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SCMP Reporter

AUTOBACS Seven Co, the largest retailer of auto parts in Japan, wants to expand its operations in Hongkong.

  The Osaka Stock Exchange-listed group already has a company in the territory, Autobacs International (HK) Ltd, which has been operating as a wholesaler for seven years.

  But the chairman of the Autobacs group, Mr Toshio Sumino, said he would like to expand further, perhaps in retailing and through franchising.

  Mr Sumino, who was in the territory for a presentation organised by Daiwa Securities (HK), said the major difficulty appeared to be finding an appropriate partner in Hongkong.

  Autobacs Seven has already expanded its retailing operation to Taiwan and also has a wholesaling operation in Singapore.

  Mr Sumino said he saw a big future of auto parts retailing, especially through franchising.

  He said that he had always believed trends in the motor industry in Japan and, ultimately, Asia would follow those established in the West.

   He said the motor vehicle industry in Japan had not yet matured and, with higher incomes and increased leisure hours, more money would be spent on auto parts and accessories.

  The group is also expanding the service sector of its parts shops - lubrication service, repairs and parts replacement - to add value to its products.

   Autobacs Seven now has 313 stores in Japan and three in Taipei and is looking to expand to 500 stores within the next few years.

  In the last five years, sales have expanded at an annual rate of 19.8 per cent, supported not only by the expansion of the accessory market but strong consumer loyalty.

  This is backed by the size of the Autobacs Seven chain, as well as quality of merchandise and services, extensive merchandising, price competitiveness and aggressive expansion by franchising.

  All stores are also equipped with comprehensive maintenance pits.

  The company has been growing in profit by 53.4 per cent annually in the last five years due to brisk sales growth, a wide range of high-profit-margined in-store brand items, and cost control.

  In Japan, Autobacs Seven now has an estimated 40 per cent share of the specialist automobile accessory retail market, and is still growing.

  Its biggest long-term task is the need to expand the customer base from young men to include women and older drivers.

  Male consumers in their late teens and twenties are the keenest buyers of automobile accessories, and have been the strongest contributors to market expansion.

 Although this is a common feature in most developed countries, it is particularly encouraged in Japan by high property prices, which makes first-time home buying almost impossible for young consumers, and many live with their parents or in company dormitories.

  Buying a car is, therefore, an important event and means of self-expression.

        The introduction of new automobile electronics or fashionable accessories has also supported growth of the accessories market.

  The number of young males in the population has grown rapidly, much to the benefit of accessory retailing, but this advantage will disappear in the late 1990s when consumers in this age and sex group begins to decline.

  The company has began brightening up stores, making them more attractive to women drivers, and also started a free or discount maintenance day campaign for women drivers.



Accessory giant looks at local franchise