AutoZone opened 16 mega hubs in its latest quarter and 39 this fiscal year, bringing its total to 172 as the auto parts retailer concentrates capital and network capacity on the U.S. and Mexico for fiscal 2027.

President and CEO Philip Daniele told analysts on a Sept. 22 earnings call that the company is deliberately slowing the pace of its Brazil expansion to focus on its domestic market. Supply chain investments started in 2020 are now in their final stages.

"We have completed the vast majority of the technology upgrades needed to accommodate a much more dynamic and global supply chain," Daniele said.

Distribution buildout complete

The U.S. distribution center expansion is finished, Daniele reported, with two new distribution facilities and two direct import facilities now operating. The figure marks the end of a multi-year infrastructure program that management credits with tangible commercial returns: in Q3, Daniele told analysts that supply chain strengthening drove an 8.4% year-over-year increase in sales.

CapEx for the year ran to roughly $1.5 billion, placed primarily toward store growth and hub and mega hub development. AutoZone expects a similar spend in FY 2027.

"We ultimately had to do some work in our supply chain to make sure we were able to service our base stores that we had and do that well and efficiently, and we needed to expand our supply chain to make sure that we could accommodate what we believe is the right strategy in new store growth," Daniele said.

The mega hub math

Mega hubs are the core of AutoZone's replenishment model. The facilities typically carry over 100,000 SKUs and serve as an expanded assortment source for surrounding stores. In 2024, the retailer targeted 200 hubs; it now aims to operate 300 mega hubs over the next three years.

"One of the reasons that we moved our targets from 75 to 110, and ultimately to 300 is that when we attach a mega hub to a satellite network, we see an acceleration, and it's a dynamic that we continue to see," CFO of Customer Satisfaction Jamere Jackson said on the call. "When you jam more parts in the local market closer to the customer, then to Phil's point, it drives sales."

The numbers back that claim. Approximately 2,000 commercial programs are linked to a mega hub network, and those programs sell 16% more annually than the balance of the commercial programs in the chain, Jackson said. AutoZone plans to open more than 40 mega hubs in FY 2027.

Mexico capacity doubles

South of the border, the network is also growing. AutoZone's new distribution center in Brazil is complete and already reducing supply chain costs, Daniele said. The Monterrey, Mexico, distribution center has doubled in size.

"We opened our new expanded Monterrey, Mexico, distribution center and broke ground on another planned DC in Mexico," Daniele said. "This expanded Mexico supply chain will allow us to serve our customers better, reduce supply chain costs and better support our international store growth."

For carriers and 3PLs serving the aftermarket retail sector, the implications are straightforward: AutoZone is consolidating more inventory into fewer, larger nodes positioned closer to end demand, which reshapes lane structures around hub-to-satellite replenishment moves rather than long-haul store deliveries.

Rival Advance Auto Parts pursues the same logic

AutoZone is not alone in rearchitecting distribution. Advance Auto Parts is nearing completion of its own distribution center consolidation, having reported progress on that overhaul earlier this year.

In August, the company said it would accelerate openings, planning up to 20 market hub locations this year. President and CEO Shane O'Kelly told analysts the retailer aims to operate 60 market hub locations by mid-2027.

The two chains' overlapping playbooks — fewer distribution points, denser local inventory, hub-fed satellite stores — signal where aftermarket freight demand is heading: shorter, more frequent replenishment cycles within regional networks.

With U.S. distribution expansion complete, technology upgrades largely done, and a matched $1.5 billion CapEx run-rate planned for FY 2027, AutoZone's next capacity moves will concentrate on mega hub openings above 40 per year and the new Mexico DC buildout.