Loxley JV with Japan firm for fast car-repair franchise
LOXLEY WILL sign a joint-venture agreement by the end of this month with Car Conveni Club, a Japanese automobile-repair company, to launch a franchise network in Thailand, said a senior executive.
Suraphand Bhasitnirandr, Loxley senior vice president and a member of its board, said the Thai conglomerate would hold 51 per cent of the joint venture, while Car Conveni would have 40 per cent and KP Group, a major automotive concern in Laos, would hold the rest.
The joint venture sets its sights on modernising the Thai auto-repair business with Car Conveni’s unique business proposition of providing same-day service for minor jobs.
“Small fixes, fast fixes, are what Car Conveni offers at its 800 branches throughout Japan,” he said.
The joint-venture firm, whose name is yet to be disclosed, plans to sell franchises to 200-300 garages throughout Thailand within five years. The first flagship garage will be opened within nine months, Suraphand said.
Each new franchised garage will require an investment of between Bt30 million and Bt50 million, but upgrading old garages into the new format will cost less, he said.
The venture with Car Conveni is part of Loxley’s strategy to grow its automotive aftermarket business. It earlier formed a joint venture with three Thai businessmen to run Parts Zone, which distributes machine tools and spare parts for leading brands such as Federal-Mogul.
Parts Zone recently won its first order from PTT, valued at Bt20 million, which plans to open FIT Auto Centers, a one-stop car-care service, at 100 PTT service stations within three years. Another client is PTG Energy, which also plans to enter the automobile quick-service business.
The Car Conveni venture will leverage on Parts Zone’s customer base of 3,000-4,000 garages nationwide as well as on Loxley’s close partnership with Thai Insurance, which has demand for the kind of quick repair services that Car Conveni can provide at reasonable prices.
Meanwhile, Suraphand said Loxley aimed to increase annual revenue from its Trading Business Group (TBG) by at least 15 per cent in each of the next three years. It aims to double the “recurring revenue” of its trading business from Bt3.3 billion to Bt5 billion within the same period.
TBG’s average revenue during the past three years was about Bt4.1 billion, of which Bt3.3 billion is defined as “recurring revenue”, since it is derived from key accounts that have provided consistent revenue steams to Loxley for a long period - such as Kook vegetable oil, Green Nut, Sealect canned tuna and Nong Pho milk.
The trading business contributes about 27 per cent of Loxley’s annual revenue, totalling Bt15 billion last year, second only to the ICT (information and communications technology) and project business that contributes about 65 per cent.
To increase recurring revenue and survive the margin squeeze forced by modern-trade retailers, Loxley has altered its strategy to focus on developing its own brands, products and factories, rather than just distributing products for ether companies.
It has started developing some consumer products under its own brands and is looking to acquire stakes in factories.
