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Revision as of 17:04, 29 May 2008

Overview

Inchcape plc (LSE: INCH) is a scale automotive retail group operating in developed and emerging countries. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. Revenue for the year ended 31 December 2006 was £4.8bn and operating profit was £213.9m.

Inchcape has scale operations in Australia, Belgium, Greece, Hong Kong, Singapore and the UK. The Group also has operations in a number of other markets, including Eastern Europe, the Baltic’s, Russia, China and South America. In addition to growing its core businesses, Inchcape is looking to develop scale operations in new and emerging regions.

Headquartered in central London, Inchcape represents leading automotive brands and operates either a retail, or a vertically integrated retail model (i.e. exclusive distribution and retail), depending on the market. Inchcape's current key manufacturer partners are Toyota/Lexus, Subaru, BMW, Mazda, Mercedes-Benz, Volkswagen, Audi and Honda.

History

In 1847, William MacKinnon and Robert MacKenzie, together with MacAllister Hall, formed the MacKinnon MacKenzie Company, which was to become the basis of Inchcape plc many years later. The Australian gold rush of 1851 brought Steam Navigation Company, obtaining contracts to transport British troops from Ceylon to India further expansion and by 1856 MacKinnon had formed the Calcutta and Burma and to carry post to the region. In 1862 the company was floated on the British Stock Exchange with the name British India Steam Navigation Company.

Inchcape and Company

In 1874, James Lyle MacKay joined MacKinnon and MacKenzie in Calcutta and by 1914 was the sole surviving senior partner. Largely responsible for solving India’s currency problems and for the adoption of the Gold Standard, he was knighted by King George V for his services to industry and in 1911. He chose the title “Baron Inchcape of Strathnaver” to commemorate the Inchcape Rock, which lies off Arbroath, and Strathnaver in Scotland. He later became a Viscount and finally, in 1929, he was appointed the first Earl of Inchcape.

By the 1950s, the company had diverse interests around the world. This time period bought new legislation and tax laws and, under the third Lord Inchcape, the group’s many interests were consolidated to become private limited companies controlled through subsidiaries in London. In 1958 Inchcape and Company became a public company with a market capital of £2million and offered twenty five per cent of its equity on the market. By the 1970s, the capital had increased to 150 times its previous figure.

A growing company

Inchcape’s growth was largely due to a series of mergers and acquisitions, including the merger with Borneo Company in 1967, which almost doubled Inchcape’s size by adding Hong Kong, Malaysia, Canada, Singapore, Brunei and Thailand to the operation. In 1972, Dodwell and Company was acquired, adding extensive shipping, motors and business machine trading in the Far East.

Mann Egerton and Company, founded in the nineteenth century, with a portfolio that initially included de Dion, Renault Daimler, and later, British Leyland cars and a range of luxury vehicles, was acquired in 1973.

Pride and Clarke brought the Toyota distribution concession with them in 1978 in a deal described as “the bargain of the century”. The Anglo-Thai Corporation, AW Bain Holdings, Gilman and Company and Caldbeck Macgregor and Company added insurance broking and wine and spirit importation to the company’s portfolio.

The formation of Inchcape plc

In 1981 the company was renamed Inchcape plc and, in 1985, Sir David Orr became chairman and George Turnbull joined the company as Group Managing Director. Under Turnbull’s guidance the group began to focus on fewer activities and was included in the FTSE100. By 1989, Inchcape’s motor segment was contributing two thirds of the group’s turnover and more than half of the profit. The greater part of this business came from Toyota and in 1990 Toyota bought a fifty per cent stake in Inchcape’s UK distribution company Toyota (GB), acquiring a five per cent stake in Inchcape plc. Despite the exponential growth and success the company had experienced over the previous twenty years, the 1990s proved difficult for Inchcape, perhaps due to over diversification away from the core business of distribution. Pre-tax profits and share value fell causing Inchcape to be dropped from the FTSE100 index, and there was a realisation that the company would have to change to meet market needs.

A new motors-only focus

In the late 1990s, Inchcape concentrated on the core business of international distribution and sold off unprofitable businesses, non automotive subsidiaries and significantly reduced its workforce. The new motors-only Inchcape emerged in July 1999 with a market capital in the region of £200million. In June 2000 Sir John Egan was appointed chairman and Peter Johnson became Chief Executive Officer. The Competition Commission Report in 2000 regarding new UK car prices caused Inchcape’s operating profit of £25million in 1999 to fall to £0.7million in 2000. But price reductions and lower interest rates brought customers back, pushing profits back up to £13.7million in 2001. The Far East recovery from economic crisis at this time also helped improve profits, as did the sale of Inchcape’s forty nine per cent stake in Toyota UK to Toyota in 2000, allowing expansion in Hong Kong, whilst retaining Inchcape’s place as the largest independent Toyota distributor in Europe, Hong Kong and Singapore.

Inchcape Today

Under Peter Johnson’s guidance Inchcape’s market capital reached the £2billion mark and the company has established a very strong commercial foundation. Recently, the Inchcape group has started to reflect on new business opportunities signaled by the arrival of André Lacroix, Group Chief Executive.

