Inchcape Plc · LSE:INCH
Inchcape — Investor Day (November 2021)
132 slides from Inchcape's investor day presentation, Nov 17, 2021
Slide 1: 2021 Capital Markets Day
2021 CAPITAL MARKETS DAY 17th November 2021
Slide 2: Duncan Tait, Group CEO
@ Inchcape DUNCAN TAIT GROUP CEO
Slide 3: Today's agenda
Inchcape 3 Today’s agenda 1 Welcome + takeaways 6 Vehicle Lifecycle Services 2 Industry & macro trends 7 Financial plan 3 Our strategy Q&A 4 Distribution Excellence & Enablers 8 Wrap-up 5 Industry consolidation Drinks & canapes Q&A Break & refreshments
Slide 4: Today's Inchcape team
Inchcape 4 Today’s Inchcape team Presenters In the room Glafkos Persianis Romeo Lacerda Helen Cunningham Mike Bowers CEO Europe CEO Americas Chief HR Officer Group General & Africa Counsel Duncan Tait Gijsbert de Zoeten Group CEO Group CFO Jasmmine Wong Dean Sykes Katie Martin Phil Jenkins MD: Singa
Slide 5: Inchcape is on an ambitious growth journey
Inchcape 5 Inchcape is on an ambitious growth journey The leading automotive Expanding the reach of our Our digital and distributor in a highly plug-and-play data capability is a fragmented global market global distribution significant competitive platform advantage Uniquely positioned to Growth amb
Slide 6: Bringing mobility to the world's communities
Inchcape 6 BRINGING MOBILITY TO THE WORLD’S COMMUNITIES – FOR TODAY, FOR TOMORROW & FOR THE BETTER
Slide 7: Next section
Inchcape 7 Next section 1 Welcome + takeaways 6 Vehicle Lifecycle Services 2 Industry & macro trends 7 Financial plan 3 Our strategy Q&A 4 Distribution Excellence & Enablers 8 Wrap-up 5 Industry consolidation Drinks & canapes Q&A Break & refreshments
Slide 8: The process we've undertaken
Inchcape 8 The process we’ve undertaken Discovery Discovery Reflection Discovery Development OEM ambitions Defined purpose Identified gaps OEMs Suppliers Dealers Experts Consumers Analysts Colleagues Shareholders Megatrends Decided direction
Slide 9: Embracing the changes to our industry
Inchcape 9 Embracing the changes to our industry Changing Changing Focus on automotive industry consumer dynamics environment & society OEM ambitions Retail trends Emissions Partners expected Expectations for Low-emission vehicles to align with a personalised, and corporate GHG long-term vision, dig
Slide 10: Electric vehicle sales on the rise, with varying pace
Inchcape 10 Electric vehicle sales on the rise, with varying pace OEMs are setting ambitious EV targets The pace of EV adoption will vary across markets 2030 EV share of new vehicle sales1 60% Global Target of 5.5m 60% of Land 40% of global 50% total EV sales Rovers sold to sales to be Europe have z
Slide 11: We are experts in successful OEM market entries
Inchcape 11 We are experts in successful OEM market entries We have operations across six continents; with Today, three of our 36 markets have targets to markets ranging from emerging to more mature phase out ICE vehicles in the next 30 years1 We are experts in our markets, with domain expertise in:
Slide 12: Inchcape embraces the adoption of electric vehicles
Inchcape 12 Inchcape embraces the adoption of electric vehicles BEVs require specialist aftersales capabilities EV penetration in our markets will lag more developed markets Labour Parts Bodyshop Oil Global passenger vehicle outlook (by drivetrain)3 ICE1 gross profit mix 65% 14% 11% 10% Unit (billio
Slide 13: The digital shift gives distributors more responsibility
Inchcape 13 The digital shift gives distributors more responsibility OEM Distributor / NSC1 Retailer / Dealer Customer Research & development Logistics / Vehicle localisation Pre-delivery inspection Manufacturing Marketing Local area marketing Brand development Channel management Stock management St
Slide 14: Consumer expectations continue to evolve
Inchcape 14 Consumer expectations continue to evolve ▪ Consumers spend considerable time online researching a vehicle 4.5 to 6 hours 1.4 visits before entering the spent online on average dealership researching price made to dealership and product prepurchase specifics prepurchase ▪ Consumers expect
Slide 15: OEMs outsourcing distribution will gather pace
Inchcape 15 OEMs outsourcing distribution will gather pace % of distribution outsourced to independents 2016 2020 39% ▪ OEMs are focused on 33% the largest TIV markets ▪ OEMs are reallocating capital to CASE ▪ OEMs would like fewer partners 3% 3% 90% of our >50k <10k distribution markets X: Vehicles
Slide 16: Embracing the changes to our industry
Inchcape 16 Embracing the changes to our industry Changing Changing Focus on automotive industry consumer dynamics environment & society ▪ We provide OEMs with a ▪ Our digital & data ▪ We are a forward-thinking, solution in smaller and capabilities are focused on purpose-driven emerging markets the
Slide 17: Next section
