Beyond AUTOBACS Vision 2032
In May 2023, we announced our long-term vision – Beyond AUTOBACS Vision 2032. In this vision, we stated our purpose (raison d’étre) as “ensuring the safety of our communities while driving and enriching customers’ lives,” and also revealed the direction for AUTOBACS SEVEN’s evolution, specifically the aspiration to become “a company that consistently offers the enjoyment of going out.”
Due to rapid digitalization and the advancement towards a decarbonized society, customer needs have changed significantly, along with society, cars, and people’s lifestyles. We decided to re-examine our raison d’étre in order to achieve sustainable growth in this uncertain and unpredictable business environment.
AUTOBACS SEVEN has a DNA that we have valued since our foundation. Embedded in our corporate motto of “realize your dreams,” which was coined by our founder, is the belief that whether you can realize your desires depends on how vividly you can envision your aspirations in your mind, and how you act upon them with passion, deep faith, and enthusiasm. The first AUTOBACS Declaration stated, “We sincerely wish for traffic safety for customers and individualized car lifestyle by being the most attentive, and will create and offer sales and services that match the needs of the local community.” Derived from our starting point of realizing these two wishes, traffic safety for customers and an individualized car lifestyle through AUTOBACS, we set our purpose as “ensuring the safety of our communities while driving and enriching customers’ lives”
Thus, as “a company that consistently offers customers the enjoyment of going out,” we aim to continually evolve our business and business models in response to changes in the social environment, contributing to the safety of transportation in society and realizing our customers’ dreams for a fulfilling life as long as cars and mobility remain at the center of our business.
In the tumultuous automobile industry, which has entered a once-in-a-century period of major transformation, we will further increase the speed of management, aim to evolve each of our businesses, and take on the challenge of business creation, and work on transformation for capturing new opportunities.
Beyond AUTOBACS Vision 2032, a vision we have announced on this occasion that describes the direction of the Group’s evolution through FY2032, is meant to express the meaning that we ourselves will surpass ourselves.
Review of FY2022
For the Japanese automobile-related industry in FY2022, the situation in Ukraine and China’s zero-COVID policy have led to shortages in parts supply and stagnation in logistics and had a prolonged impact, although the number of new cars produced which had been affected by the global semiconductor shortage has been on a recovery trend. In addition, in the used car market, the decrease in new car production led to a reduction in the circulation of trade-in vehicles, and the number of used cars registered remained at a lower level compared to the previous year. In the automotive goods and services sector, although we were affected by rising prices, demand for winter goods increased due to cold waves and snowfall.
As a result, despite the impact of reduced new car production and rising raw material and energy prices, we achieved increased sales and profits. The Group’s consolidated net sales increased by 3.3% year on year to 236.235 billion yen, and operating income increased by 1.5% year on year to 11.722 billion yen.
The Domestic AUTOBACS Business remained firm, effectively capturing the increased demand for maintenance of existing cars due to reduced new car production, although we have set higher prices for some items due to soaring raw material costs. The Overseas Business has been strong for both retail and wholesale, and we were able to reduce the operating loss. In addition, the Car Dealership, BtoB and Online Alliance Business also turned a profit and contributed to increased sales and profits, resulting in the Group’s management surpassing the initial plan in terms of net sales, operating income, ordinary profit, and profit attributable to owners of parent.
In FY2022, we have set and implemented the following three priority initiatives: improve execution and increase speed; strengthen initiatives for sustainable growth; and continue human resource development initiatives.
To improve execution and increase speed, we have promoted the optimization of management resources through the review and narrowing down of the business portfolio. Specifically, we decided to partially withdraw from Lifestyle Business as part of optimizing management resources. Next, in reviewing the business portfolio, we are continuing deliberations on the withdrawal from unprofitable businesses at meetings of the Board of Directors, while also focusing on establishing business in fields where growth is expected, thereby strengthening our strategic business initiatives. Specifically, we aim to increase profits by making the used car purchasing and sales (AUTOBACS CARS) of the Domestic AUTOBACS Business independent and recruiting new franchisees outside the AUTOBACS Group. We also signed a dealer contract with BYD Auto Japan Inc. in the Car Dealership Business. We intend to contribute to the realization of a decarbonized society through the promotion of EV adoption.
In order to realize prompt and accurate decision-making in advancing these initiatives, we have abolished the officer system. We will further accelerate the speed of reform through the realization of organic collaboration between various businesses and the strengthening of business portfolio management.
For strengthening initiatives aimed at sustainable growth, we have focused on the “evolution as a retailer” through the integration of online and physical stores, and the “evolution from a retailer” utilizing unique data, which is one of our digital transformation (DX) initiatives.
In the “evolution as a retailer,” we have accelerated the integration of online and offline, implementing Buy Online Pick-up In Store (BOPIS) service where items purchased online can be immediately picked up in store if available, and last-mile delivery measures that enable immediate shipping from the store if inventory is available. We believe that these initiatives contribute not only to the efficiency of logistics but also to environmental friendliness.
