Car distributor Inchcape seizes EV opportunity instead of waiting for invite
Car dealerships that risk being left out of the electric car revolution don’t have to sit anxiously on the sidelines
Lee Lilian &
Leow Ju-Len
THE electric vehicle (EV) party is getting lively, but not everyone has an invitation. What are car dealers still mired in the combustion ecosystem to do, apart from watch from the sidelines?
They could, like the uncool kids do, denounce the proceedings and say they have better things to do. After all, on the face of it, EV sales are still relatively small, accounting for only one in 10 new car sales worldwide, and slightly more than that in Singapore.
But as the motoring world undergoes a complete paradigm change, electric cars offer tantalising growth opportunities.
Globally, EV sales were up by a staggering two-thirds last year, even though the overall car market declined.
Here, in the first 11 months of 2022, the American upstart Tesla managed to narrowly outsell Audi, a bona fide premium brand with nearly a century of heritage and motorsport success. It did so with only two kinds of car, against a German menagerie of more than two dozen models.
During the same period BYD, a Chinese battery manufacturer turned carmaker, saw its sales grow 10 times here, a result that launched it from obscurity into the orbit of other established names, such as Nissan.
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Yet, some dealers here simply have no way to join the EV party, because the carmakers they represent have yet to cough up the requisite goods. Instead of being left out altogether, they might look for ways to make their own fun.
Inchcape’s announcement this week that it has acquired AutoInsure, a workshop for car repairs, looks like just such a move. The dealership group – a global giant that sells an estimated one out of every 100 new cars in the world – is best known here for its subsidiaries that represent Toyota, Lexus and Suzuki, as well as Hino, a Japanese lorry brand.
On the surface, the acquisition, made for an undisclosed sum, complements Inchcape’s existing operations neatly. Its dealerships can only service and repair cars from their respective brands, but AutoInsure is free to fix any car.
Located in Marsiling, the acquired workshop serves an area where Inchcape was absent. It works with 13 insurers, while Inchcape’s own body repair facilities tend to be an option only for drivers who pay for top-tier insurance.
As a group, Inchcape is also on the lookout for ways to diversify its income streams. It believes that selling a car and servicing it for the first owner captures only 25 per cent of the revenue that a given car can generate over its lifetime. Buying an independent workshop gives it a crack at the other 75 per cent.
Yet, AutoInsure sees roughly 30 cars a day go through its workshop doors, so the acquisition is unlikely to move the needle on Inchcape’s numbers – in the first half of 2022, the group took in £3.9 billion (S$6.37 billion).
While it dovetails nicely with Inchcape’s existing business, what AutoInsure really brings to the table is the ability to repair electric cars. These require different skills from normal cars, partly because high-voltage batteries pose a hazard and need special handling, and partly because EVs are sometimes structurally distinct from combustion machines, to say nothing of the differences between motors and engines.
As a designated EV repair centre for Allianz, a German insurer, AutoInsure gives Inchcape a way to gain valuable knowledge about the technology.
That is crucial for the dealership, because apart from marketing an electric Lexus model that has made little impact on the market here, Inchcape has yet to put a toe through the electric-car door.
Inchcape is hardly alone in wanting to get a jump on the shift to EVs. Charge+, a charge point operator, is scrambling to build EV charging networks both here and in relatively underdeveloped markets such as Vietnam and Indonesia. Goh Chee Keong, its chief executive, believes it necessary to front-run demand, instead of trying to keep up with it.
Cycle & Carriage, another dealership group, imported a few units of the Kia Niro EV nearly four years ago, when the electric car market was still dormant here. A senior manager told The Business Times (BT) that she didn’t expect the car to sell, but wanted to bring it in to learn about how to market and service EVs.
Last year Komoco Motors opened an EV repair centre of its own, to handle electric Hyundais. The facility is at serious overcapacity at the moment, but a director told BT that the company has it because it “has to”, since EV sales could soon go from trickle to flood.
In a move that shows just how EV-ready car dealerships want to be, Komoco also launched a partnership with the Institute of Technical Education that allows it to identify and snag promising technicians for its EV workshop.
Indeed, in April 2022 Inchcape agreed to help foster a generation of electric car specialists with Singapore Polytechnic. Presumably, the idea was to give Inchcape its pick of the brightest graduates. If so, the AutoInsure acquisition gives those bright pupils somewhere to go.
None of the above can address the fact that Toyota, Lexus and Suzuki have yet to make a serious assault on the electric car market.
But instead of sitting anxiously on the sidelines, Inchcape has at least decided that if it can’t yet join the EV party, it doesn’t hurt to learn a few moves first.
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