Inchcape 17 Next section 1 Welcome + takeaways 6 Vehicle Lifecycle Services 2 Industry & macro trends 7 Financial plan 3 Our strategy Q&A 4 Distribution Excellence & Enablers 8 Wrap-up 5 Industry consolidation Drinks & canapes Q&A Break & refreshments
Slide 18: Strong OEM relationships built on long-term collaboration
Inchcape 18 Strong OEM relationships built on long-term collaboration Why our OEM partners need us? Specialist distributor in smaller & emerging markets Inchcape key market TIVs vs Typical ‘retail market’ TIV1 ▪ Distribution is our specialism 22m 17m Non-INCH market 4.7m ▪ We are nimble, fast and ef
Slide 19: Considerable opportunities for an ambitious Inchcape
Inchcape 19 Considerable opportunities for an ambitious Inchcape Annual new car volumes (units) Vehicle lifetime value2 90m 17m Revenue Profit Initial User 45% 25% (0-4 years) New market opportunities Typically insourced e.g. China, by OEMs US, UK Subsequent Users 55% 75% (4+ years) Inchcape markets
Slide 20: Supercharging our strategy: from Ignite to Accelerate
Inchcape 20 Supercharging our strategy: from Ignite to Accelerate Our Growth Drivers Lead in Distribution Excellence Vehicle Lifecycle Services customer experience Become Invest to the OEM’s accelerate partner growth To be the world’s most trusted of choice Our Enablers automotive Distributor Cultur
Slide 21: Accelerate strategic framework
Inchcape 21 Accelerate strategic framework Our Growth Drivers Distribution Excellence Vehicle Lifecycle Services Our Enablers Culture and Digital, Data & Efficient Scale Capabilities Analytics Operations Responsible Business
Slide 22: Doubling-down on distribution and accelerating growth
Inchcape 22 Doubling-down on distribution and accelerating growth Culture and Digital, Data Efficient Scale Accelerated Capabilities + & Analytics + Operations = growth Fostering a ‘relationship Providing leading digital Leveraging our global More customers first’ culture: with solutions for custome
Slide 23: A strategic Responsible Business framework
Inchcape 23 A strategic Responsible Business framework Planet People Places Practices ▪ Mapping the risks and ▪ Prioritising safety ▪ Positively impacting ▪ Strengthening our opportunities of and wellbeing local communities governance policies, climate change ▪ Creating an inclusive and ▪ Supporting
Slide 24: Next section
Inchcape 24 Next section 1 Welcome + takeaways 6 Vehicle Lifecycle Services 2 Industry & macro trends 7 Financial plan 3 Our strategy Q&A 4 Distribution Excellence & Enablers 8 Wrap-up 5 Industry consolidation Drinks & canapes Q&A Break & refreshments
Slide 25: Becoming the undisputed number one choice for OEMs
Inchcape 25 Becoming the undisputed number one choice for OEMs Our Growth Drivers Distribution Excellence Our Enablers Culture and Digital, Data & Efficient Scale Capabilities Analytics Operations
Slide 26: We have created a plug-and-play distribution platform
Inchcape 26 We have created a plug-and-play distribution platform ▪ Inchcape has developed a differentiated approach to distribution ▪ Our global platform makes it easy to plug-in OEMs and enter new markets ▪ Our focus is to drive: ▪ Better performance for our brands, ▪ An unforgettable customer exp
Slide 27: Our global footprint: 36 markets spanning six continents
Inchcape 27 Our global footprint: 36 markets spanning six continents 1: Retail only 2: BMW and MINI retail only 3: Subaru, Peugeot and Citroen distribution, all others retail only
Slide 28: Hao Q. Tien, Toyota
Inchcape 28 Hao Q. Tien Toyota
Slide 29: Inchcape: a differentiated approach to distribution
Inchcape 29 Inchcape: a differentiated approach to distribution High barriers to entry ▪ Exclusive distribution contracts: one A well invested business; leading digital platform contract per brand per market OEM partnerships up to 54 years ▪ Long-standing relationships with brand partners Excellent
Slide 30: George Ashford, Chief Transformation Officer
GEORGE ASHFORD CHIEF TRANSFORMATION OFFICER
Slide 31: Redefining distribution excellence & accelerating growth
Inchcape 31 Redefining distribution excellence & accelerating growth ‘Disruption’ = ‘Opportunity’ Omni-channel & digital capability Data analytics Strong foundation of building brands Global processes in challenging markets Finance & insurance solutions
Slide 32: Leveraging our global leadership, to grow faster
Inchcape 32 Leveraging our global leadership, to grow faster impact Omni-channel & digital capability Market share Higher Greater lead gains ASPs conversion Data analytics Margin Better Lower Global processes improvement customer inventory levels retention Finance & insurance solutions
Slide 33: Passionate about fulfilling our customers' needs
Inchcape 33 Passionate about fulfilling our customers’ needs Four core values: Trust Transparency Convenience Personalisation Powered by: Culture: putting our customers first Technology: a leading customer experience Data: pre-empting our customers’ needs
