Where luxury meets mainstream
Despite the downturn in car manufacturing in Australia, the car market is thriving in other areas. Bob Forshaw speaks with Ateco managing director Ric Hull about distribution, diversity and the importance of China.
– Despite the downturn in car manufacturing in Australia, the car market is thriving in other areas. Bob Forshaw speaks with Ateco managing director Ric Hull about distribution, diversity and the importance of China.
Ric Hull has been in the car industry for much of his life. While he does not consider himself a car lover in the ‘rev head’ sense of the expression, he is very much engaged with the business of cars.
“It is one of those industries where we have a large volume of turnover of relatively high value commodities, so when it is good it is very good,” Ric says.
The man who graduated with a commerce degree from the University of Melbourne, began his career with a trade association but soon found himself at Ford where he spent 16 years working in what he calls a very disciplined, organised company.
“Ford was highly regarded back then. It was a great learning ground, particularly in finance and in dealing with programs such as the Asian Car Scheme.”
It was this scheme that introduced Ric to Asian business practice and while with Ford he spent four years in Japan and three years in Taiwan. He took a sabbatical from cars after that working for an optical company, but soon found himself at Bond Group importing the Hyundai brand.
“The Bond Group was more handsoff. But that was the era where Bond had to sell off everything.” Ric says.
Those would have been interesting days indeed. Daiwoo provided a more settled environment. He began Daiwoo importation into Australia and later SsangYong, all the while building contacts in all the right places.
When he landed at Ateco in 2000, Ric took a hands-on role with Kia, a relationship that lasted for six years.
“I stayed with Daiwoo for five years,” says Ric. “Then Neville Crichton approached me. He wanted to pitch Kia and because we knew each other, he knew I had a great deal of Korean car experience. He approached me to see if we could entice the Kia distribution rights. We did and kept the rights for the next six years.”
Crichton is the owner of Ateco. Though the company has a low profile, they have maximum exposure and import and sell: • Chery • Great Wall • Lotus • Maserati • Ssangyong • Foton light trucks and utilities
This is an exceptional mix of prestige, luxury and general-purpose vehicles. And under the guidance of both the owner and the MD, the brand value has continued to increase because the diversification puts Ateco in a strong position across the market.
In terms of growth, Ric says, “We have always had our ears and eyes open for opportunities. We were successful in securing Kia. We knew in 2005 it was returning to the factory. Kia had been very effective as a volume seller beneath our prestige and luxury brands, so I started to look at other high volume brands. We travelled to India and China, but it was China that I felt would be the right source.”
In fact Kia was so successful that when Ateco took it over it was selling 5,000 units a year, when they let it go the number was 25,000 and that happened in a five-year timeframe. They are experiencing similar growth with Chinese brand Great Wall, which launched in 2009 and already has 40,000 units on road.
When you look at the statistics it is easy to understand why China is such a significant growth market.
“They did 23 million vehicles last year; that is more than the US and Japan combined,” Ric says. “I think they will be a major source of motor vehicles in Australia.”
According to Total Executive the reason China is so strong is because 1. They manufacture spare parts for the majority of brands globally. 2. They have access to technology from many of the top brands globally – a lot of which manufacture in China. 3. They have access to much of the
We have always had our ears and eyes open for opportunities. We were successful in securing Kia. We knew in 2005 it was returning to the factory.”
technology available from global component makers who produce in China. 4. They still produce at competitive prices. 5. Growth and volume is ensuring their investment in infrastructure for the future.
It means Chinese brands have become a big part of the Ateco business and will continue to be in future.
And as for dealing directly with the Asian market, Ric uses the same approach he would anybody.
“I have dealt with the Asian market all my working life. I don’t make any particular changes to the way I do business with anyone. Honesty, a forthright and professional approach will enable you to do business very readily.”
Ateco’s business model is also very attractive to suppliers. Ric sees it as a simple model amidst a sea of complications.
“We like to keep the business as simple as possible. In this industry there is a temptation to complicate and build model variations, but we don’t think this is a rewarding approach. So our approach is to keep things simple, while investing in infrastructure. “
In 2010, there was a major infra- structure investment in Ateco’s $32 million headquarters and Ferrari/Maserati dealership in Sydney. They staged Australian debuts of Ferrari’s 458 Italia super-coupe and Maserati’s GranCabrio convertible in front of more than 550 invited guests. This followed the opening of retail outlets in Melbourne, Brisbane and Perth, and upgrades to premises in Adelaide and Auckland.
“We’ve achieved our goal of building the best car dealership in Australia,” said Crichton at the time.
“This magnificent new Sydney dealership means that we now have a network of dealership that can stand comparison with the best in the world.
“Wherever our owners visit a dealership they will be welcomed by a unique level of customer service in facilities that match the legendary performance, technology and style of their cars.”
Ateco has always stood out. According to Ric there are three major importers, however while two concentrate on one major brand, Ateco has a divergent range of products concentrating on the European, Korean and Chinese markets.
The company has crucial relation- ships in these markets, due to its management’s foresight and experience.
“Our relationship is important with suppliers because we are a franchise business, we operate in franchise agreements from our supplier and we need a good relationship between the franchisors,” Ric says. “If that relationship breaks down it can mean that that brand is lost to us.”
Ric understands the car industry. He has seen radical changes from duties of 57.5% to 5% and imports now making up 90% of the Australian market when it used to be 15%. He believes manufacturing in Australia will phase out completely, however he still sees a place for the manufacture of parts.
“The biggest impost to business, and one major factor that killed the car manufacture business in this country, is the currency fluctuation,” Ric says. “It affects the business at the most fundamental level.”
However, imports will continue to grow and according to Ric the market is showing signs of a steady growth, which augurs well for the future particularly for a company whose brands are so disparate that they have all ends of the market covered.
And that’s where a knowledge and understanding of past and present market drivers comes in handy. Ric can utlise the lessons of the past to steer the company forward and into a very robust future.