Overseas Business
Strengthening the Business Platform
The Company Group has positioned overseas business as a medium-to-long term earnings contributor. Adding to substantial business operations already established in France, the Company Group is moving forward with the construction of a business platform anchored by the ASEAN region, which continues to enjoy economic growth. Through capital and business alliances, and joint ventures, with leading local retail, service, and wholesale enterprises, we will expand earnings by implementing measures emphasizing speed, while limiting risk.
Strengthening Retailing and Services Business Earnings Power
Focusing on Developing Store Models for Local Markets and Improving Service Quality
For overseas AUTOBACS stores, earnings power will be strengthened by developing store models tailored to local customer segments and needs, while emphasizing fundamentals in the form of detailed product lines and maintenance services provided by installation pits.
In France, for example, where we are operating large stores, as in Japan, people tend to keep cars over long periods. Therefore, with the market in a mature stage, we aim to increase the gross margin by strengthening our e-commerce efforts and expanding service revenue. In contrast, however, in Thailand and Malaysia, were economic expansion is driving growth in automotive-related markets, raising brand awareness and working aggressively to gain new customers is key. In these markets, therefore, we are accelerating openings of small-scale stores in small market areas adjacent to a flagship store, with the goal of establishing area dominance. Offering Japanese-quality pit services is critical for the competitive differentiation necessary to establish the AUTOBACS brand. Toward that end, therefore, we aim to boost added value by, for example, building systems that include standardization and education for enhancing and maintaining quality, and offering an expanded range of pit services and compelling products.
Development of Wholesale Business
Expand Business Opportunities and Lower Costs by Strengthening Local Procurement of Parts and Automotive Goods
In recent years, our network expansion through alliances and business activities with local companies has led many local suppliers and retail and service businesses to approach us about wholesale purchases. Given this growth in wholesale business opportunities, the Company Group will use know-how developed in the domestic AUTOBACS business to establish and develop an overseas wholesale business. In taking this action, our higher aims will be to: 1) Develop an earnings source that does not rely on the speed of store openings in the retail and services business and 2) Increase the volume of goods we handle to lower merchandise unit costs and improve overall overseas earnings.
Regarding repair parts and consumables, we will move ahead with efforts to procure internationally competitive merchandise and apply the logistics resources of local partners. As for the wholesale of automotive goods such as tires, oil, and accessories, we aim to collaborate with a Chinese trading company (involved mainly in the export of goods to Japan) to develop private-brand products for local markets and to pursue actions such as procurement of products for exclusive sale. During the fiscal year ended March 2017, we entered into a capital and business alliance with the Kit Loong Group, a large tire wholesaler and retailer in Malaysia, to further our wholesale business. Going forward, we will continue to use capital and business alliances, and M&A, to achieve overseas business expansion.
Overseas Business Models
Achieving Dominance with Flagship and Small-Scale Stores
Having opened our first store in 2000, we established the subsidiary SIAM AUTOBACS in 2006 as a joint venture with a group of local companies, including the Saha Group, a major purveyor of consumer goods. In the capital, Bangkok, SIAM AUTOBACS operates a network of small-scale stores in small market areas adjacent to new residential areas and shopping malls. With its operations anchored by the Pattanakan flagship store, SIAM AUTOBACS differentiates itself by offering mainly maintenance goods but also Japanese-brand accessories. As of March 31, 2017, the company had a total of eight directly managed stores. Going forward, it plans to expand its store network to at least 10 locations to strengthen its dominance, and to begin wholesaling merchandise to local retailers.
Opening Stores That Appeal to the Affluent and Strengthening Wholesale Operations
AUTOBACS INDOMOBIL INDONESIA is a joint venture established in 2013 with the INDOMOBIL Group, a major player in the Indonesian market for automotive-related businesses. Under a sublicensing agreement with AUTOBACS INDOMOBIL INDONESIA, Salim Group, a major Indonesian retailing enterprise, opens and operates local AUTOBACS stores characterized by their small size and upscale atmosphere to appeal to an affluent customer segment. These stores, five in total as of March 31, 2017, included shopping mall locations offering automotive accessories. AUTOBACS INDOMOBIL INDONESIA is leading the development of a wholesale business in which it is handling not only Japanese-brand merchandise from AUTOBACS SEVEN but also popular automotive goods procured through the INDOMOBIL Group’s network. AUTOBACS INDOMOBIL INDONESIA is working to expand its wholesale business as it wholesales this merchandise to AUTOBACS stores and retail outlets operated by the Salim Group.