Slide 34: Striving for excellence throughout the value chain
Inchcape 34 Striving for excellence throughout the value chain Current priorities Sales & Operational Digital marketing Planning (S&OP) ▪ Search engine ▪ Demand forecasting optimisation ▪ Supply management ▪ Conversion rate optimisation Customer relationship Omni-channel management fulfilment ▪ Afte
Slide 35: Using advanced analytics to drive our buying decisions
Inchcape 35 Using advanced analytics to drive our buying decisions How we’ve overhauled our S&OP process: Before Global roll-out ▪ Reactive planning approach ▪ Supported stock ▪ Manual, time-consuming management during the pandemic ▪ Disparate regional processes ▪ 30% reduction in variants ▪ Intuiti
Slide 36: Significant growth from innovative financing solutions
Inchcape 36 Significant growth from innovative financing solutions F&I: driving greater customer How F&I supports our core revenue streams: loyalty and retention Improves vehicle F I Finance Insurance purchase accessibility Commission based revenue & profit model Deepens customer New Shortens vehicl
Slide 37: Embracing digitalisation and making smart use of data
Inchcape 37 Embracing digitalisation and making smart use of data Digital Experience Platform Data Analytics Platform Omni-channel Data analytics Providing consumers with a fully Central capability to drive better functional digital showroom decisions across the Group Built on a platform with the ab
Slide 38: Distribution Excellence delivering better performance
Inchcape 38 Distribution Excellence delivering better performance Website Marketable Sales traffic customers ARPU conversion +6% +22% +6% >2x unique engaged digital visitors opting into higher basket size DXP lead to sale vs. visitors communications other web leads Customer experience scores1 increa
Slide 39: DXP: omni-channel
Inchcape 39 DXP: omni-channel
Slide 40: Mark Dearnley, Chief Digital Officer
MARK DEARNLEY CHIEF DIGITAL OFFICER
Slide 41: Digital eXperience Platform: our digital touchpoint
Inchcape 41 Digital eXperience Platform: our digital touchpoint Customer campaign Customer contact Lead management management management E-commerce Aftersales Customer account Dealer solutions Listing & syndication
Slide 42: A digital architecture that will scale with Inchcape
Inchcape 42 A digital architecture that will scale with Inchcape Distribution Excellence Vehicle Lifecycle Services Inchcape core ▪ Global platforms: Data Analytics Platform ▪ Support distribution operations Finance Broker Engine ▪ Ready to deliver Enterprise Resource Planning future services Networ
Slide 43: Data Analytics Platform: driving smart, fact-based actions
Inchcape 43 Data Analytics Platform: driving smart, fact-based actions Predictive analytics Business Intelligence ▪ Using Machine Learning to ▪ Empowering market teams dynamically optimise action with a consistent set of live KPIs Improved Operational Increased ▪ Helping drive improved financials ef
Slide 44: Lead scoring: improving our marketing efficacy
Inchcape 44 Lead scoring: improving our marketing efficacy Historic approach New approach (powered by DAP) Key differences Activity-based lead-classification Machine Learning lead-scoring model ▪ Data driven machine Potential Lead Potential Lead learning model drives action taken Website ▪ Real-time
Slide 45: Inchcape has a leading digital and analytical platform
Inchcape 45 Inchcape has a leading digital and analytical platform Results of an independent third-party report Leader ▪ Inchcape’s global scale and internal development capability is a key point of differentiation Analytics Challenger ▪ Only a few distributors are well-progressed with digitalisatio
Slide 46: Digital Delivery Centres: our global 'tech hubs'
Inchcape 46 Digital Delivery Centres: our global ‘tech hubs’ ▪ Accelerating use of Progress in last 6 months: digital and analytics across all regions ▪ Set up two centres ▪ Internal digital delivery capability; ▪ All six ‘Digital Platforms’ twice as efficient using the DDCs as 3rd parties ▪ Recruit
Slide 47: Global Business Services: leveraging our global scale
Inchcape 47 Global Business Services: leveraging our global scale Finance HR & Distribution Transactional Recruitment Transactional Services Services Services APAC, Russia Programme For future review and UK already launched migrated Partnered with Partnered with SAP Cognizant Efficient Scale Operati
Slide 48: Accelerating DXP adoption across the globe
Inchcape 48 Accelerating DXP adoption across the globe Timeline of our global DXP roll-out by brand 2020 2021 Q1 Q2 Today Number of markets 1 1 6 10 18
Slide 49: Leveraging digital & data to drive transformation
