Motorcar Parts of America (NASDAQ:MPAA) outlined its growth strategy across braking, rotating electrical products and diagnostics, with Chairman, President and CEO Selwyn Joffe highlighting opportunities tied to the Centric brake brand intellectual property, manufacturing scale and geographic expansion.
The company supplies automotive aftermarket replacement parts in two primary categories: rotating electrical products, including alternators and starters, and braking components. Its brake portfolio includes power brake boosters, hydraulics, master cylinders, calipers, brake pads, rotors and wheel hubs with anti-lock braking system components.
Centric Brand Opportunity
According to Joffe, Motorcar Parts of America has won new caliper and booster business following the bankruptcy and recently opened a brake-caliper factory that is approaching capacity. He said the company is beginning to see margin benefits from the facility as production volume increases.
The company also acquired the Centric brand and intellectual property from First Brands. Joffe said Centric historically had strong customer loyalty, particularly among professional installers, and was best known for brake pads and rotors.
Motorcar Parts of America had previously secured rights to Centric brake-pad formulations and incorporated them into its Quality-Built branded brake pads. Joffe said the company is evaluating how to relaunch and distribute the Centric brand, including a possible strategic relationship with a larger industry participant or a more traditional rollout.
“We think the revenue opportunity from our perspective over time, just looking at historics, is probably around $400 million for that brand,” Joffe said, while emphasizing that no final decision has been made on the launch structure.
He said brake-pad manufacturing capacity could be expanded relatively quickly and that the company already has the infrastructure to serve large North American customers. Joffe also said the potential working-capital requirements may be lower than expected, depending on the approach taken.
Rotating Electrical and Diagnostics
Motorcar Parts of America has substantial U.S. penetration in the rotating-electrical market, Joffe said, although he characterized the business as recently softer. He attributed some of the weakness to deferred repairs and a slower ramp in newly won business, while saying he expects replacement demand to recover because vehicles still require functioning starters and alternators.
The company operates remanufacturing facilities in Mexico and new-unit manufacturing operations in Malaysia, according to Joffe. He said the dual capability enables Motorcar Parts of America to address demand for both remanufactured and new products.
Joffe identified Mexico, Canada and broader international markets as a key longer-term opportunity for rotating electrical products. The company’s customers are expanding in Mexico and Canada, he said, and Motorcar Parts of America has seen success in those markets.
In diagnostics, Joffe said a tester business acquired about a decade ago has gained broad retail-store adoption, with roughly 70% of stores having committed or committing to carry the product. The company is also expanding diagnostic offerings in Mexico and Canada.
He said the company’s technology can test alternator communication protocols, which he described as important for newer vehicles. Motorcar Parts of America also relocated its heavy-duty rotating-electrical business from Canada to Mexico, a move Joffe said should generate operational synergies and support future diagnostic offerings for the heavy-duty market.
Costs, Tariffs and Capital Allocation
Joffe said the company has sought to mitigate tariff exposure through its Mexico and Malaysia manufacturing footprint. He said its Mexico operations are exempt under the U.S.-Mexico-Canada Agreement, while products made in Malaysia have been certified by U.S. Customs and Border Protection as made in Malaysia.
He also pointed to rising commodity costs, including copper, as an area where the company’s ability to use both new and remanufactured components could provide flexibility. The company is evaluating ways to optimize metals use and manage global scrap-material flows, he said.
On capital allocation, Joffe said organic growth investments, including the Centric opportunity, remain a priority. He added that share repurchases are part of the company’s ongoing capital-allocation discussion and said management views its low leverage as a positive in the current environment.
For the Centric brand specifically, Joffe said a strategic partnership could potentially accelerate the ramp, while a company-led rollout could produce a more gradual expansion. He estimated that a traditional rollout could initially represent at least $50 million of incremental opportunity, with a potential range up to $200 million over several years, though he stressed those outcomes remain dependent on decisions that have not yet been finalized.
About Motorcar Parts of America (NASDAQ:MPAA)
Motorcar Parts of America, Inc is an automotive parts manufacturer, remanufacturer and distributor serving the North American aftermarket. The company supplies replacement components for passenger vehicles, light trucks and other applications through automotive retailers, distributors, warehouse distributors and e-commerce channels.
Its product portfolio includes rotating electrical products such as alternators and starters, as well as wheel hub assemblies and a range of braking products.
