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running Jane Bordenave talks to Warren Espinoza, Chief Operating Officer of automobile aftersales business Midas Group about how the company has become the market leader and what it is doing to stay there.

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Midas Group FEATURE

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idas Group is the market leader in the automobile after sales industry. Founded in 1968 and floated on the stock market in 1986, the company has an established presence in both the wholesale market and by way of franchises in retail. In 1973, also founded NAPA – the National Automotive Parts Association. Comprised of 85 members, it acts as a marketing and bulk-buying & marketing organisation, ensuring that members receive preferential prices from suppliers and value-adding promotions.

Our sales have improved during this tough period as vehicle owners drive their vehicles for longer in preference to purchasing new It is this dual route to market that differentiates the firm from its competitors and has allowed it to rise to the position it is in now: It operates five franchises, Midas, Motolek, CBS, Adco and Auto Care & Diagnostics which cover all the different direct-to-consumer aspects of the motor after-sales business and have over 400 individual stores throughout South Africa. The Group delisted in 2002 and, as of December 2009, a majority owned subsidiary of the Imperial Holdings Group, itself listed on the JSE. Despite being ostensibly in the automobile sector, Midas Group hasn’t suffered in the way that car dealerships or manufacturers have during the recession. “Our key market covers vehicles that are between 4 and 13 years of age. What we are benefiting from at www.southafricamag.com

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Midas Group FEATURE

the moment is the large number of new vehicle sales that took place in 2005, which are just coming out of warranty now,” explains Mr Warren Espinoza, Chief Operating Officer of the Group, “Our sales have improved during this tough period as vehicle owners drive their vehicles for longer in preference to purchasing new”. However, he does temper this, going on to say, “the lack of disposable income in the pockets of South Africans has meant to some extent that consumers have tried to reduce their kilometres travelled and have deferred their vehicle maintenance plans.” Clearly, this five-year lag between the new sales and after sales markets means that the dip in new vehicle sales

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experienced by the automotive industry in 2007 – 2009 will impact on the aftermarket in a few years time. However, the breadth of services and products offered by the company

and its franchisees mean that it is well positioned to ensure continual growth. “We have a number of product divisions within our business, some of which are niche divisions based on consumer discretionary spend,” says Mr Espinoza. “These products are sold primarily through our franchisees, which, over the years have diversified their stock, adding non-automotive ranges to the core vehicle after sales items on offer.” While these divisions have suffered during the recession, as customers drew in their belts, with the recovery that will inevitably take place, sales have started to pick up. “Taking our Midas franchise as an example, we profiled our existing customer base in these stores, concluding that the type of person walking through the door is someone who enjoys DIY and out-door pursuits, so we cater to that market too.” As such, these shops carry products targeted at this kind of customer, such as outdoor, camping and fishing equipment, and other items that are not necessarily directly related to the auto after-care market. Aside from the commercial aspect of the business, the company has an important set


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Midas Group FEATURE

of core values centred on the notion of social upliftment. The largest and most important initiative to come from this is the adoption of three schools by Midas Group, “about six years ago, when we decided that we wanted to put something back into the community, we asked our shop stewards to canvass our staff in the warehouses for suggestions as to what we could do,” says Mr Espinoza, “they suggested helping a particular school located in a poor area on the outskirts of Johannesburg. The government funds received by the school was inadequate, so we decided to approach the headmistress and offer additional finance.” Since starting this relationship, the firm has been involved in building new classrooms, helping to nearly quadruple the number of pupils in attendance, as well as paying for extra teachers, building toilet blocks and paving the playing field. Most recently, the

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Armstrong Holdings As part of the Tenneco Industrial Group – one of America’s leading industrial groups, Monroe is the largest independent producer of ride control products in the world. In 1997, Tenneco Automotive and Armstrong Holdings entered into a JV to manufacture and market ride control products in SA; these being distributed via the likes of Midas and most franchise fitment groups, as well as various independent outlets. Producing over 60 million shock absorbers per year and with an annual turnover of approximately R6 billion, 55% of Monroe’s production is geared towards the manufacturing of original equipment for most well-known brands of car – including 90% of those driven in SA. Monroe are also responsible for the distribution of the Tenneco ‘Rancho’ product – America’s best selling off-road specialist brand, with a unique nine setting adjustment.