Inchcape 49 Leveraging digital & data to drive transformation Digital platform Building our digital Leveraging data Accelerating established capability & analytics digitalisation ▪ Digital architecture ▪ c.500 Inchcapers ▪ Machine Learning ▪ In 2021: for Distribution across two global dynamically ▪
Slide 50: Frank Wittemann, JLR
Inchcape 50 Frank Wittemann JLR
Slide 51: Romeo Lacerda, CEO Americas & Africa
Inchcape 51 Romeo Lacerda CEO Americas & Africa
Slide 52: Gijsbert de Zoeten, Group CFO
@ Inchcape GIJSBERT DE ZOETEN GROUP CFO
Slide 53: Next section
Inchcape 53 Next section 1 Welcome + takeaways 6 Vehicle Lifecycle Services 2 Industry & macro trends 7 Financial plan 3 Our strategy Q&A 4 Distribution Excellence & Enablers 8 Wrap-up 5 Industry consolidation Drinks & canapes Q&A Break & refreshments
Slide 54: Distribution fragmentation a huge opportunity
Inchcape 54 Distribution fragmentation a huge opportunity Annual new car volumes (units) 90m 17m GDP+ Distribution markets offer New market opportunities greater growth prospects Typically insourced e.g. China, by OEMs US, UK 30% Inchcape markets coverage of ‘typical distribution markets’ Market sha
Slide 55: The leading independent distributor by some distance
Inchcape 55 The leading independent distributor by some distance Market presence and brand partners of top 50 distributors (of >1000) # Brands 45 40 Inchcape 35 30 7 Distributor B 25 2015 20 15 Distributor C Distributor G Distributor A 10 Distributor D 5 4 Distributor F Distributor E 38 0 0 2 4 6 8
Slide 56: Our OEM relationships have strengthened and expanded
Inchcape 56 Our OEM relationships have strengthened and expanded Core OEM partners Length of OEM relationships (flags signify the award of a new distribution contract) Toyota 54 years Jaguar Land Rover 51 years Suzuki 44 years Daimler 34 years Volkswagen 33 years BMW 32 years Subaru 29 years New OEM
Slide 57: Deals have accelerated in the past five years
Inchcape 57 Deals have accelerated in the past five years New markets Existing markets Strategic move to enter Leveraging existing market a new geography and regional infrastructure 2010-2015 2016 Chile, Colombia, Peru & Argentina Subaru, Hino Thailand JLR 2017 Estonia BMW Australia Stellant
Slide 58: Proven track record of integrating acquisitions
Inchcape 58 Proven track record of integrating acquisitions 2016 2018 2020 Revenue Revenue Revenue +£400m +£200m +£100m ▪ Combined with our existing ▪ Invested in a best-in-class ▪ Created a Mercedes-Benz business and consolidated aftersales centre centre of excellence to back-office (£15m savings)
Slide 59: The factors that will further accelerate consolidation
Inchcape 59 The factors that will further accelerate consolidation External factors Internal factors Covid-19 has Independents Significantly Ramped up our accelerated the do not have strengthened technological digital shift the scale to our OEM and digital invest in digital relationships investments
Slide 60: Our M&A framework
Inchcape 60 Our M&A framework Strategic Financial Organisational ▪ Additive to existing ▪ Focus on markets with ▪ Focus on retaining and brand footprint higher growth prospects nurturing talent ▪ Broadens geographic ▪ Take a considered ▪ Sophisticated ESG program reach approach to valuing targets ▪
Slide 61: Global distribution: plotting the landscape of opportunity
Inchcape 61 Global distribution: plotting the landscape of opportunity Typical distribution markets1 Number of 17m 17m 17m independent distributors Middle East >170 Other OEM OEMs Latam & operated >500 (potential) Africa (NSCs) APAC >250 Inchcape Independent OEM distributors Partners Europe >220 (ex
Slide 62: Our distribution proposition is very attractive for OEMs
Inchcape 62 Our distribution proposition is very attractive for OEMs Market focus Technology Capital Distribution footprint ▪ Focused on the ▪ Aim to be at the ▪ Need to allocate ▪ Looking for fewer OEMs largest markets cutting edge capital to CASE and stronger partners ▪ Smaller and ▪ Created a ▪ F
Slide 63: Matthias Lürs, Mercedes Benz
Inchcape 63 Matthias Lürs Mercedes Benz
Slide 64: Ruslan Kinebas, CEO APAC
Inchcape 64 Ruslan Kinebas CEO APAC
Slide 65: Leveraging our scale and capability to drive consolidation
Inchcape 65 Leveraging our scale and capability to drive consolidation We are the industry Internal and Good track record Strong financial leader and the external factors a and strengthened position gives us natural consolidator catalyst for deal capability significant firepower acceleration
Slide 66: Duncan Tait, Group CEO
@ Inchcape DUNCAN TAIT GROUP CEO
Slide 67: Inchcape has made significant progress since 2015
Inchcape 67 Inchcape has made significant progress since 2015 Number of… Markets Brand partners Vehicles distributed 2015 26 28 0.1m 2021 36 41 0.2m
Slide 68: We are accelerating our competitive advantage
