Koh Ching Hong Managing Director South Asia David Colwell

Koh Ching Hong
Managing Director
South Asia
David Colwell
Finance Director
South Asia
Market Overview
Population
4.8 million
Language
English, Malay,
Chinese, Tamil
Currency
Singapore Dollar
Capital City
Singapore
GDP
US$195 billion
Singapore has established itself as a major hub in Asia
Source: IIMF
Commercial Overview
Growing economy
Stable political environment
Western style legal system and business
environment
Long term policy focus
Regional trading hub with
strong growth prospects
Benefits from Asia-Pacific economic development
MNCs from Europe, India, US, China have set-up
regional HQ. Continued influx of ex-pats
Strong household and
sovereign savings
Quick rebound from GFC
Well capitalised and regulated banking segment
Low sovereign risk (AAA rating on govt. debt)
Significant investment in
premium retail
Continued expansion of premium retail sector
GDP per capita CAGR of 6.8%
Opening of two casinos has accelerated retail
demand
5.2m people expected to reach 6.0m by 2020
Highest rate of home ownership in the world
High population growth,
high density living
2005-2010
2010-2015
GDP growth (CAGR)
12.2%
6.5%
Population (CAGR)
3.3%
1.7%
Unemployment rate
<3.0%
<3.0%
Inflation
<3.0%
<3.0%
Singapore has a good economic outlook which supports increased vehicle demand
Source: IMF
Automotive Overview
Limited land area
Major government investment in public infrastructure,
£20bn by 2020
Vehicle
congestion
controlled by
government policy
Certificate of Entitlement (COE) required to register a car
Government policy is to increase car parc by 1.5% per year
(2009-2011)
High car costs
Taxes and Duties amount to 127%
Purchased COE is a 10-year licence
Vehicles are 3 times more expensive than UK
Interest rates are benign, 10-year financing
Environmental
policies are
becoming more
important
40% tax rebate for hybrid and CNG vehicles
Tax premium charged for diesel vehicles (due to NOx
particulates)
Vehicle CO2 emissions has an increasing focus
Current policy expires 2012
Singapore vehicle market is heavily regulated
Source: LTA
Business Model
Vertically Integrated Retailer
Service
Sole importer and retailer for:
Toyota since 1967
Lexus since 1992
Suzuki since 1977
Hino since 2006
Market leader since 2002
Largest Aftersales network
8 sites
Service
Service
Service
Showroom/Service
Parts
Delivery PDI
Showroom
Service
Showroom
Service
B&P
B&P
Employees: 660
Inchcape has the best geographical coverage with sites in key locations
2000–2006: Strong growth driven by government
incentives
000’ vehicles
2000 to 2006 CAGR growth 8.2%
8
6
Total Industry Volume (TIV)
Average Age of Car (Years)
5
4
3
2
1
0
Car parc was refreshed with average vehicle age of 3.5 years
Source: Inchcape estimates
Ave Car Age (in Years)
7
2007 – 2011: Ageing of the Car Parc
000’ vehicles
Total Industry Volume (TIV)
8
Average Age of Car (Years)
7
6
5
4
3
2
1
0
TIV falling due to delay in 1-for-1 replacement cycle
Source: Inchcape estimates
Ave Car Age (in Years)
2007 to 2011 CAGR growth –21.9%
Luxury and Premium segments are outperforming
Inchcape well positioned to take advantage of growth in premium and luxury markets
Our top 5 Priorities
Growing
market
share
Improving
margin
Growing
aftersales
Controlling
working
capital
Selective
capital
expenditure
Operational focus on our top 5 priorities to deliver our
Customer 1st strategy
Mix focus on stronger segments
Growing
market
share
Cutting edge innovation to accelerate repeat
sales
Optimise the Lexus/Toyota Hybrid advantage
Strengthening VFM proposition through
differentiated specifications
Traffic
Leads/Traffic
Test drives/Traffic
Order/ Traffic
New product introductions, Model life cycle
management
Programs developed for growing
‘out of warranty’ segment
Growing
aftersales
Loyalty programs including extended warranty
to grow retention
Enquiries
Booking/Enquiry
Intakes/Enquiry
Broadening the product portfolio to grow sales
per visit
Innovation and operational discipline to grow revenues ahead of the competition
Operational focus on our top 5 priorities to deliver our
Customer 1st strategy
Improving
margin
Controlling
working
capital
Selective
capital
expenditure
Focus on quality of revenues to leverage the market shift towards premium and
luxury segments
Tight gross margin management with upsell / mix management on each value
driver
Restructured the cost base to reduce headcount by 20% and total costs by £6m
since 2007
Proven processes in place to manage supply chain effectively
Daily focus on aged stock over 3 months and debtors collection
Closed non-customer facing pre-delivery and storage yards and consolidated
two delivery centres
