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Inchcape puts focus on retail and new markets

Inchcape is looking to rapidly expand its retail presence in new markets, particularly eastern Europe and the Far East, with global partners like Toyota/Lexus, Subaru, Mercedes-Benz and BMW.

It is likely to continue using its distributorship business to gain a foothold in new markets prior to opening dealerships.

The group already has strategies in place for Russia and China, and in 2007 will carry out a systematic assessment of additional opportunities, both in developing and developed markets.

The majority of expansion will be seen by its retail operation as a result of both organic growth and acquisition. Retail contributes 43% of the group’s revenue and distribution 53%.

Inchcape has this month appointed a new retail managing director for mainland Europe; George Ashford, a former operations director at Pizza Hut and KFC, fills the gap left by Graeme Potts’ departure last month. Spencer Lock continues to head Inchcape UK Retail.

Speaking to investors this month, Inchcape chief executive André Lacroix said the group has a unique business model with a consistent financial track record.

“There is no other business like Inchcape on the stock market. We are able to enlarge margins through continual business improvement, benefit from a good diversity of earnings and form long standing relationships with high growth partners,” he said.

Inchcape’s sales year-to-date are up 8.9% (8.1% in constant currency) compared to the same period in 2005. Like-for-like sales are up 3.7%.

Lacroix attributes its success to the longstanding relationships with brand partners: its top seven partners, Toyota, Lexus, Subaru, VW, Mercedes-Benz and BMW having all outperformed the industry by 4.2% in the last five years.

These relationships, developed on a national and international level, give the group access to senior manufacturer management on a global level.

“This is important as we gain a deep understanding of their global strategy, and of global expansion opportunities,” Lacroix says.

Exceptional customer service, increased finance penetration and a greater focus on servicing and parts are all drivers for organic growth, in addition to expansion in developing markets.

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