Inchcape 68 We are accelerating our competitive advantage Inchcape has never Our digital and technology We are a truly global lost a distribution contract; investments sets us apart business; with presence in but has added 17 new from our competition 36 markets across six contracts in five years con
Slide 69: Next section
Inchcape 69 Next section 1 Welcome + takeaways 6 Vehicle Lifecycle Services 2 Industry & macro trends 7 Financial plan 3 Our strategy Q&A 4 Distribution Excellence & Enablers 8 Wrap-up 5 Industry consolidation Drinks & canapes Q&A Break & refreshments
Slide 70: Q&A
Inchcape 70 Q&A
Slide 71: Next section
Inchcape 71 Next section 1 Welcome + takeaways 6 Vehicle Lifecycle Services 2 Industry & macro trends 7 Financial plan 3 Our strategy Q&A 4 Distribution Excellence & Enablers 8 Wrap-up 5 Industry consolidation Drinks & canapes Q&A Break & refreshments
Slide 72: Break & refreshments
Inchcape 72 BREAK & REFRESHMENTS
Slide 73: Duncan Tait, Group CEO
@ Inchcape DUNCAN TAIT GROUP CEO
Slide 74: Next section
Inchcape 74 Next section 1 Welcome + takeaways 6 Vehicle Lifecycle Services 2 Industry & macro trends 7 Financial plan 3 Our strategy Q&A 4 Distribution Excellence & Enablers 8 Wrap-up 5 Industry consolidation Drinks & canapes Q&A Break & refreshments
Slide 75: Capturing more of the vehicle lifecycle opportunity
Inchcape 75 Capturing more of the vehicle lifecycle opportunity Our Growth Drivers Vehicle Lifecycle Services Culture and Digital, Data & Efficient Scale Capabilities Analytics Operations
Slide 76: Focused on three game-changing opportunities
Inchcape 76 Focused on three game-changing opportunities Global deployment C2B Vehicle transaction Multi- brand Refurbishment used platform Single-market test B2B Wholesale Digital Used car Parts listing Platform C2B Vehicle platform appraisal Idea Discovery & Test Prove Develop Launch & Reflection
Slide 77: Uniquely positioned to increase our share of wallet
Inchcape 77 Uniquely positioned to increase our share of wallet 1 2 3 4 5 Significant Profit pools Our existing Our global Harnessing opportunity beyond the capabilities footprint our expertise for us to first user are and resources provides to drive digital capture more more stable provide a access
Slide 78: Significant profit opportunity beyond the first user
Inchcape 78 1 Significant profit opportunity beyond the first user Vehicle Lifecycle Value New vehicle import 1st sale Revenue Profit % Initial User 45% 25% (0-4 years) 2nd sale % Subsequent Users 55% 75% 3rd sale (4+ years) % % Finance & Insurance Aftermarket Trade-in Currently underserved by Inchc
Slide 79: Used and aftermarket are more stable and profitable
Inchcape 79 2 2 Used and aftermarket are more stable and profitable Demand is more insulated from market shocks1 Significantly higher gross margins >70% >50% 90s rate hike Dot-com Global Financial +3% bubble Crisis (2)% (2)% >10% (9)% c8% (11)% (12)% c6% (20)% (24)% (43)% New cars New Used car Used
Slide 80: Advantaged by existing capabilities and resources
Inchcape 80 3 Advantaged by existing capabilities and resources Sourcing Operational expertise Technology & Data ▪ Supply of used vehicles from ▪ Proven retailing expertise ▪ Global technology platforms existing retail network ▪ Broad aftersales capability ▪ Leading data & analytics ▪ Accurate valua
Slide 81: Our footprint provides access to high growth markets
Inchcape 81 4 Our footprint provides access to high growth markets Motorisation rate1 ▪ Exposure to higher growth markets with significantly lower motorisation rates 700 ▪ Leveraging our well- established and trusted local brand to become 446 a dominant player in several parts of the vehicle value c
Slide 82: Digital adoption is still nascent in our markets and industry
Inchcape 82 5 Digital adoption is still nascent in our markets and industry E-commerce penetration (by industry) E-commerce penetration of general retail sales 20% 20% 32% Global average = 17% 13% 13% 25% 10% 23% 23% 9% 15% 6% 8% 2% ~1% Auto Video Beauty Petcare Apparel Consumer Consumer North APAC
Slide 83: Multi-brand used platform
Inchcape 83 MULTI-BRAND USED PLATFORM
Slide 84: Further accelerating our used vehicle progress
Inchcape 84 Further accelerating our used vehicle progress Used to New volume ratio Used New +17% +42% +43% +66% +20% 0.80 0.94 0.61 0.88 0.17 0.25 0.07 0.12 0.37 0.44 2017 2019 2017 2019 2017 2019 2017 2019 2017 2019 2017 2019 UK Russia Chile Belgium Inchcape Group Leveraging the substantial progre
Slide 85: The used car market opportunity is huge
Inchcape 85 The used car market opportunity is huge Used car volumes and B2C / C2C split in selected markets (>90% of Inchcape TIV) Millions of units sold (2020) Used car C2C Used car B2C 2.4 16m 4.4 1.9 4.4 Addressable 1.3 1.4 0.2 0.6 0.6 14m market of 0.9 0.9 0.7 0.5 0.4 0.2 0.1 c.14m units 1.1 2.
