Dear Shareholders,
The previous year was rather unfavourable for car manufacturers, especially due to the drop in sales compared to sales especially at the end of 2010 when sales soared on the basis of information related to the planned liquidation of VAT deduction on car purchase in Poland. This situation caused a lot of comments and questions as to the crisis of the industry. Consequently, we have received a number of questions from anxious investors on the condition of our business. Today, Inter Cars’ results speak for themselves. Consolidated sales revenue increased by 14,6% and generated the net profit of PLN 104 million proved that although the crisis had impacted the car production segment, the segment of independent distributors continues to grow and is profitable. Unfortunately, for many motor industry is mainly understood as a car production industry, although in Poland today, in terms of generated value and the number of people employed the market comprise mainly of spare parts and car equipment manufacturers, car repair garages and independent spare parts distributors.
We see, however, that increasing fuel prices may impact negatively our business segment. Many drivers in large agglomerations give up a daily car use and revert to municipal commuting. As reportedon the ING Bank Slaski’s website, which was followed by other media, 58% of drivers admit having reduced usage of their cars during last 12 months and 5% of drivers have switched to municipal commuting.
On the other hand the journal “Dziennik Gazeta Prawna” quotes on its internet portal that the growing number of new car owners decides to have their periodical controls of vehicles outside the network of official service stations (OSS). According to Alfred Franke, the President of the Association of the Independent Spare Parts Distributors, approx. 20-30% of new car owners may service their cars outside the network of official service stations. While still 4 to 5 years ago the number of vehicles under guarantee serviced outside of the network of official service stations was practically null.
Owners of new cars switch to independent services due to undoubtly lower prices and according to Tadeusz Kunce, the president of GIPA Poland, due to insufficient territorial coverage of Official Service Stations in Poland. It mainly applies to the brands that market share does not exceed 3%. These are Volvo, Mitsubishi and even Citroen and Peugeot. It has been known for some time that distance over 50 kilometres is a discouraging factor for a driver to visit a service station.
In view of these two opposite information we should ask ourselves how to take advantage of current market situation which could be seen in terms of hope or threat.
Inter Cars SA as a leader and one of the largest European spare parts distributor for passenger and commercial activity vehicles is a profitable company both in times of prosperity and crisis.
The mission of Inter Cars SA from its very beginning was to continuously increase the level of services for customers mainly through the widest accessible offer and optimalization of delivery times for repair garages. Moreover, we continue to expand our investment offer (sales support) for repair car garages in terms of garage equipment as well as we extend our training offer and technical help desk. Obviously, it would not be impossible to provide such a wide offer without cooperation of Premium spare parts manufacturers. As it is them who lead in innovation and trend setting in the industry. Owing to such close cooperation Inter Cars SA has a quick access to technical knowledge related to vehicle servicing. Therefore, Inter Cars is a guarantee for its customers for the best use of opportunities that arise in the current economic surroundings.
According to the data provided by the Polish Automotive Aftermarket Suppliers Association the value of independent passenger car market in 2010 amounted to PLN 7 billion (without oil and tyres). This means that this segment of the market has only grown as much as 2% over the year. Based on our own estimates Inter Cars SA’s share in the segment of passenger and commercial vehicle market amounted to approx. 20%.
A stable situation of Inter Cars on the Polish and neighbouring markets allows us to calmly work on optimization of operations in order to increase profitability. Therefore I see successful future ahead, especially that we continue to seek new solutions increasing our competitive advantage.
I believe that 2012 will be another successful year and for You Dear Shareholders will be a confirmation that you have made right decision to invest in Inter Cars S.A.
Robert Kierzek
President of the Management Board