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A nyone who has ever driven across the M5 bridge near
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Bristol and looked down across the acres of freshly-imported new cars can't fail to come to the conclusion that moving them has to be big business. They literally stretch as far as the eye can see, and the storage charges alone must constitute a nice little earner.
The company currently picking up that nice earner is the owner of the Portbury site, Autologic. While you may not know the name, you will almost certainly have come across its two main operating subsidiaries in the UK, Walon and Axial.
Walon was originally owned by the French industrial group Chargeurs but was bought by its management team in 1996 with the backing of venture finance. They in turn quickly acquired Walon Benelux, and Autologic was born. It was floated on the London Stock Exchange a year later and today acts as a holding company for a number of car transporter businesses across Europe. It owns a 40% stake in a huge joint venture in France with Renault. Around a quarter of Autologic's business is done in the UK—it also operates in Belgium, Spain, Portugal, Holland, and even South America.
UK businesses
4Vaklli pronounced Valon) is by far the biggest piece of the UK jigsaw, it moves cars and vans on behalf of Fiat, Saab, Toyota, Kia, Mitsubishi, BMW (and Mini), Vauxhall and Land Rover.
Around half its income is derived from car distribution and the other half comes from 'other services' it provides to the manufacturers. Primarily, the company moves imported cars around the UK but it also delivers cars for export—most notably Toyotas manufactured in Derbyshire and Vauxhalls made at Ellesmere Port. Walon moves more than one million cars a year, and operates 350 car transporters out of 22 UK depots, For some reason—probably because it is perceived to have a strong brand name—Axial retains a separate identity both here and in Europe. In the UK, it carries cars on behalf of two main customers—the Volkswagen/Audi group and Nissan. Axial moves around 500,000 oars a year on 120 transporters, and has eight distribution centres.
Autologies third big car distribution arm in the UK is Ansa Logistcs. This is a joint venture with Ford, and is a dedicated contract to move 530,000 cars a year entirely an Ford's behalf. It has 270 transporters and three distribution centres.
Despite the size of these contracts, Autologic also moves cars for a host of other customers including most of the big car rental companies, leasing firms such as TLS, and other large fleet providers. It has a specialist covered-car-transporter business called Enable which moves spe cialist cars, or ones that the manufacturers want to keep under wraps, such as prototypes. It has also recently added a trade plate service which moves demonstration vehicles between car dealers.
Added value
If you compare the current car transporting business with that of the past, the main difference is the amount of work now done to cars before they are delivered. Walon and the other subsidiaries now undertake a significant amount of the manufacturers' work for them. Depending on the contract, they might install the stereo, alarm/immobiliser, sunroof, alloy wheels and even the leather seats.
For example, all Toyotas that arrive in the UK requiring leather seats have them fitted by Walon staff ready for onward delivery. At the Portbury site, there is even a Simplified version of a car production line to allow quicker fitting. Autologic companies carry out pre-dekvery inspections, and also valet and wash cars. Many of the rental companies outsource all the cleaning of cars to Walon and they now arrive at offices ready to rent'.
Profitability
According to Russell Brown, the managing director of Walon UK and Axial UK, the key to profitability in this area is filling transporters quickly once they have made their first delivery.
"As soon as a transporter delivers its first load at the dealer or wherever, it is directed to the nearest pick up to reload. One of our most important key performance indicators is the number of miles travelled per car moved, and we make great efforts to reduce the amount of empty running," he says.
The company is helped by the fact that it does a great deal of spot' work, and it will even carry vehicles for its competitors (for a price) in a bid to reduce empty running. Undoubtedly, the huge numbers of vehicles being moved every day allow it to keep it to a minimum— planners are helped by a vehicle tracking management system that logs every car (via its chassis number and barcodes) and every dekvery. Walon's computer system has direct links into its main customers' computers, enabling those customers to get real-time information at any stage of the delivery process.
Having spoken to Brown at length, you get the impression that one of the group's new-found strengths is its flexibility. There is clearly a great deal of overlap between the 'separate' businesses—the company recently started bringing in vehicles from abroad to get around the huge jumps in business caused by the now six-monthly number plate changes.
Brown says most of the UK business is done for a flat fee (on a closed-book basis) although they have contracts that allow them to go back to a customer when fuel costs rise, as they have over recent months. However, he declined to reveal how much he charges to deliver a recently-imported car.
Rail
One recent area of development for the company is in rail. The giant site at Portbury, which incidentally is Europe's biggest car distribution site, recently had a £22m rail-link installed and Walon now runs two trains a week carrying cars up to Mossend, Glasgow Brown says the length of the journey makes up for the slight cost disadvantage of going by rail, but goes on to say that the company is committed to making more use of rail where it can in the future. Interestingly. Walon is also involved in a joint venture with the French rail company SIVA to provide a rail service into its Corby depot.
Finances
As the chart (left) shows, Autologic's rise in turnover and matching profits over the last six years has been very steady. We will find out next week (26 March) how it really performed during 2002 when it releases its year-end results, but most observers are predicting it to post profits around 130m—which would be up 50% on the year before.
The joint venture with Renault is performing well, and it was this that led the stockbroking firm Cazenove to say last August that it was recommending clients buy the stock at 5.4.45p. Since then the price has fallen to around half that, but that has more to do with the general state of the market than Autologic's performance.
you were going to scund a note of discord, you would have to sal that this is a company with all its eggs in one basket. Part of the reason it has been doing well recently is that its progress is completely allied to the state of the economy. Car sales have risen steadily (2.5 million this year) over the last couple of years; however, if they start to fall away, as they surely will, then the company's figures may not look quite so bright. That said, it has a reputation for being well-managed, and it is clearly very well placed to start winning the European-wide distribution contracts that the manufacturers are starting to look at introducing in the future.
• by Miles Brignall