Slide 86: Capabilities to win in a highly fragmented market
Inchcape 86 Capabilities to win in a highly fragmented market Market presence Operational Technology & Data Scale expertise ▪ Ready supply of ▪ 50+ years ▪ Dynamic pricing ▪ Global technology quality used vehicles experience in model allows us to platforms support retailing and deploy unique lower c
Slide 87: Glafkos Persianis, CEO Europe
Inchcape 87 Glafkos Persianis CEO Europe
Slide 88: Significant uncaptured opportunity on older vehicles
Inchcape 88 Significant uncaptured opportunity on older vehicles Used car retail Australia used car sales UK used car sales Group used car split Wholesale 12% Opportunity c.30k 46% multi-brand 66% 100% 88% 80k 54% 34% 1–3 year 4+ years 1–3 year 4+ years All used old vehicles old vehicles old vehicle
Slide 89: Capability to source independently of our retail network
Inchcape 89 Capability to source independently of our retail network Russia UK used car centres Split of used cars by source (% of total) Split of used cars by source (% of total) Franchised trade-in Franchised trade-in Direct from customer Purchased from wholesaler (e.g. ex-fleet) Direct from custo
Slide 90: Consumer buying journey relies on a listing platform
Inchcape 90 Consumer buying journey relies on a listing platform Representative of developed markets with mature used vehicle ecosystems 6% of buyers go straight to the dealership 6% OEM website 11% dealership website visit physical 14% use google search People land on 90% dealership 94% of car buye
Slide 91: bravoauto
Inchcape > bravoauto bravo everything you expect and more a
Slide 92: A model designed to deliver the best outcomes
Inchcape 92 A model designed to deliver the best outcomes impact Aftermarket services Market presence Sourcing from existing operations Higher Repeat GPU custom Operational Omni-channel & expertise digital capability Lower Limited overheads investment Proprietary data Data and algorithms Low working
Slide 93: Case Study: Russia used vehicles
Inchcape 93 Case Study: Russia used vehicles Higher GPU Low overheads Attractive returns Indexed Gross Margin evolution (2018 = 100) 186 Less than 50% of new car operations 115 100 Limited investment Well-above group 2018 2019 2020 Payback in under 2 years average ROCE: >20% Repeat Custom Low workin
Slide 94: Global ambition: double used volumes within five years
Inchcape 94 Global ambition: double used volumes within five years Addressable market Ambition to at least of c.14m units double volumes We sell c.80k used cars globally ▪ Less than 1% of addressable market Used car C2C Used car B2C We generate c.£100m used car gross profit ▪ Gross profit per unit =
Slide 95: Timeline of bravoauto
Inchcape 95 Timeline of bravoauto Prove Launch Dedicated used car ▪ Created centre opened in bravoauto brand Moscow to retail trade-in vehicles ▪ Omni go-live 2018 2019 2020 2021 2022 2023 Test Develop Scale First dedicated used car ▪ Further used car Begin multi-market centre opened in Burton centr
Slide 96: Digital Parts Platform
Inchcape 96 DIGITAL PARTS PLATFORM
Slide 97: Broadening our aftermarket focus
Inchcape 97 Broadening our aftermarket focus Retention Penetration Digitalisation Increase aftersales Broaden aftermarket Develop and retention for our OEMs penetration beyond globalise a digital across all 36 markets just OEM garages parts platform (e.g. via bravoauto) Leveraging our core competenc
Slide 98: Large vehicle parcs create significant opportunity
Inchcape 98 Large vehicle parcs create significant opportunity Australia Colombia 20x 20m 30x 6m 3m ▪ Car parcs are >10x 1m 0.9m annual new car volumes 0.2m in all markets New Used Car New Used Car car TIV car vols parc car TIV car vols parc ▪ Significant untapped opportunity for Inchcape to capture
Slide 99: Aftermarket upside is enormous and is highly fragmented
Inchcape 99 Aftermarket upside is enormous and is highly fragmented Global aftermarket revenues1 c.$1,400bn ▪ >$500bn aftermarket revenue across Inchcape regions c.$900bn ▪ Highly fragmented with China varied business practices; W.Europe something we can address N.America ▪ Extremely attractive prof
Slide 100: Leverage our expertise to increase our aftermarket share
Inchcape 100 Leverage our expertise to increase our aftermarket share Aftermarket value chain Digitalisation of parts Parts Parts Workshops Customers ▪ Opportunity to manufacturers distributors modernise parts- distribution OEMs OEM NSCs & affiliated Franchised OE Toyota, BMW, distributors dealers ▪
Slide 101: How the Digital Parts Platform fits into the value chain
