(first posted 4/24/2017, updated and expanded over the years. Much to my surprise, this article is often the top non-paid Google search result for JC Whitney. I am humbled and honored to be able to contribute my small experiences to the JC Whitney legacy.)
Regular readers of my Cars of a Lifetime series will know by now that I spent some time working for JC Whitney at the corporate headquarters in Chicago. Given how deeply this brand is ingrained with US car culture, I figured I would share my unique insider’s perspective on the company, especially in its final years.
While I normally dislike quoting Wikipedia in my posts, I will take some liberties here, since part of the Wikipedia article on JC Whitney was authored by yours truly. JC Whitney began as a scrap metal yard on Chicago’s south side, formed by Lithuanian immigrant Israel Warshawsky, who came to the US to escape religious persecution. Warshawsky named the company JC Whitney in order to give the company a less foreign-sounding name.
While Israel did alright for himself, things really started to pick up when his son Roy Warshawsky joined the business in 1934. Possibly inspired by the success of fellow Chicago mail-order giant Sears and Roebuck, it was Roy’s idea to expand the business beyond Chicago by entering the burgeoning mail-order catalog business.
Initially, he started promoting the business with classified ads in magazines like Popular Science and Popular Mechanics. Many of these ads are available in the magazine archives at Google Books, which I’ve sprinkled throughout my post.
The business really hit its stride in the 1950s. The ads eventually blossomed from 4 liners in the classified section to full-page spreads. With the widespread distribution of its now iconic catalog, JC Whitney was well on its way to becoming an institution.
Ah, the JC Whitney catalog: The pulp paper, the dense pages with tiny print, the minimalist line drawings. It is an interesting window into the automotive zeitgeist of the 1950s and 1960s. These decades marked the heyday of JC Whitney.
At the time, JC Whitney still sold a lot of what we would later call “hard parts.” These are typically replacement items like alternators, brakes, body panels, and even complete engines, as shown in the ad above. Almost always made of steel or iron, hard parts are expensive to ship, and have a relatively low profit margin.
But of course, it is not the hard parts that made JC Whitney famous, but rather all those wild, wacky accessories. Unlike hard parts, accessories are cheap to make, buy, and ship, and in later years were manufactured inexpensively in China. Some of our most profitable accessories had gross selling margins upwards of 50%, and sometimes more.
Whether these gimmicks worked or not was almost beside the point. I’m sure deep down not many people expected paint on whitewalls to look as good and last as long as the real thing. They were selling the dream that Joe Lunchpail could have whitewall tires just like his snooty neighbors.
Whenever manufacturers added new styling, technology, or safety features, JC Whitney was always right behind to give wannabes in older rides the new car look, whether it is the 1958-style quad-headlight look for your 1957 car, or a third brakelight for your pre-1986 ride.
With their eclectic product mix and low-budget outré, JC Whitney had something for everyone, and was able to bridge several otherwise non-overlapping automotive subgenres:
- The hardscrabble, down on their luck kinds, who need to keep their jalopy running with minimal cash outlay. After all, who else would need a VW hand starter?
- Those who wanted to accessorize their car with styling cues and features of more expensive cars.
- Those who wanted to individualize and customize their cars.
All were welcome under the JC Whitney tent. Income inequality? Not here. At JC Whitney, everyone can have a third brakelight or continental kit on their car.
And so it went, for several decades. By the 1970s, cracks were beginning to show in the facade, as the combined forces of rising gas prices, primitive electronics, and emissions controls began to conspire to make it more difficult for the average owner to work on their car, a trend that continues into the present day. Indeed, while researching this article, I discovered that JC Whitney filed for Chapter XI bankruptcy in 1979, a fact not well-known even to the employees of the company. Obviously, they were able to successfully reorganize their debt, but these were the first hints of trouble.
By the 1980s and 1990s, the lower-margin hard parts began to disappear from the catalogs, replaced by an increasingly chintzy assortment of cheap (but profitable) Chinese-made accessories, as the ad from 1992 above indicates. The tiny print and homespun line art was still there, but many of the products were now useless junk.
