were eventually used to build The Homer.
In fact, the fake exterior door handles on The Homer are actually interior door handles I pulled from a Renault Dauphine I found in Pick Your Part. Looking at the Dauphine in your photo, it sure looks like it’s in the Chula Vista yard I found the door handles in, so there’s a pretty good chance they’re from the exact car in your photo.
But I just retired the Lemons car, and my ’85 Ford LTD is now too old to find parts for in the junkyard, so I guess the junkyard scouring phase of my life may be over soon anyway.
Does LKQ own the land under the Pick-Your-Parts? This feels real estate-y.
Land under the yards is likely toxic and would require tons of remediation to use for anything else, so I doubt it.
Depends on where they are. The half-dozen or so junk yards that were once near me (north shore MA) are all gone. While several don’t seem to be in use for anything I can determine, one has become high end condos, another a fancy gym, and others are some miscellaneous office/commercial use. At the end of the street where I used to live, there was a former Dow Chemical superfund site adjacent to active RR tracks, but also alongside the water. It had been capped by concrete, but newer standards called for the removal of the cap and something like 10 feet of soil removed and shipped over a hundred miles to a processing site. It didn’t seem like that big of a piece of land, but there are a lot of expensive condos there now. Honestly, though, even with the train, I think I’d rather live there and risk whatever toxins may still be present than live in the condos they built on the site of the infamous Danvers State Hospital with its tunnels and unmarked graves. If land in an area is valuable enough, it doesn’t much matter what’s underneath.
Interesting. Wouldn’t surprise me if there were more restrictions here in California, but admittedly I have seen former gas station sites turned into other things, so I guess it’s possible.
That said, the LKQ yards here in San Diego are not really in places that are used for anything else. One is next to the city dump, the other next to a busy general aviation airport.
The few old junk yard spots near me that aren’t being utilized are similarly in undesirable places. I don’t know much about the business, but I imagine the environmental fees, land tax, and reduced number of customers as cars last longer and are less DIY friendly closed them down.
All of the fancy high-rise condos that recently sprouted up on the Baltimore waterfront are built on a former Superfund site, the former Allied Chemical Chrome plant. They claim it was cleaned up and remediated with private investment money, but I don’t remember any dump trucks hauling soil out of there before they started building.
The place on my street was built after I moved, but I also have my doubts about how much they did with the site. That said, it was sitting for quite a while on an estuary, so I wouldn’t be surprised if anything in the soil had already been washed into the harbor. Thinking about it now, it’s probably not uncommon a thing since water frontage attracted industry during the Industrial Revolution, prior to any considerations for the environment, but is now highly valued for residences.
There are probably grants they can get to fund the remediation, to a Private Equity firm that’s just more free money when it comes to the exit strategy.
Our local chain was bought by LKQ a couple of years back. The closest yard to me was clearly a toxic hazard: built on a sloping patch of ground that was bisected by a stream. There was no pavement or concrete, all the fluids just leaked down through gravel into the dirt. They closed it down a couple of years ago and it’s been empty ever since. My guess is that they’re going through the legal steps to get it all remediated, and then they’ll drop condos over the whole thing, and nobody will be the wiser.
1. Take away everyone on the board at Pacific’s cars away along with those of immediate family members.
2. Bring them to the nearest LKQ yard and hand them each a socket set. Tell them to take their pick of a new company car and get it running.
3. Whoever claims that Dauphine gets to be the new CEO.
I’d totally watch Junkyard Wars as produced by Karl Marx!
Everything’s gonna go wrong.