[European Atlas]“GPC and AAG together is the global leader in IAM”

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Zepros : How is Alliance Automotive Group positioning itself on a European scale in 2018?
Jean-Jacques Lafont: The group totalled €2.4 billion in invoicing (45% in France, 40% in the UK and 15% in Germany). In Poland, we took control of the Groupauto purchasing group but have not yet made an acquisition. For the moment we are observing this difficult market. Overall, our acquisition policy is not to buy market leaders, but to build individual bricks by buying smaller structures.
In the UK, you took over Platinum International Group which is a big company (€65 million annual turnover), and above all one of your suppliers...J.-J.L.: It follows the same logic as the acquisition in 2016 of FPS, also from the UK. In addition to being a logistician, it also gives us access to Apec, a braking specialist, and BTN, a turbo distributor and renovator. Platinum is part of this strategy to include complex product specialists, like batteries. At first, this will allow us to deploy a good battery offer to our British customers. Then the combination of FPS and Platinum should help us better penetrate the market.
Is AAG involved in the merger of two Groupauto Spanish distributors?J.-J.L.: No, we did not intervene in the decision of Pena and Coll to create an entity to combine their purchases. But we applaud this initiative, which looks like an embryo of local consolidation. The Spanish market is interesting, but AAG cannot enter it by buying a small structure. We will look with interest when the company represents at least €200 million. We will wait until the market has consolidated.
What is your 2019 programme for Europe?J.-J.L.: We will continue our development in Germany and the UK, where we have already completed sixteen acquisitions. This is a market where we will have great opportunities, knowing that the reference buyer (ECP/LKQ) is so well established that it should be less active on buyouts!
Developing more business in the UK. What about Brexit?J.-J.L.: I know no more about the subject than Theresa May (UK Prime Minister), who seems to me to be waiting and hoping for the best! (see interview conducted in mid-November). Whether it is a hard Brexit or an agreement it will not simply affect logistics and accounts. In any case, AAG will remain a player in the UK market.

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A year after AAG's entry into the sphere of the Genuine Parts Company, have you introduced any synergies?J.-J.L.: Harmonization takes time. We have already worked on internal synergies such as HR and IT. To go further, we must better understand which specific parts of each are logical to keep as they are and those that would be better shared. Purchasing is the most obvious area to pool. And here we are moving forward. GPC and AAG together is the global leader in IAM. This has a cost for our partners but is also a very big advantage. There will be a redistribution of the cards with winners and losers. But it is also a framework that broadens the scope of negotiations and builds broader agreements with our suppliers, going well beyond the pressure on pricing conditions. This allows us to tackle together more globally strategic issues concerning the evolution of the automotive world. But remember, the European decision centre remains in Europe. Seen from Atlanta, the diversity of our markets is not always obvious.
Could you develop the GPC model in Europe, very strong in the USA with its own brand?J.-J.L.: Indeed 90% of GPC sales in the United States are under its Napa brand. Unlike Europe, this market does not have the culture of OEM brands. To serve all the demands of repairers, Napa segments it range according to different levels of quality. From premium, sourced from suppliers which are also premium, through to standard quality and then low-cost. Is all or part of this model transposable into Europe? We have not yet answered that question, but it is clear that the deployment of an own brand is something that some of our distributors are looking for - especially in France and UK. This is actually an interesting way to better coordinate our approach on own brands with Napa.
Can you still bypass e-commerce today, when you are in the Top 3 in Europe?J.-J.L.: We’re asking ourselves the question. GPC is currently piloting an online spare parts sales website in Canada and Australia. But today everyone is looking at the subject thinking that the richest pickings will go to the first out of the blocks. In this case, and because of fast moving technology, I think it's better to wait until a functioning model emerges. And then we can either develop our solution based on that model, or buy it. Whatever happens we do not intend to launch into e-commerce and risk alienating our historic and natural partners, the distributors. Because, in any case, it is not easy to operate both channels in harmony.Caroline Ridet