Limited to necessary replacement items
Continuing to deliver high returns through disciplined margin management and cost control
Programmes developed for the ageing car parc
have enabled us to increase Aftersales contribution
Strengthening
VFM proposition
Model mix
management
Introduced grading strategy to increase number of variants
Differentiated warranty/service/loyalty offering
Marketing calendar focused on value-added promotions
Broadening segment coverage with new models; Suzuki Kizashi; Toyota Crown, Toyota
Camry Hybrid
Deepen segment penetration with new variants; Lexus RX270, Toyota Wish 1.8
Refresh model line-up with special editions; Corolla (Altis) Elegance; Fortuner TRD
Focus on improving segment share of higher margins premium models
Suzuki Kizashi
Toyota Crown
Camry Hybrid
Lexus RX 270
Toyota Wish
Programmes developed for the ageing car parc
have enabled us to increase Aftersales contribution
Membership
benefits
First impression lasts
Extended warranty differentiates the ownership experience
Competitively price standard servicing to maximise retention
Body care program to look after vehicle appearance
Product
innovations
Customer
contact activities
Toyota Shield
Body care express provides repair services as part of our preferred insurance program
Value buys are a range Engine flush, Fuel treatment, Engine Protector and Nano-Detox
treatments
Strong focus on outbound service bookings
Comprehensive customer contact programs to maximise retention
Move from Km-based servicing to time-based
Toyota Shine
Body Care Express
Value Buys
Service Centres
2012 – 2015: Road to Recovery
000’ vehicles
Certificate of Entitlement (COE) has 10-year life span
After 10 years, customer must renew their COE or scrap the car
2012-2015 CAGR 25.1%
8
ry
ve
o
c
t re
e
rk
Ma
Total Industry Volume
(TIV)
Average Age of Car
(Years)
6
5
4
3
2
1
0
Market recovery attributable to COE 10-year life span
Source: Inchcape estimates
Ave Car Age (in Years)
7
2012 – 2015: Road to Recovery
Trend
Inchcape
Demand for premium and luxury car models
have increased as the population becomes
more affluent (in the context of rising vehicle
prices)
Widest range of premium and luxury
models, covering hatch, sedan, SUV &
MPV segments
Tax incentive in the form of “Green Vehicle
Tax” rebate of 40% helps to encourage /
incentivise “Environment-Friendly” vehicle
purchases
The largest supplier through its Hybrid and
CNG model range, covering both mass
market and luxury segments
Rising vehicle costs and large families has
increased demand for people-mover models
Inchcape has the widest range of peoplemover models, covering mass, premium &
luxury segments.
Singapore government is encouraging
consumers to use public transport instead of
owning a private vehicle
Range of Hybrid and CNG models
available to taxi operators. Continue to
explore new models. # 1 player in the
small bus segment
New Product Launches
LEXUS CT200h
SUZUKI Swift
TOYOTA Camry / Hybrid
TOYOTA Wish
LEXUS GS / Hybrid
LEXUS RX / Hybrid
TOYOTA Corolla Altis
TOYOTA Vios
Increasing demand for green technology
Inchcape brand partners leading their competitors with Hybrid Technology
Growing Aftersales
Trend
Inchcape
Ageing car parc will prompt consumers to
prolong vehicle’s lifespan by utilising
genuine parts and service
Inchcape has developed a range of
membership packages for the ‘Out of
Warranty’ segment where the benefits
increase as the car ages, on the condition
all scheduled servicing is completed
Convenience of Service Centre locations
is an important factor for consumer
choice
Inchcape has the most extensive network
of 8 repair centres strategically located
throughout the island
Vehicles are being purchased by more
affluent customers who will look after
their purchases
Inchcape offers one-stop aftersales
experience and a broad product offering
including bodyshop and spa services to
increase retention and revenue per visit
Selective Capital Investments
Refresh customer facing facilities
Expanded Toyota and Lexus
showroom to allow new model
introductions
Relocate Suzuki showroom to ‘motor
strip’ on Leng Kee Road
Economical investment to accommodate broadening model line-up
Inchcape Singapore
Market recovery will be driven by the 10-year COE expiry
Well positioned to leverage lower cost base as the market grows: business
restructured to operate on lower cost base with lower working capital
Strong Toyota / Lexus product pipeline to grow revenues
Differentiated Inchcape Advantage operational discipline to grow revenue
ahead of competition
Proven business model with significant profit and cash generation delivering
high returns
Strongly positioned to take advantage of market turnaround