Inchcape 101 How the Digital Parts Platform fits into the value chain Future: a more digitalised parts value-chain Today Parts Digital Parts Workshops ▪ Complete listing distributors Platform of vehicle parts ▪ Very manual SKUs Stock management ▪ Platform fully ▪ Little technology searchable for Imp
Slide 102: Digital Parts Platform: our proposition
Inchcape 102 Digital Parts Platform: our proposition How we make money? What is required to succeed? Commission Marketing Automotive Technological on parts sold relationships expertise Highly accretive returns; Leveraging our core distribution competencies, asset-light business model and technologic
Slide 103: Development timeline of Digital Parts Platform
Inchcape 103 Development timeline of Digital Parts Platform Reflection Prove Launch Started discussions Perform similar tests Multi-market roll-out with experts and across a number of potential partners other markets 2020 2021 Q1 Q2 Today 2022 2023 2024 Discovery Test Develop Idea first uncovered Co
Slide 104: Summary
Inchcape 104 SUMMARY
Slide 105: Significant profit opportunity beyond the first user
Inchcape 105 Significant profit opportunity beyond the first user Vehicle Lifecycle Value Our launch roadmap New vehicle import 2021/ 1. bravoauto 22 1st sale % 2. Digital Parts 2023/ 2nd sale % Platform 24 3rd sale 3. Used car % TBC listing platform % Finance & Insurance Aftermarket Trade-in
Slide 106: Uniquely positioned to increase our share of wallet
Inchcape 106 Uniquely positioned to increase our share of wallet Strong OEM relationships; Leveraging our Globalising our bravoauto encouraging us to market footprint and used-car platform; aim to capture more of the expertise to accelerate double used volumes Vehicle Lifecycle Value our growth Driv
Slide 107: Gijsbert de Zoeten, Group CFO
@ Inchcape GIJSBERT DE ZOETEN GROUP CFO
Slide 108: Next section
Inchcape 108 Next section 1 Welcome + takeaways 6 Vehicle Lifecycle Services 2 Industry & macro trends 7 Financial plan 3 Our strategy Q&A 4 Distribution Excellence & Enablers 8 Wrap-up 5 Industry consolidation Drinks & canapes Q&A Break & refreshments
Slide 109: A stronger business with attractive growth opportunities
Inchcape 109 A stronger business with attractive growth opportunities Revenue Distribution focus £8.9bn ▪ Significantly changed the £7.8bn £7.6bn shape of the Group Retail £4.2bn ▪ Attractive growth £2.8bn opportunities across our markets Strong resilience £5.0bn ▪ Group revenue has Distribution £4.
Slide 110: Distribution: geographically diverse with meaningful upside
Inchcape 110 Geographically diverse with meaningful upside Operating Operating Medium-term New car volume profit split margin expectation (TIV) CAGR2 ▪ Geographically diverse (2021E1) (2021E1) (2021-2026) business with higher growth exposure 33% Asia 9.3% High single digit 4% ▪ Distribution: margin
Slide 111: Distribution Excellence: drivers of topline growth
Inchcape 111 Distribution Excellence: drivers of topline growth M&A Consolidation Outperformance ▪ Broaden market footprint Market share gains Volume ▪ Expand OEM relationships ▪ Omni-channel (DXP) Market TIVs ▪ Analytics platform (DAP) ▪ Exposure to higher ▪ Finance products growth markets Aftersal
Slide 112: Distribution Excellence: drivers of profitability
Inchcape 112 Distribution Excellence: drivers of profitability Gross margin Overheads ▪ Vehicles and Aftersales ▪ Savings / Cost inflation ▪ Regional mix ▪ Leveraging global scale (GBS & DDCs) ▪ Evolution of M&A ▪ Advertising & Promo effectiveness ▪ Supply-Demand dynamic ▪ M&A synergies Distribution
Slide 113: Drivers of Vehicle Lifecycle Services
Inchcape 113 Drivers of Vehicle Lifecycle Services Digital Parts Used Car bravoauto Platform Listing Platform ▪ Used volumes & AFS ▪ Volume of parts sold ▪ Too early ▪ Platform roll-out ▪ Marketing revenue Maintaining the Group’s low capital intensity
Slide 114: Extremely cash generative business model
Inchcape 114 Extremely cash generative business model Annual cash flow generation (£’m; five year average) ▪ Consistently strong cash conversion1 67% FCF conversion 18 ▪ £150m of post dividend cash flow p.a. 74 25 ▪ Disciplined capital 76 allocation 391 84 234 58 150 119 38 13 79 EBITDA Working Net
Slide 115: High returns supported by balance sheet efficiency
Inchcape 115 High returns supported by balance sheet efficiency ROCE1 Net assets2 Financial position snapshot Illustrative based on 5-year average movements Distribution c.30% £0.9bn £0.4bn £0.9bn 1x net debt £0.4bn EBITDA Retail c.8% £0.2bn 1H21 net cash3 £0.2bn £0.1bn Headroom FCF Dividends Workin
Slide 116: Capital allocation policy: highly attractive and disciplined