Today, Inchcape operates in twenty-six countries and has more than 12,000 employees worldwide:

Australia

In Australia, Inchcape has been an importer and distributor for Subaru since 1973. It has the largest market share for a Subaru market outside Japan and is the sole retailer for Subaru in Melbourne, a territory that represents approximately 16 per cent of the Australian market. Subaru Docklands, Inchcape’s flagship site, is the largest Subaru dealership in the world, where the brand can be fully experienced through a variety of interactive driving facilities.

Inchcape also retails Volkswagen in Sydney and Subaru, Hyundai, Kia and Mitsubishi in the Brisbane area.

Inchcape also runs AutoNexus, a business services operation, which handles over 42,000 vehicles a year.

Belgium
Inchcape has been the Belgian importer and distributor for Toyota/Lexus since 1979 and now sells over 30,000 vehicles per year through a mainly independent network of 120 dealerships.

Greece
In Greece, Inchcape has been an importer and distributor for Toyota since 1987 and sells over 30,000 units per annum. It retails Toyota/Lexus exclusively in Salonica, and is in the process of expanding its retail portfolio in Athens.

Inchcape Greece has been able to offer a range of financial and insurance products to the Toyota customer through its partnership with the leading Greek bank, EFG Eurobank Ergasias. The strong relationship with Toyota in this market has allowed Inchcape to expand operations into the Balkans.

Hong Kong
In Hong Kong, Inchcape is an exclusive importer and retailer for Toyota/Lexus, Hino, Jaguar, Mazda and Daihatsu. When combined, these franchises regularly achieve around 40 per cent of market share. Crown Motors have held the Toyota franchise since 1966 and have won the Toyota Triple Crown Award a record 15 times.

Singapore
Inchcape is the exclusive importer and retailer for Toyota/Lexus and Suzuki in Singapore. It has held the Toyota franchise since 1967 and was awarded the Suzuki franchise in 1977. Their Toyota operations in Singapore have also won the Toyota Triple Crown award from 1991-2004.

Russia
In 2006, Inchcape announced it’s entry into the Russian market through a joint venture with the Independence Group of Companies, one of Moscow’s leading independent car Retailers.

The second move in 2006 was a further acquisition of a majority stake in a business in St Petersburg, Russia’s second largest market.

In 2007, Inchcape continued expansion in St Petersburg with the majority stake acquisition in businesses Retailing Audi and Peugeot.

China
In 2007, Inchcape announced its first entry into China with the completion of an Inchcape Toyota retail centre in Shaoxing and plans to open a Lexus Shaoxing retail centre later in 2007, followed by a third centre, Lexus Shanghai, in early 2008.

Rest of the World
The Group also has a number of growing operations in a variety of other markets worldwide, including:

Finland with Mazda Jaguar and Land Rover
The Baltics (Estonia, Latvia and Lithuania) with BMW, Ford, Hyundai, Mazda, Mitsubishi, Jaguar and Land Rover
The Balkans (F.Y.R.O.M, Bulgaria and Romania) with Toyota
Guam, Saipan and Brunei with Toyota/Lexus
Ethiopia with Toyota
Chile and Peru with BMW/MINI
France with Jaguar, Land Rover, Volkswagen/Audi and Skoda
Poland with BMW/MINI
New Zealand with Subaru

References

Jones, Stephanie. Two Centuries of Overseas Trading: The Origins and Growth of the Inchcape Group. Basingstoke: Palgrave Macmillan, 1986. ISBN 0-333-37172-0

External Links

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@@ Line 16: / Line 16: @@
 '''Inchcape and Company'''
-In 1874, [[James Mackay, 1st Earl of Inchcape|James Lyle MacKay]] joined MacKinnon and MacKenzie in [[Calcutta]] and by 1914 was the sole surviving senior partner. Largely responsible for solving [[India]]’s currency problems and for the adoption of the [[Gold Standard]], he was knighted by [[King George V]] for his services to industry and in 1911.  He chose the title “Baron Inchcape of Strathnaver” to commemorate the [[Inchcape Rock]], which lies off [[Arbroath]], and [[Strathnaver]] in Scotland. He later became a Viscount and finally, in 1929, he was appointed the first [[Earl of Inchcape]].
+In 1874, [[James Mackay, 1st Earl of Inchcape|James Lyle MacKay]] joined MacKinnon and MacKenzie in [[Calcutta]] and by 1914 was the sole surviving senior partner. Largely responsible for solving [[India]]’s currency problems and for the adoption of the [[Gold Standard]], he was knighted by [[George V of the United Kingdom|King George V]] for his services to industry and in 1911.  He chose the title “Baron Inchcape of Strathnaver” to commemorate the [[Inchcape Rock]], which lies off [[Arbroath]], and [[Strathnaver]] in Scotland. He later became a Viscount and finally, in 1929, he was appointed the first [[Earl of Inchcape]].
 By the 1950s, the company had diverse interests around the world. This time period bought new legislation and tax laws and, under the third Lord Inchcape, the group’s many interests were consolidated to become private limited companies controlled through subsidiaries in London. In 1958 Inchcape and Company became a public company with a market capital of £2million and offered twenty five per cent of its equity on the market. By the 1970s, the capital had increased to 150 times its previous figure.