Franck Baduel, AAG: “Financing ourselves with value creation allows us to develop elsewhere”

First of all, can you give us the traditional round up of acquisitions and results in 2022? 
Franck Baduel: We are finishing the year on nearly 3 billion euros, which is a big increase in the space of a year (€2.5 Bn in 2021) with organic and external growth each at 9%. We are being hit by inflation in the nine countries where we operate which, when weighted, comes out at about 8% per year. But in the current climate, we have nonetheless stayed on course with 16 acquisitions including eight in the UK and four in Ireland. Next come those spread between the Netherlands and Belgium. In Germany, after Coler, Busch and Henning, we are expanding even further with the integration of Knoll. Next are Spain and Portugal with Lausan (the owner of Soulima). The Spanish number one has added 31 Spanish stores and six Portuguese branches and should end the year on 130 million euros. In total we have bought up approximately 300 million euros of turnover in 2022. And overall, we now have 750 subsidiaries across 2,500 points of sale. 

So is the Iberian Peninsula still one of your key expansion targets?
F. B.: This still fragmented market is very attractive! Spain and Portugal boast a vehicle fleet in circulation of 26 million vehicles, with behaviour quite similar to that in France, for example. In these countries, we work with premium suppliers, who we already know from our dealings elsewhere, and we have all our solutions like NAPA and Nexdrive. We are adopting the same expansion strategy as in other countries. It simply requires that we allocate the adequate resources: logistics, distribution concept, repairs, digital tech, etc. 

What are your “powerhouse” countries?
F. B.: We are seeing substantial growth in the UK (+7%) but also in France (6%) and in Germany and the Netherlands with two-figure growth. Poland, through the recruitment of members to Groupauto Polska is also a vector, notably with the arrival of Hart distributors (180 million sales, 700 employees, 26 locations) and Darma (20 million sales, 12 locations). These two firms each have subsidiaries in Poland, the Czech Republic and Slovakia. We have never truly stopped developing, except in 2020 with ‘only’ six acquisitions during a period when, like other companies, we had to hold onto our cash. We are continuing to maintain our rate of acquisitions and new members. And this is going to keep on into 2023. Financing ourselves with value creation allows us to develop elsewhere. But we remain pragmatic and, more importantly, humble, in spite of our size! 

Allparts has left Groupauto Nederland to join Nexus. What’s your reaction? 
F.B.: A lot has been said about this departure that is unjustified. For many years, Allparts Groupauto Nederland had been building a commercial partnership with LKQ. And in 2019, when Alliance Automotive Group acquired the operations of Parts Points Group in the Netherlands and Belgium, we attempted on several occasions to find a harmonious way of working together. Because when a GAUI member does most of their sourcing from a competitor, it’s not logical. We built a service offering so that they could have at their disposal all the ranges from our own suppliers, listed by GAUI. In spite of this, the Allparts board decided to join Nexus Automotive, which is a decision I nonetheless respect. That’s their choice.

Can we see the NAPA brand all over Europe? 
F. B.: Yes: NAPA operates in eight out of nine countries (excluding Poland, where we do not have the logistical resources to control the supply chain), with volume close to 300 million euros (compared with 200 million in 2021). We have been deploying it since 2019, with a different strategy to that in the USA, its native country. Over there, NAPA has a strong footprint which drives brand awareness for GPC: packaged products, distributor and garage concepts, online sales, sponsorship, etc. Everything has a NAPA look and feel. In Europe, the strategy is slightly different, with the choice of a 20-30% price de-positioning on a brand at only one level (middle range) and an offering tailored to each local fleet. We have transitioned our former private labels (Axcar, Tech’in, Truck Tech, etc.) to NAPA PC and HGV, as well as our paint supplies lines. 

Will the First logistics system be deployed outside France? 
F. B.: No, First is a French-born partially automated system spanning 50,000 sqm located 35 km from Paris, designed to round out our logistical network coverage around the country, between our nine regional distribution centres and the national platforms. However, we do have similar projects, in particular in the north of England with a 90,000 sqm semi-automated mega-centre. It will also handle products to be sent to Ireland. In Germany, we are going to open a new 26,000 sqm automated distribution centre, solely dedicated to original parts. And it is probable that we will also be setting up a nationwide parts distribution centre for our Spanish subsidiary. 
 

What news of the Winparts online platform that you bought in 2021? 
F. B.: It is still dedicated to online consumer sales! Winparts is a website that was created in the Netherlands 16 years ago, with a warehouse for car parts (PC and accessories). The aim is to duplicate the model in other European countries between now and 2024. But to do that, we first need to change the software so that its digital infrastructure can cope with the influx of data. We’re working on it! 

Do you have an update on Nexdrive to report?
F. B.: The concept is still a very recent one because it only started up less than a year ago in the Netherlands, which is a fertile land for electric and hybrid vehicles. We are harnessing all our experience there to build a packaged offering for repair shops around the servicing and maintenance of this type of vehicle: certification, marketing, parts, expertise, e-catalogues, training, equipment, etc. Nexdrive is now deployed across all our geographies, apart from Spain and Portugal (scheduled for 2023). We can report 150 certified garages, and we will be able to announce at least 500 at the end of 2023. Nexdrive even launched in Canada a few months ago, since GPC has adopted it worldwide. It will soon be up and running in the USA , Australia and New Zealand.