Overview

Inchcape plc (INCH) is the global distribution and retail leader in the premium and luxury automotive sectors. Company has a vision to be the world’s most trusted automotive distributor and retailer.

Inchcape is present in 32 national markets and operate as a key strategic partner to the world’s foremost premium and luxury car brands for whom the company provide an effective, well-financed and customer centered route to market for vehicles and parts. The company operate across every link of the post-factory automotive value chain for its OEM partners, providing a highly efficient, customer-focused route to market that delivers shared rewards at every stage.

Strategy

Inchcape’s strategy is built around its Vision to become the world’s most trusted automotive Distributor and Retailer1

Lead in customer experience

As the global automotive industry rapidly evolves, the purchasing behaviour and service-level expectations of consumers are clearly changing. The company will invest to maintain its position as leader in customer service innovation in automotive Distribution and Retail, with digital a key priority.

Become the OEM partner of choice

Inchcape has a very strong portfolio of brands. The company now need to build on its OEM partnerships to ensure that the company thoroughly deserve to achieve the status of ‘partner of choice’ across all its relationships, and then to robustly defend that position.

Deliver the full potential of all revenue stream

The addressable market for Aftersales is set to grow faster than New car sales. The Used car market, which is typically a multiple of that of New cars in most of its territories, is a further growth opportunity. Finance and Insurance (F&I) is another significant focus for growth.

Leverage global scale

The company aim to maximise the opportunity of its unique position in the automotive industry to share more expertise and best practice across its organisation, leveraging its global scale to improve collaborative working and cost optimisation.

Invest to accelerate growth

The automotive Distribution and Retail markets are highly fragmented; the company apply a disciplined use of capital to fuel further growth through selective participation in market consolidation.

Business Model

The company's business model brings together its core strengths that enables it to leverage its unique proposition in attractive, growing markets2

Strong global position

Inchcape has strong positions in 32 countries around the world. The company's global portfolio is a fundamental strength of the Group, with a healthy balance between developed economies and emerging markets. Inchcape has a leading presence with its high-margin, capital-light distribution model in small, medium and emerging markets where Inchcape has secured strong positions with its marketing expertise, customer-centric approach and technical capabilities. This is complimented by its scale retail presence in medium and large markets with its strong portfolio of premium brands.

Strong in Asia Pacific, Selective in Emerging Markets, Scale in Developed Markets

Leading OEM brad partnership

Inchcape has strong and long-standing relationships with the world’s leading OEM (Original Equipment Manufacturer) groups. These OEMs are the world’s main drivers of automotive innovation, new fuel technologies, powertrain developments, safety breakthroughs and cutting edge engineering. The company's partnerships provide it with an attractive line-up of models across the world. And by consistently focusing on the core needs of its OEM partners, the company seek to build and deliver ever-deeper relationships, outstanding brand representation and strength in market share.

Long-standing relationships with the world’s leading OEM groups

Distinct routes to markets

Market size, potential and dynamics determine the specific operating model the company employ from country to country.

In small and medium sized markets, as exclusive Distributor, the company manage the entire value chain post the factory gate for its OEM partners. Inchcape is the OEM’s brand custodian in these countries, responsible for everything from importing vehicles and parts to all sales and marketing activities, including the appointment and management of the third party retail network. In larger, more developed markets, such as the UK, the company operate its Retail model, with a focus on delivering a superior customer experience online and in its retail and service centres.

Diversified revenue streams

Five distinct value drivers support Inchcape’s revenue and profit performance throughout the economic cycle.

The company leverage opportunities from the New car market by selling New vehicles, Finance and Insurance products. And the company simultaneously take advantage of the defensiveness of the growing global Car Parc (the total number of cars on the road) through Used vehicle sales, Aftersales Servicing and Parts. Maintaining this balance prepares it well to respond to the full array of different market conditions and trends at play in all its local markets across the world.

Business Overview

The company operate across every link of the post-factory automotive value chain for its OEM partners, providing a highly efficient customer-focused route to market that delivers shared rewards at every stage.3

Product planning and logistics

The company's in-depth knowledge of local markets, customer preferences and trends enables its OEM partners to benefit from its insights and understanding throughout the entire planning process.

Product specification

The company work closely with its OEM partners for several years before a new model is launched, providing clarity throughout the planning process as its view of market pricing, local fit requirements and sales volumes gains precision.

Import and logistics

The company's global oversight of distribution by land or sea, allied with comprehensive local port or border-to-showroom capabilities, removes all logistical burdens from its partners.

Brand management

Under its Distribution model, the company take on total responsibility for its OEM partners’ brands, marketing and sales operations in its local markets – the company handle every aspect of the customer interface from appointing and managing the dealer network to advertising and social media management.

Appoint and manage the dealer network

Where the company operate as a Distributor, the company select and appoint an independent dealer network that has the best fit with its partners' brands; training and managing them to meet the demanding standards of its customer-focused ethos. Further, the company typically own and operate 15-20% of the network itself .

National marketing and price positioning

Inchcape is scrupulous in projecting its partners’ brand values and personality in all local marketing and communications support, refining messages where necessary to maximise positive impact in specific markets. The company's approach to price positioning is based on in-depth knowledge of market trends and competitor pricing.

