AM Online

Life to begin again at 40 for Kwik-Fit

If life begins at 40, Kwik-Fit is poised to begin an exciting new phase and put the turbulent times and multiple ownerships of the last decade behind it.

The proposed sale of the UK’s most popular fast-fit chain – established in 1971 – to Itochu Corporation has been broadly welcomed by industry analysts and senior figures in car retailing.

They believe it will lead to a more stable future with greater prospects for sustainable growth.

Itochu is a respected Japanese conglomerate which already owns rival company Stapleton’s Tyre Services (STS).

The deal, brokered by Kwik-Fit’s current owner PAI Partners, a private equity firm, values the brand at £637 million, but is subject to European Competition Commission approval.

Roy Kishor, former chairman of SMMT’s Aftermarket Group and now chairman of two automotive companies, said: “Kwik-Fit was subjected to a number of changes when it was part of Ford.

"If it’s going to be within a corporation, and a Japanese one at that, it can only be good news for Kwik-Fit.”

Itochu has a reputation for being highly professional, promoting long-term ownership over quick profit

STS is now the UK’s leading wholesale tyre distributor and runs the franchised dealer tyre programme for many car manufacturers.

“It will be interesting to see how Itochu takes Kwik-Fit forward in terms of its relationship with STS,” added Kishor.

“STS has a good reputation with the franchised dealers and that provides Itochu with an opportunity to develop a relationship for Kwik-Fit with the independent garage sector.”

PAI Partners bought Kwik-Fit in 2005 for £800m from CVC Partners, another private equity firm.

During its six year stewardship, PAI has sold Kwik-Fit’s financial services division for £215m and overseen a sale/leaseback deal on the group’s business assets for £150m.

A PAI spokesman said it had seen “a double-digit percentage point return on its investment”, and with Itochu interested in buying, the time was right for “an attractive exit”.

If Kwik-Fit wants to grow its MoT and servicing business, the risk is that such a move will take custom way from the franchised sector.

John Tustain, chairman of Tustain Motors, said Kwik-Fit will undoubtedly be invigorated by the sale if it goes through.

“We have never been short of a challenge in this business, and we’re happy to take this one on,” he told AM.

“We have to make sure we remain competitive in all areas and drive higher return business.

"We must improve customer care and show we can be trusted to do a job to the highest standards and with integrity.

"If Kwik-Fit’s new owners help raise standards in the industry, that’s no bad thing.”

He said the key to preventing customers from abandoning the franchised sector in favour of independents such as Kwik-Fit was to do a good job in car sales and to generate a desire among customers to return.

Danny Stone, MD of the Donalds Motor Group, said his first reaction was that this was “nothing we haven’t seen before” with the likes of Halfords Autocentres trying to do the same.

He explained: “Kwik-Fit has always been synonymous with tyres and it’s probably the first place people go to check a price, but service delivery has been the problem.”

Stone said he believed marketing strength would play a key role in the battle to win customers.

“It’s about who has got it, the manufacturers and main dealers, or the independents like Kwik-Fit who could come in with a cost-driven offering.

"Often an owner’s decision about where to go will come down to the age of the car.”

 

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