In our “evolution from a retailer,” we have adopted the vision of “realizing CDE with a digital ecosystem,” and as its first step in our DX strategy, we have made AUTOBACS Digital Initiative Co., Ltd., a company involved in system development, planning, operation, and maintenance, a subsidiary. Going forward, we plan to strengthen areas related to the establishment of IT infrastructure, and focus on the development of digital talent. Regarding the utilization of unique data, we have opened the car life general information site “MOBILA,” and will aim to be a platform for mobility information that can provide an opportunity for the “enjoyment of going out by car” to both users and non-users of AUTOBACS. In addition, we are continuously working on improving pricing through the efficiency of logistics, aiming to create a virtuous cycle where efficiency leads to cost reduction, which in turn leads to improved pricing and increased store profits, generating investment for new store openings, thereby increasing sales profits and improving price negotiation power.
Lastly, to continue human resource development initiatives, securing certified mechanics is an urgent issue, and we are pursuing initiatives focused on recruitment, development, and retention of certified mechanics. For example, we are conducting training sessions in preparation of proficiency exams for automobile inspectors nationwide, and are focusing on personnel development within the Group centered on mechanic development. Also, to realize the evolution from a retailer, as an initiative that also integrates our DX strategy, we have started a DX reskilling program aimed at improving the digital literacy of all AUTOBACS SEVEN staff.
We aim to have our human resources acquire specialized skills through these human resource development initiatives to establish a system where we can provide new value to customers.
Review of the Five-year Rolling Plan and future plans
We are soon reaching the fifth year since announcing our “Five-year Rolling Plan 2019.” In an environment where the conditions surrounding cars are rapidly changing, we respond to changes in the external environment and diversifying customer needs. In order to promptly consider and implement measures accordingly, we continuously adjust our direction and strategy for the next five years in light of current trends, and update the content of the Plan every year.
Our initiatives and achievements for the past four years include successfully raising profit levels to a certain degree as a result of flexibly developing our business and business infrastructures to adapt to various changes in the social environment. Going forward, we plan to manage and visualize each business using ROIC (return on invested capital) as a key metric, and by revising and restructuring our business portfolio, we aim to accelerate the pace of reforms by incorporating this indicator into our evaluation criteria for General Managers.
In addition, we aim to fulfill the growth vision we have set forth in our Five-year Rolling Plan, which is to “leverage our network to provide a variety of services tailored to customer car-use situation,” and we will steadily achieve our business plans through improvement of productivity by making full use of our accumulated business infrastructures and network while leveraging existing assets. Going forward, we will finalize our Medium-term Business Plan that is currently under review, and we will engage in a Group-wide effort for the achievement of the Plan with a strong will and determination.
Medium to long-term growth strategies
As I mentioned at the beginning, we have announced our long-term vision, Beyond AUTOBACS Vision 2032, and have set “ensuring the safety of our communities while driving and enriching customers’ lives” as our purpose. For the next ten years, we will implement initiatives to go beyond AUTOBACS. Since October 2022, we have been discussing the next Medium-term Business Plan led by members under 50 who will be responsible for the next generation of management. We started discussions on the question of whether a Medium-term Business Plan is necessary for the consolidated Group, and we are working to materialize a plan to take the place of the Five-year Rolling Plan, with the aim of announcing it in FY2024.
In order for the Group to become sustainable, we believe it is important to pursue “ensuring the safety of our communities while driving and enriching customers’ lives,” and to integrate this purpose with management.
First, to spread this importance throughout the Group, we have implemented e-learning training on “sustainability management and SDGs” for the Group’s domestic staff, as well as for approximately 15,000 staff members working in our franchisees and stores. It is not easy to continue our economic activities into the future while being continually needed in a stably maintained society. It is important to not only incorporate sustainability management, but also for each individual staff member to consider the future 10 to 20 years from now. We have started our efforts aiming for FY2030 by setting nonfinancial targets and KPIs from four material issues: creation of businesses that solve social issues, enhancing efforts that consider the environment and society, development of organization and personnel, and sustainable and strong management base.
To our stakeholders
The environment surrounding the automobile industry is undergoing a significant transformation, driven by technological innovations including CASE and initiatives to resolve global-scale challenges such as climate change. As a result, society, cars, and people’s lifestyle will continue to change even more rapidly and dramatically in the future. The impact of the COVID-19 pandemic and the outbreak of wars were unprecedented events, even when looking back to the founding period of AUTOBACS SEVEN. Even amidst such increasing uncertainty, we will continue to respond to changes in the external environment with flexibility and a sense of speed, keeping an eye on the future.
FY2024 will mark the 50th anniversary of opening the first AUTOBACS store. As we anticipate changes in the business environment and the future of automotive society, as well as envisage our customers who use cars, we aim to further strengthen and evolve our core business and transform into a corporate group that is as entrepreneurial as we were during our founding period, and continue to take on the challenge of creating new value. While there is a view that the automotive aftermarket is reaching maturity, we aim for sustainable growth by evolving beyond the wholesale and retail automotive goods and services business to become “a company that consistently offers customers the enjoyment of going out by cars.” Furthermore, to realize our dreams and purpose of “ensuring the safety of our communities while driving and enriching customers’ lives,” we will continue to improve our sustainable corporate value in the long term by creating new value without being confined to existing frameworks.
We look forward to the continued understanding and support of our shareholders, investors, and all our other stakeholders.