Roy Warshawsky retired from the business in 1991 and died in 1997. Roy’s last surviving sister sold the company in 2002 to The Riverside Company, a private equity investment firm. At this point, JC Whitney was no longer a family-owned company, but for the time being, was still Chicago-based. Although details of the transaction were never made public, informed speculation around the office was that the sale was for somewhere around the $60 million figure, for what that the time was a company with $170 million in sales. This was already down from peak sales volumes north of $200MM in the ’90s.
In 2006, Riverside made one last-ditch effort to revitalize the business. Riverside acquired my employer, truck accessory catalog company Stylin Concepts, and shoved us together in a shotgun marriage.
Riverside had correctly identified that the automotive aftermarket business was ripe for consolidation and figured that JC Whitney would be the instrument for that consolidation. Towards that end, they created Whitney Automotive Group as a kind of parent holding company, with an eye toward other acquisitions and brand expansion. Riverside brought in a young, hotshot executive from Dell to boost our eCommerce street cred, and created a new vice-president of M&A (merger and acquisition) position. We moved into fancy new digs on the top floor at the corner of Michigan and Wacker Drive, right at the doorstep of Chicago’s Magnificent Mile. In an effort to give the place a startup vibe, the dress code was relaxed to jeans, and the de rigueur foosball table placed in the lobby along with a video wall.
Roy was long gone by the time I joined the company, but his legacy was everywhere. Portions of his collection of antique gas pump globes and other automobilia still decorated the office, along with pictures of some of the cars from his large personal collection of cars (with a particular fondness for 30’s luxury brands, including a V-16 Cadillac once owned by the King of Denmark). The conference room that housed most of these items was still called “Roy’s Garage.”
We had all kinds of great ideas, many of which were long-term bets that may have eventually paid off had we been able to wait it out. Among them:
- Install Pro – While Whitney long catered to the DIY (Do It Yourself) market, we thought we could carve out a new niche in the DIFM market (Do It For Me). We set up a network of installation shops (similar to what Tire Rack does), where the customer could pay for installation along with the product, and we would ship the parts directly to the installer. A good idea, but we weren’t able to put enough effort into it to assemble a large enough network of installers, nor were we able to market it properly.
- carparts.com – JC Whitney’s business was constantly under assault by what we called “ankle-biters” – small fly-by-night companies with a search engine optimized online storefront and not much else: No inventory (strictly drop ship), no customer service, no catalogs, and (most importantly) none of our fixed costs. Carparts.com was our attempt to create a no-frills website in the same vein that could compete on price with the ankle biters. In exchange for bargain basement prices, it had no phone number and outrageous restocking fees for returns. It also made very little money.
- Sears at the time was trying to fashion itself into an eCommerce portal similar to Amazon, so we entered into a co-marketing agreement where we would create and maintain the auto parts portal on sears.com, and we would handle the fulfillment. In return, it seems, Sears got most of the profits, and we just got some contribution dollars to fixed costs.
- We spent enormous sums of energy looking at many potential business acquisitions, ultimately without consummating a single deal.
Readers of this site will be well familiar with the concept of a flywheel. A similar concept applies to the core business of any company, which in Whitney’s case was its core auto accessory business. A flywheel can take a tremendous amount of effort to get spinning, but once it gets going, momentum will keep it spinning cash with little to no investment for seemingly forever. But alas, flywheels eventually slow down, and so it was with JC Whitney’s. With all these efforts spent towards growing and expanding the business, the core business was withering away due to inattention faster than the new business opportunities were growing.
A funny thing happened on the road to recovery in 2008: The financial collapse that sparked the Great Recession intervened. Credit became non-existent, effectively killing any M&A activity. Worse, we were trying to reposition JC Whitney upmarket (with carparts.com moving in towards the bottom end) at the worst possible time. Remember the companies that were doing well between 2008 and 2010? Low-end consumer companies like McDonald’s and Walmart. With JC Whitney, we had a brand name synonymous with cheapness, and instead of capitalizing on it, we were running away from it.
