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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Our LKQ is in a fairly inconvenient location next to interstate and not close to an exit. It was a local pull a part place before that. Hopefully that will be enough to keep it from getting axed.
Why do I feel like a swarm of locusts just landed? Will there be anything left in a year?
Somehow I feel there’s a joke in there about private equity running a junk yard into the ground, but I can’t quite put it together.
Something something junk bonds something.
The PE playbook:
1) Sell the land to a third party company controlled by the PE executives and then rent the land back to themselves
2) Jack up the rent and load the purchased company with debt, while moving all assets to a third party company the PE controls
3) Declare bankruptcy and have the landlord company foreclose for pennies on the dollar of the original value of the land
4) Sell the land for a profit that you invest in the next
victimacquisitionHopefully the fact that every junkyard I’ve ever been in is a future superfund site may actually have an upside of making the land less valuable.
Or maybe not with how things are going at the EPA. They’ll probably turn them into orphanages that have wells instead of city water.
That sucks because the local LKQ is actually really good here.
I’ve always had good experiences at LKQ. I hope they don’t screw it up.
Dumb
Man, any threat to pick-n-pulls is a terrible thing. LKQ was also the supplier of the final engine for my Gencoupe. I was able to nab a basically new complete engine for less than a short block from Hyundai.
At least it wasn’t First Brands Group.
‘(“LKQ” or the “Company”)’ ,
Wait, I thought the C.I.A was “The Company”
First it’s prostitutes and LSD, and now junkyards. Is nothing sacred with these people?
Ooh I’m so excited! A PE firm is gonna make everything awesome! Said no one ever…
Where I’m at in the southeast, we have both LKQ and Pull-a-Part, and still a few local yards too. I mostly frequent the Pull-a-Parts because their inventory search is a little easier to use and they actually have what they say they do in the right spot. Others including LKQ? Oh I think we have one down round the bend over yonder. Just keep walking… hell no, it’s 10 thousand degrees and 99% humidity around here in the summer. So for me the loss of LKQ wouldn’t be devastating except for what it does to keep market pricing competitive.
I had always assumed LKQ had been PE-owned before it went public. But looking at the SEC documents it looked looks like Auto Nation provided a bunch of financing along with some other generically named partnerships that are likely from deep pocketed investors that are likely PE or PE adjacent. LKQ bought so much so quickly when they built LKQ they surely had a PE mentality even if they were only PE adjacent.
This is true. LKQ fairly rapidly took over a huge swath of the ebay etc. online used parts market by getting the parts out of the cars and onto the internet.
What’s the worst that could happen… they could… part it out?
I would lay the blame for Red Lobster’s woes on Thai Union.
that said, PE ownership has ruined many “parts suppliers “:for a multitude of industries
I was just reading that the new people at Red Lobster are trying to do good stuff.
I’m not their target customer though.
I’m not eating any giant bugs.
With the way lkq has been over the last decade I figured PE has already moved their sorry behinds in. Perhaps they ruined it so they could buy it to ruin it further in some kinr of grand scheme to make money but ultimately loose it all or maybe just sell the land to another PE firm for a profit.
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.
Went to one once and they tried to charge me to find out they didn’t have what I wanted.
Seriously.
So you’re complaining about being charged for admission to the yard and not finding what you wanted? That’s absolutely nothing new, been like that for decades. At least now with most yards you can see an image of what the car looked like at intake time which at least gives you an idea of body condition
I can’t believe anyone puts up with that
Ehhhh, It’s always been part of the deal. If you dont want to pay for the chance that they’ll have what you want, there’s always the full-serve yard where you (usually) will pay more for the part.
That said, now that admission for most yards is $3 (I’ve heard that some LKQ yards are $5 now) and parts are easy to search for online at full-serve yards on car-part.com, the allure of the self-serve yard is dying.
I’ve had them tell me they wouldn’t charge me if they don’t have the part.
Sometimes true.
Can’t say for sure which was lkq.
Traditional one I’ve gone to for years started charging, but never charged me.
Big Ford place doesn’t charge but uses some kind of set pricing now, which is often too high.
Not sure if they’re connected to a chain or not now.
This can only be good for parts sites such as Rock Auto. Finding the best deal on a good quality part is pretty satisfying, too.
I love walking around a good junkyard, but my time is valuable as well, and there are no good junkyards near where I live.
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.
Pick your Part is going to get picked for parts?
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.
Haha yeah – I recently found a couple Scorpio switches buried in a drawer in the garage. Good times.
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.
Mostly cities ignore toxic waste laws.
Ever wonder who screens demolition sites for toxic waste?
Real answer is no one.
The people Memphis hires to haul material were dumping it routinely in the middle of residential neighborhoods.
After they were caught, made a big show of prosecuting the people they knowingly paid to dump toxic waste.
In the fallout, the school system got caught paying a couple of guys with a truck to fake asbestos remediation.
Nothing has changed there.
FYI the safe exposure level to airborne asbestos is 0 parts per billion.
That is no longer the federal standard, but doesn’t change the science.
Standards vary widely between States and even municipalities. That being said, there is always corruption for dumping.
Federal standards still apply, and have teeth when enforced.
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.
New York has a very lucrative one that I’ve worked on for a decade. It’s less so now, but ~$10/truckload credit to dump in lower-standard Pennsylvania remade the urban centers of Westchester County, NY in the last 20 years.
Scroll down to tax credit table mid-page – 50% credit on prep and cleanup, even more depending on the final use.
That is beginning to change as the NYSDEC is requiring some carbon emission calcs to consider in-situ cleanups vs. export else-where dumping.
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.
If you want some entertainment, look up the stories on the dockyards on the bay used in world war 2 and the drive to clean them up so they can be developed further.
Now many say it wasn’t really cleaned up.
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!
LOL – back when I was in high school in the mid 80’s the school degenerate (Let’s call him Chris Hamilton) repeatedly broke into a small local junkyard and eventually drove something out the front one night. Never did hear what it was, but he disappeared from school not long after he stole (and set on fire) one of the town’s transit minibusses.
Everything’s gonna go wrong.