Big plans for prominent South African company that escaped business rescue

After escaping the business rescue, AutoZone has already taken several steps to improve the business. 

AutoZone is a distributor of auto parts, spares and car accessories in South Africa, with over 150 retail stores and 1,400 employees. 

Despite its widespread network, the group was placed into business rescue proceedings in July 2024 as it could not pay off its debts when they became due.

The company achieved rapid growth, leading to its takeover by a private equity firm in 2014. This depended on continued high growth, which was increasingly complex amidst the weak economy.

The group also had to deal with losing a key government tender and global shocks, such as the Covid-19 pandemic and geopolitical instability. 

“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.”

Due to the brand’s popularity, it was believed the company would not struggle to find a buyer. 

 The JSE-listed Metair then acquired the group in December 2024 for R290 million. 

Under the new ownership, AutoZone has implemented a fit-for-purpose funding structure, with a renewed customer focus and strategic alignment with the Independent Aftermarket (IAM) sector.

“Operationally, we never doubted our fundamentals,” said De Graaff.

“But what truly stood out was the human spirit. Our people didn’t leave. They stepped up. And thanks to transparent leadership and open communication, we’ve emerged stronger.”

He added that Autozone’s approach was characterised by full transparency and openness, with stakeholder communication focusing on ensuring everyone knew what was happening. 

“We had a weekly town hall video call with over 150 senior and branch managers to ensure everyone knew exactly where we were every week,” he added.

He added that supplier support was overwhelmingly positive and customers were already responding to its improved offerings. 

“The real success is seeing customers come back and new talent wanting to join our journey.” 

The group is now focusing on its relevance by expanding its product offering, penetrating deeper into the IAM value chain and exploring new markets in Africa. 

The interactions with Metair are helping to drive efficiencies and unlock long-term growth.

Vishal Premlall, National Director of TEPA, said that AutoZone’s turnaround serves as a blueprint for businesses facing similar pressures.

Survivors

AutoZone’s survival from business rescue mirrors a similar incident at West Pack, which faced elevated cash problems.

The company was placed into business rescue proceedings in May 2024 as it was unable to pay its debts when they became due. 

This was due to rapid growth, leading to severe cash flow problems. As the group opened more stores, it needed to spend more of its cash reserves on inventory, making it hard to repay debt. 

A group of individual buyers saved the group, and the corporate stores, which were previously owned by the founders, were sold to an individual investor. 

These previous corporate stores will soon become part of the franchise network, which remained robust during the business rescue proceedings. 

The corporate stores could not stock a full range of products due to the business rescue proceedings. 

Due to the issues facing the business rescue, these stores could not stock a full range of products.

The group expects a significant stock investment in the previously corporate-owned stores over the coming months to restore the variety and availability of its typical inventory.

The group also expects to rapidly expand its franchise model, focusing on strengthening the brand in regions with limited or no exposure.