Midas Group FEATURE

company has attracted local media attention while installing a soccer sports field. Midas Group has also adopted another two schools, one in Port Elizabeth and one in Durban. While these three schools form the spine of the company’s social upliftment programme, there are also other initiatives in place, such as the bursary programme offered to exceptional pupils at the Johannesburg school to enable them to continue their studies to standard 10. As well as encouraging education in the outside world, the company also places great importance on the training and up skilling of its employees. Due to its size, the business is covered by the South African Skills

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Schaeffler South Africa Automotive Aftermarket, through its brands LuK, INA and FAG is proud to be a supplier to the Midas Group! The Midas Group is a major distributor of Schaeffler Group products through its National Wholesale and Retail structures to independent workshops, fitment centres and end users. In order to optimally maintain an excellent working relationship, Schaeffler South Africa, with the only OE passenger car clutch manufacturing facility in the country, has invested substantially in production, distribution, warehousing, technical and sales support infrastructure. Schaeffler South Africa, a member of the Schaeffler Group


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Our six local OE awards from Toyota, VW and GM for 2009!

The Schaeffler Group’s LuK brand has been recognised continously for more than twenty-five years with the brand scooping numerous local and international awards including six local OE awards from Toyota, VW and GM in 2009. LuK is an important supplier of clutch components to the OE industry in South Africa. LuK clutches, many of which are proudly manufactured in South Africa with award winning German technology, are renowned for excellence in innovation and superb quality. Look out for the same top quality replacement parts in the distinctive yellow box, available throughout all major motor spares outlets.

The Schaeffler Group is a renowned, world-wide supplier to the automotive industry, developing and manufacturing precision LuK, INA and FAG products as original replacement parts. Schaeffler Aftermarket Service is a high-performance partner for distributors, workshops and end users and provides an online technical database and toll free hotline for technical advice.

For more information please contact: Toll Free Hotline: 0800 41 2106 (Office Hours) Phone: +27 11 225 3000 Fax: +27 11 225 3099 Email: info-za@schaeffler.com

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Midas Group FEATURE

Development Act, where all staff members are assessed for potential training needs. A sign of how seriously Midas Group takes its obligations under the act is it’s ABET training scheme. While management level staff may be sent to universities or colleges for short training courses, the company cares and provides for those employees in need of basic literacy skills in house though ABET, so there is no upheaval with them needing to travel further a field. In addition to these mandated educational and training elements, the Group also has a state-of-theart diesel training centre. This is the area of largest capital investment in technology, to ensure that it is constantly at the cutting edge of new developments in diesel vehicles. This centre offers knowledge transfer to Midas’ customers and their technicians, ensuring that they are, in turn, able to offer the best to their clients.

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The company has an important set of core values centred on the notion of social upliftment

Midas Group is innovative, socially and environmentally aware and responsible and client conscious and it is these attributes that have put it into the strong position it is today. While warehousing and selling stock is the foundation of its business, it is the company’s commitment to good service and building a relationship with its clients that has made it the market leader. While there are challenges ahead in the automotive after sales market, Midas Group has positioned itself in such a way that it can counterbalance them through its auxiliary product ranges. As the company continues to grow and mature, it will maintain its place at the forefront of the industry, demonstrating just exactly what best practice means in the sector. END


CELEBRATING THE POWER OF ENDURING RELATIONSHIPS

Willard Batteries has enjoyed a long and fruitful relationship with Midas over the years and looks forward to more of the same in years to come!


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Midas Group (Pty) Limited 294 Brickfield Road, Meadowdale, Germiston, 1401South Africa Tel: +27 (0) 11 879 6000 Fax: +27 (0) 454 0210

www.midasgroup.co.za


MIDAS FEATURE