Bunnings heats up auto parts war as Bapcor profits plunge

The competitive landscape in the retail sector is undergoing a significant transformation as home improvement giant Bunnings ventures into the automotive accessories market.

The strategic move is adding considerable pressure on established players like Bapcor, challenging them to adapt and innovate in response to heightened competition.

Bapcor, the retailer behind Autobarn, Burson and Midas, has revised its fiscal 2025 statutory net profit forecast to between $31 million and $34 million, following a statutory loss of $158.3 million in 2024.

The company, a long-established operator of more than 1100 stores in the auto category whose roots stretch back to 1971, is grappling with a weaker-than-expected second-half trading period, particularly during the crucial months of May and June, where trade sales increased by only 1.4 per cent to $785.4 million, and specialist wholesale sales declined by 3.1 per cent, according to The Australian.

Retail sales have been particularly affected, in part due to threat from new competitors such as Bunnings.

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In March, the hardware giant unveiled its aggressive plan to capture a slice of the $1.5bn auto parts and products category by offering everything from oils, lubricants and cleaners to auto tools and accessories.

At the time, Bunnings boss Mike Schneider said the expanded offering would see Bunnings greatly broaden its currently limited range to 300 new auto products rolled out to more than 300 Bunnings stores in 2025.

“This is the start of something,” Mr Schneider memorably warned.

“We love competition. This is helping us understand how this resonates, but if it is anything like we’ve seen with other categories there’ll be auto 2.0 down the track with an even bigger range.”

Bunnings has announced it plans to expand its auto parts and products category by offering everything from oils, lubricants and cleaners to auto tools and accessories.

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Bunnings also unveiled plans in July to revolutionise the way Australians power their homes by offering a new subscription service that could make solar energy and battery storage accessible to everyone.

While Bapcor chief executive Angus McKay did not refer directly to Bunnings in his recent profit warning, he did refer to “competitor activity” as one of the reasons for poorer sales.

Citi analyst Sam Teeger told The Australian that he saw Bunnings as a major threat for Bapcor.

“Retail remains challenging noting lower spending on discretionary categories, competitor activity,” he said.

“Repco appears to be performing well and we have been concerned about Bunnings’s entry into the space.”