Private equity is eating up the car modding industry

This weekend, reports began circulating that renowned tuning house Hondatta has been acquired by Engineered Performance Technologies. It’s the same private equity-backed parent company that owns Cobb Tuning, Autometer, Accutec, and other big names in the world of car modding.

Hondata acquisition news

On Saturday, I found something like a leaked press release draft Honda Type R Parts Facebook Group Page stating, “Engineering Performance Technologies (EPT) is proud to announce the acquisition of Hondata Inc., a leading innovator of engineered software and hardware solutions for the Honda and Acura performance market.”

Funny what the real company is called EngineerNot engineering. Also strange is the fact that no official communication has been issued by Hondata or EPT themselves (I sent some notes, and will update this story if I hear back). So I’m thinking it’s a leaked draft. That said, it seems very specific to create for anyone. So I imagine that either someone shared the release before it even came out (the staff at Honda retailer HA Motorsports is on summer vacation for another week as I write this), or I read the AI-disabled version of the release that’s hidden on an industry-facing press wire page.

Anyway, if we’re deciding to take the release at face value, here’s what you’ll be interested in if you’re interested at all:

“This acquisition ensures that Hondata will have access to expanded corporate resources, state-of-the-art research facilities and deeper manufacturing capabilities. Customers, dealers and tuners can expect accelerated development of future platforms, CanFlex systems and next-generation software features, as well as the same specialized support they have relied on for years.”

So far, it looks like this will be an extension of business as usual, which will be great. Although whenever private equity gets involved in something, I get a little nervous. More on that later.

quick reference

Here’s a quick reference to fully appreciate today’s Hondata news:

Summer 2013, Avante Capital Partners (also known as Avante Mezzanine Partners) and Promus Equity Partners Purchased well-established car gauge company Autometer And started building his little aftermarket car-parts empire around it. Engineered Performance Technologies (EPT) Autometer came online as a corporate umbrella company to stand in as the parent and, soon, managed other brands in the region.

Autometer was actually already owned by another investment firm at the time, which had its own network of subsidiaries in the class (Stack, Ltd., Dedenbier Products, and ProParts LLC which made NASCAR’s Spec-Pro gauges).

In 2014, E.P.T. Cobb Tuning acquiredSubaru is known for computer tuning, but it now has applications for a huge range of cars. This gave EPT a foothold in the all-important world of ECU tuning.

A few years later, British ECU tuning outfit, Accutec, was also purchased, giving the parent company a foothold in Europe.

Last year, E.P.T. Chose PRL MotorsportsWhich makes hardware (intakes, intercoolers and other such things, mainly for Honda).

So, with all that in mind, it makes a lot of sense for this Engineered Performance Technologies unit to go after Hondata, a leading authority on Honda ECU tuning.

With this move, EPT has effectively created two parallel empires. In the Subaru camp, it has software (Cobb) and hardware (Grimspeed). Now, in the Honda/Acura camp, it has accomplished the same conundrum with software (Hondata) and hardware (PRL) Motorsports).

What’s next for the enthusiast aftermarket?

In the best-case scenario, Hondata gets a bump in cash investment and infrastructure, allowing the brand to expand its offering without reducing support for existing products. The worst case scenario is that the brand is drained of talent and continues to trade on name recognition as long as its new owners can squeeze money out of it. The reality will probably be a little of both.

As far as the car-modding business as a whole… it’s complicated.

flatiron tuning Recently hosted a podcast with Justin Grimm go ahead (formerly Grimspeed) and Dan Hurwitz Mach V Motorsports To discuss private equity in the automotive aftermarket. You can view it here:

Well, specifically, their conversation was about the consumer-facing performance aftermarket. (In auto industry parlance, “aftermarket” often describes non-name-brand replacement parts like brake pads, control arms, and sway bar end links that you pick up at your local auto parts store or on Amazon.)

Grimm is particularly well-versed in discussing this because his tuning company, GrimmSpeed, was almost sold to private investors in 2019 (it was spun off into an aggregator called Aftermarket Performance Group). Grimm was fired shortly afterward, and details of that situation emerged last year when he Reddit AMA.

Today’s edition of Grimspeed is owned byguess who, who same company We’re talking about the bulk of this story—EPT.

While the entire enthusiast-focused aftermarket is too big for any one investment firm to eat (for now), I think it’s fair to assume that this trend of consolidation will continue. Aftermarket parts companies are juicy snacks for PEs – they have a strong brand name, loyal customers, and corner-cutting opportunities (sorry, I mean cost-cutting) that a proud founder might overlook but a corporate overlord would be keen to exploit.

We’re still a long way from a car-enthusiast aftermarket owned by a money-squeezing megacorp, but I’m generally not into consolidation and corporatization. My concern is that fewer players in the space will lead to homogenous products, and ultimately, higher prices and poorer quality.

Hopefully Hondata keeps the good people in charge and continues the great work.