Inchcape 116 Capital allocation policy: highly attractive and disciplined 01 Invest in the 02 Dividends 03 Value 04 Share business accretive M&A buybacks Capex for organic Policy: Disciplined Policy: distribute growth and 40% annual payout approach to excess FCF technological of basic EPS valuation
Slide 117: Strong business model with exciting growth prospects
Inchcape 117 Strong business model with exciting growth prospects Exposure to markets Innovation our clear Strong financial Leveraging with significant differentiator that position gives us distribution growth potential will accelerate our significant firepower capability to global expansion capture
Slide 118: Medium-term financial outlook
Inchcape 118 Medium-term financial outlook Distribution Excellence Vehicle Lifecycle Services Organic M&A ▪ At least double used car volumes ▪ TIV: 3+% growth p.a. ▪ Continue to bolt-on new distribution businesses ▪ Digital Parts Platform: ▪ Outperformance: 1+% p.a. operational and profitable ▪ Attr
Slide 119: A compelling growth story and highly attractive returns
Inchcape 119 A compelling growth story and highly attractive returns Share buybacks M&A Dividends Strong cash generation Profit growth Well-positioned to deliver significant value through organic growth, consolidation and cash returns
Slide 120: Next section
Inchcape 120 Next section 1 Welcome + takeaways 6 Vehicle Lifecycle Services 2 Industry & macro trends 7 Financial plan 3 Our strategy Q&A 4 Distribution Excellence & Enablers 8 Wrap-up 5 Industry consolidation Drinks & canapes Q&A Break & refreshments
Slide 121: Q&A
Inchcape 121 Q&A
Slide 122: Duncan Tait, Group CEO
@ Inchcape DUNCAN TAIT GROUP CEO
Slide 123: Next section
Inchcape 123 Next section 1 Welcome + takeaways 6 Vehicle Lifecycle Services 2 Industry & macro trends 7 Financial plan 3 Our strategy Q&A 4 Distribution Excellence & Enablers 8 Wrap-up 5 Industry consolidation Drinks & canapes Q&A Break & refreshments
Slide 124: Inchcape is on an ambitious growth journey
Inchcape 124 Inchcape is on an ambitious growth journey The leading automotive Expanding the reach of our Our digital and distributor in a highly plug-and-play data capability is a fragmented global market global distribution significant competitive platform advantage Uniquely positioned to Growth a
Slide 125: Next section
Inchcape 125 Next section 1 Welcome + takeaways 6 Vehicle Lifecycle Services 2 Industry & macro trends 7 Financial plan 3 Our strategy Q&A 4 Distribution Excellence & Enablers 8 Wrap-up 5 Industry consolidation Drinks & canapes Q&A Break & refreshments
Slide 126: Appendix
Inchcape 126 APPENDIX
Slide 127: Investment proposition: sustainable growth and cash returns
Inchcape 127 Investment proposition: sustainable growth and cash returns Disciplined capital Strong returns allocation & cash- Harnessing conversion Past five years: Vehicle global scale lifecycle >20% ROCE ▪ Dividends: £420m Consolidation wallet upside ▪ Acquisitions: £600m Roll-out digital FCF = 6
Slide 128: APAC: OEM & market exposures
Inchcape 128 APAC: OEM & market exposures Inchcape New wins pre-2016 Passenger vehicles Commercial vehicles Toyota Lexus Jaguar Land Rover Subaru Isuzu Peugeot Citroen Suzuki BMW Chevrolet Hino Maxus Hong Kong Macau Singapore Australia Guam Brunei Thailand Indonesia Saipan New Zealand
Slide 129: Europe: OEM & market exposures
Inchcape 129 Europe: OEM & market exposures Inchcape New wins pre-2016 Passenger vehicles Toyota Lexus Jaguar Land Rover BMW Mini Rolls Royce Mazda Ford Hyundai Lithuania Latvia Estonia Finland Belgium Luxembourg Greece Romania Bulgaria North Macedonia Poland
Slide 130: Americas & Africa: OEM & market exposures
Inchcape 130 Americas & Africa: OEM & market exposures Inchcape New wins pre-2016 Passenger vehicles Commercial vehicles Mercedes BMW- Land Rolls Mercedes Western BMW Subaru Suzuki DFSK Mini Toyota Jaguar Geely Changan BYD Freightliner Hino Fuso Komatsu Others Benz Motorrad Rover Royce Benz Star Chi
Slide 131: Singapore cycle is stabilising: higher trough, lower peak
Inchcape 131 Singapore cycle is stabilising: higher trough, lower peak Units £m (‘k) Singapore TIV ▪ The Singaporean 200 220 government controls the Asia ex SG TIV 200 vehicle population via a Asia Trading profit licence quota system Sharp decline in 180 profits due to ▪ A vehicle licence (‘COE’) is
Slide 132: Australia FinCo JV
Inchcape 132 Australia FinCo JV Context Objective FinCo JV Financials Strategy Australia lacks non- To partner with a Formed a JV The JV will be Improves customer OEM financiers with financier to be (50:50) with equity accounted experience with a the ability to offer able to offer Allied Credit by t