Metcash revs up

 

Midas Rouse_Hill_15 oIn a strategic move to strengthen its automotive business, Metcash has acquired Midas Australia, a franchise chain specialising in car servicing, brakes, suspension, and exhausts.

The acquisition adds a 10th branded business to the Metcash Automotive division, expanding its motor vehicle servicing outlets trading under the ABS banner.

Metcash will add 88 Midas outlets to the 53 trading as Auto Brakes & Services (ABS), for a national network of 141 outlets, all owned and operated by franchisees.

It is now a major competitor with Kmart Auto & Tyre, which has a network of around 250 stores.

The purchase is the second this year in the automotive aftercare business.

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Metcash purchased four Malz Motoring & Leisure Zone (MALZ) stores in Western Australia that had been placed in receivership and has rebranded them as Autobarn.

While grocery and liquor sales remain the core business for the listed Metcash wholesale business, the company has diversified into hardware with the acquisition of Mitre 10, and the automotive aftercare market with the purchase of Autobarn, Autopro, CarParts, MCB, Partco, Garrmax, ABS, IBS Auto Parts, and ATAP.

Metcash first entered automotive aftercare in July 2012, buying Autobarn, Autopro, and the trade outlets of Car Parts. It now has a network of 246 stores.

The company has since developed a stronger wholesale operation while developing a growth strategy that aims to expand the retail network with independent outlet conversions and greenfield development.

Ian Morrice, Metcash CEO, has identified the automotive aftercare sector as a growth segment, with more than 17 million vehicles on the road with an average age of 10 years.

The industry has an annual growth rate of 2.4 per cent and Morrice is keen to participate in industry consolidation, with the wholesale distribution and supply chain capability of Metcash able to support independents and franchise networks.

Morrice believes Metcash can create significant growth in the fragmented market by expanding direct sourcing, a more efficient supply chain, product development, and increased operational scale.

Under Paul Dumbrell, Metcash automotive CEO, the business has been developing a stronger consumer value proposition with consumer-led ranging and more innovative and effective marketing.

Dumbrell has also been working on disciplined merchandising standards, staff training, and store environments, as Metvash shapes up to major retail competitor, Supercheap Auto, and now takes aim at Kmart Tyre and Auto in the motor vehicle servicing segment.

The Midas acquisition is another strategic step for Metcash Automotive, adding significant scale to the network.

“The addition of Midas, an internationally recognised brand with a reputation for value and quality, ensures a formidable presence in the Australian automotive aftermarket alongside the existing ABS service business,” said Dumbrell.

Midas opened its first site in Tasmania in 1976 and has since grown to 88 sites nationally, comprising 62 franchised and 28 corporate outlets. The brand is owned by TBC Corporation in the US.

The Midas management team, led by CEO, Glenn Jarrett, will remain in place

Dumbrell said Midas marketing programs will continue as planned, existing franchise agreements will remain, and additional centres will be opened as opportunities arise.

The sale price for Midas Australia has not been disclosed.

The four MALZ retail stores at Balcatta, Cannington, Cockburn, and Midland were converted to Autobarn last month.

MALZ was placed in the hands of receivers in February, with estimated debts of $8 million.

It sells automotive aftermarket parts, accessories, tools, equipment, and leisure items and  opened its first store in December 2004.

It is understood to have annual sales of more than $11 million, which were not adequate to ensure the profitability on a standalone retail business.

MALZ was created by businessmen associated with the Marlows retail chain that was acquired  by Supercheap Auto in May 2003.

Marlows was the largest independent retailer of automotive parts and accessories in Western Australia and South Australia, with 20 stores in Western Australia, South Australia, and Victoria trading under the Marlows and Rocca Bros brands.

This story first appeared in Inside Retail PREMIUM issue 1998.

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