About that brand: Major companies spend millions of dollars promoting their brand, keeping it top of consumers’ minds. JC Whitney, on the other hand, spent virtually nothing on branding, and as a result, it was quickly becoming an aging brand among the likes of Ovaltine or Prell. People kind of vaguely knew about JC Whitney, but it didn’t really resonate anymore. Indeed, the most common reaction I got from people when I told them I worked at JC Whitney fell into two categories: “My Dad used to buy from you,” and “You guys are still around?” Not the kind of word association you want for your brand.
Over the next few years, the core JC Whitney business continued to founder. Customers continued to age and die out of our mailing list (whose average age was in their 50s). Sales continued to spiral downward to around the $120 million mark, as a whole new generation of buyers who had never heard of JC Whitey went to places like eBay, Amazon, and Google for their parts.
It is said that the only thing harder than managing growth in a business is managing decline. We were shrinking towards being a $100 million business, but we still had the cost structure of a $250 million business. We couldn’t reduce our costs fast enough, so we ended up piling on debt. We were leveraged to the hilt: We borrowed against every asset we had, and had gotten to the point where we were essentially financing the business on the backs of our vendors. As we continued to delay payments to our suppliers, it had gotten to the point where some were refusing to sell us products or extend us any more credit. Everyone knew that the end was near.
At this point (around the summer of 2010), Riverside announced to the world that they were shopping for a buyer for WAG. Our ideal outcome would be an “angel investor” who would be willing to make the necessary investments to revive our moribund brand for the 21st century. Our worst case would be a competitor who would shut us down and strip us of our two main assets – our brand and our customer list.
While we had numerous potential suitors come through our doors (including most of the major brick-and-mortar auto parts resellers), in the end, the outcome was the worst-case scenario I outlined above. Rival competitor US Auto Parts ended up acquiring Whitney Automotive Group (along with all its debts) for $27.5 million on August 17, 2010. I thought this was a good price; more, actually, than I thought what was essentially a break-even business was worth by the time you subtracted all the liabilities.
Once the deal closed, USAP moved quickly to reduce headcount, including the entire WAG executive team. I was one of the lucky ones (along with most of my IT team), who got to spend the next seven or eight months winding down the Cleveland and Chicago offices, and migrating all the JCW systems over to USAP’s platform. I must give credit to US Auto Parts for how they handled the acquisition. I always felt like an active participant in the integration, and not just watching from the sidelines. They handled everything very professionally and made sure I was taken care of with a decent severance package.
US Auto Parts is not the villain of this piece, however. Whitney’s wounds were self-inflicted, and USAP was just there to scoop up the pieces. USAP paid a heavy price for their purchase: Whitney was in much worse shape than the brief discovery period before the sale closed allowed them to fully realize. Their stock has been stagnant for the past seven years, and they are only now returning to profitability.
As I insinuated at the beginning of this article, JC Whitney still exists today, but only as a storefront for US Auto Parts. Other than the name, there is no longer any connection to the Chicago-based company founded by Israel Warshawsky 102 years ago. The Chicago office is long gone, although the distribution center in La Salle still exists, along with the outlet store, they are both owned by US Auto Parts. The general print catalog, which was an enormous marketing expense, is mostly a thing of the past. Only two specialty books still exist, and they are for the largest and most profitable segments: Jeep and Truck. All the other specialty catalogs (Classic VW, Motorcycle, Auto) are long gone.
July 16, 2020: US Auto Parts Network (now rebranded as CarParts.com) announced that it is shutting down the jcwhitney.com website and that it has ceased all print catalog publication. JC Whitney will live on only as a private label brand for some (presumably cheap) CarParts.com auto accessories.
October 2023: Jcwhitney.com is reborn as an automotive lifestyle blog with search engine-friendly content designed to funnel clicks back into carparts.com. While the print catalogs are still gone (likely never to return), they are, somewhat curiously, offering a print magazine for those who still wish to consume JC Whitney in physical form.