Cycle & Carriage Bintang Bhd (CCB) expects its new spare parts division to contribute substantially to earnings in three to five years.
The group, via wholly-owned unit Cycle & Carriage Parts and Accessories Sdn Bhd (CCPA) set up in June last year, has seen tremendous opportunity in auto spare parts distribution, said managing director Steve Foster.
CCPA, among other things, undertakes all the group's parts businesses and imports parts from China, India, Indonesia, Thailand, Japan and Taiwan.
It distributes them to the local after-sales market, including original equipment manufacturers and replacement market for cars of all makes.
Speaking after CCB's AGM yesterday, Foster said: “The new division has to generate double-digit (in million ringgit) contribution to overall profit. Otherwise, it is not worth to be in it at all.”
The local after-sales market is estimated at RM18bil.
Foster said the new division's strategy was to source for the right products and develop strong relationships with its clients, like service centres and workshops operators.
With an authorised capital of RM100,000, the new unit will operate at CCB's plant in Petaling Jaya.
On vehicle distribution, Foster said CCB responded to the National Automotive Policy by teaming up with Hong Kong-based Sinotruk last year to locally assemble and distribute China's best-selling trucks, which were due for launch in September.
He said the initial investment for the venture was RM5mil, mainly on the purchase of jigs and tools, as production would be undertaken at its existing assembly facility in Petaling Jaya.
He said the truck market was currently estimated at 4,000 units annually and the group aimed to capture at least 12% market share.
On car sales, Foster said while there was a slowdown in the sales of Mazda and Peugeot marques, its Mercedes-Benz segment had a robust growth in the first quarter.
CCB has about 50% market share of new Mercedes-Benz. It registered sales of some 360 of Mercedes-Benz cars in the first three months compared with 250 in the same period last year.
The group plans several launches that are mainly due for next year, including the Mazda BT50 pick-up truck and the facelifts for Mazda 5 and RX8.