New and used car retailing

The Inchcape approach to retailing revolves around creating and managing customer life-cycles. Following initial engagement, through digital and physical channels, the company seek to create long-term ongoing relationships involving multiple New and Used car sales.

Vehicle sales

The company aim to provide the best New and Used car buying experience in its retail centres across the world. The company's people have a depth of expertise and a wealth of product knowledge to ensure the company can deliver on this aim.

Customer engagement and retention

After initial customer engagement, the company aim to deepen relationships via a wide range of sophisticated retail techniques including tailored social media campaigns, loyalty strategies, rapid web response, opportunities with affinity partners and more.

vehicle finance and insurance

Close relationships with financial services businesses across the world mean the company can provide customers with attractive, transparent means of vehicle financing.

Aftersales

The company's commitment is to never undertake service work without its customers’ prior agreement. This, together with its investment in state-of-the-art facilities and expertise of its highly trained technicians, ensures the company become the first choice for Aftersales care.

Servicing

The company's ultimate focus is on getting it right first time, every time – from the quality of a routine service to fixing a problem, this is the most certain way of retaining its customers and best representing its partners’ brands.

Parts

The company's strong OEM relationships and specialist wholesale capabilities make Inchcape the preferred provider of high-quality, genuine parts and accessories.

Brand partners

Inchcape has long-standing partnerships with the world’s leading automotive OEM groups.4

These valued partnerships allows for a consistently robust product line-up across the Group.

The company have seven core partnerships

  • TOYOTA MOTOR CORPORATION
  • JAGUAR LAND ROVER LIMITED
  • SUZUKI
  • MERCEDES-BENZ RETAIL GROUP
  • VOLKSWAGEN GROUP
  • BMW GROUP
  • SUBARU

Recent development

On January 22 nd 2020.  Inchcape plc has agreed to acquire Daimler’s Mercedes-Benz passenger car and private vans distribution operations in Colombia, currently operated by Daimler Colombia S.A. The transaction enterprise value, which is undisclosed, represents approximately 8x 2019E EV/EBIT. This follows the announcement made on 7th November 2019 that Inchcape has agreed to acquire Autolider, the distributor of certain Daimler brands such as Mercedes-Benz passenger and commercial vehicles, Freightliner and Fuso in Uruguay and Mercedes-Benz passenger and commercial vehicles in Ecuador. The purchase of these businesses represents a strategic transformation of Inchcape’s partnership with Daimler to include distribution contracts after a 30-year Retail-only partnership, a further milestone for Inchcape’s OEM Partner of Choice strategy. Together these acquisitions have enabled us to create a scale regional platform with Daimler.5

In Colombia, where Inchcape has operated since 2016, Inchcape will become the Mercedes-Benz distributor of passenger cars and private vans, adding to its Subaru, Hino and JLR operations. This acquisition further enhances the LatAm platform which has grown from operating BMW in two markets to now representing BMW, Mercedes-Benz, Hino, Subaru, Suzuki and JLR, as well as Freightliner, Fuso and a range of Chinese OEMs, in eight markets across the region.

This acquisition represents Inchcape’s 12th Distribution business win since 2016 and highlights the compelling proposition Inchcape can provide to OEM partners. It follows the Retail-only disposals announced this year which will generate c.£250m of proceeds on completion. The focus on our core Distribution capabilities and the disciplined allocation of capital are consistent with Inchcape’s strategy of long-term sustainable growth.

Earlier on November 7, 2019 Inchcape plc has acquire Autolider, a distributor of Daimler brands, for £47m. Autolider is the distributor of Mercedes-Benz passenger and commercial vehicles in both Uruguay and Ecuador. Autolider is also the distributor of Daimler’s Freightliner and Fuso brands in Uruguay.6

Transaction highlights

Builds further on the recently strengthened Latin America platform, adding Uruguay and Ecuador; brings Inchcape to six new LatAm markets entered since 2016 and a meaningful increase in strategic OEMs represented in the region to six, in addition to emerging OEMs

Acquisition represents Inchcape’s first Distribution contracts with Daimler brands, after more than 30 years of Mercedes-Benz partnership in Retail-only markets

Consistent with focus on core Distribution capabilities and on the disciplined re-allocation of capital; follows the recent disposals of less strategic Retail-only assets which will generate c.£250m on completion

A milestone for two pillars of the Ignite strategy - OEM partner of choice and investing to accelerate growth

Investor Presentation

https://www.inchcape.com/content/dam/inchcape/corporate/investors-and-media/InvestmentProposition/CMD%20summary%20presentation%20(2019-03-21).pdf

References

  1. ^ https://www.inchcape.com/en/who-we-are/our-strategy.html
  2. ^ https://www.inchcape.com/en/who-we-are/our-business-model.html
  3. ^ https://www.inchcape.com/en/what-we-do/our-value-chain.html
  4. ^ https://www.inchcape.com/en/what-we-do/our-brand-partners.html
  5. ^ https://www.inchcape.com/en/investors-and-media/news/inchcape-news/2020/acquisition-of-mercedes-benz-passenger-car-and-private-vans-distribution-in-colombia.html
  6. ^ https://www.inchcape.com/en/investors-and-media/news/inchcape-news/2019/acquisition-of-mercedes-benz-distributor-in-uruguay-and-ecuador.html
Tags: UK:INCH
Created by Asif F on 2020/01/27 16:54
     
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