Full Annual Report - Inchcape

Business review
Strategy
Group Chief Executive’s
strategic review continued
Resilient business model
We operate scale retail and distribution
businesses in 26 markets across the world
and are a leader in 14 of these. Our core
brand partners, with whom we have longstanding
relationships, have a history of
outperforming the market.Inchcape’s global
scale of operation is unique in our industry.
Our business model is further strengthened
by the Group’s broad geographic spread,
which embraces developed markets (like
Australia,the UK and other western European
countries together with powerful Asian
centres like Hong Kong and Singapore),
and emerging markets (such as Russia,
China and other central and eastern
European states) and is unequalled. Our
diversity has spread risk, as decline in some
markets has been balanced by strength
in others. It also gives us a vital presence
in those emerging markets where sales
potential is highest and which,in the fullness
of time, we believe will deliver the best
returns thanks to our efficient retail footprint.
We also match the demands and
opportunities in each territory with the
appropriate channel strategy.
In small to medium sized markets, we
predominantly operate as country
distributors, where we become the
custodian of brands like Toyota, Lexus and
Subaru to manage every step of the journey
between the factory and the end customer.
This demands our deep involvement with
our brand partners, as well as developing
local brand, marketing and sales strategies,
finance products, aftersales servicing, parts
and accessories, plus managing sales via
a mix of Inchcape-owned retail centres
and third-party independent dealerships.
In larger markets like the UK and Russia,
manufacturers use their own national sales
companies to distribute and appoint
independent dealers. In these markets, we
operate a retail service that is increasingly
focused on bigger, better sites that deliver
an enhanced customer experience and
provide scale volume for our sales and
aftersales activities, including servicing,
parts and accessories.
In the city state markets of Hong Kong
and Singapore and a number of central
European states, we operate a ‘vertically
integrated retail’ (VIR) model where we
are both the distributor and the exclusive
retailer, enabling us to deliver heightened
efficiencies and strong margins through
our management of the entire value chain.
Inchcape has a mix of growth and
defensive value drivers, which gives the
Group a diversity of revenue streams. Our
growth drivers are new and used vehicle
sales together with associated finance
and insurance products, which are
particularly important to facilitate the sales
process. Defensive drivers are our resilient
parts and aftersales servicing businesses,
which in 2009 represented approximately
50% of our Group gross margin.
We are in close partnership with many
of the best known and most respected
automotive brands in the world.These are
strong, innovative brands that outperform
and lead the market based on years of
investment, to create deep customer
relationships through constant technological
advance and continuous improvement.
1
Resilient
business
model
Our business model
enables growth,
spreads risk,and
delivers resilience.
It is fundamental
to our position as
a global leader.
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Inchcape plc ¦ Annual Report and Accounts 2009