viewRPM Automotive Group Ltd

RPM Automotive Group extends national tyre growth strategy through Melbourne purchase

The group comprises a number of aligned automotive aftermarket businesses that together provide a platform to address significant opportunities in the Australian market.

RPM Automotive Group Ltd - RPM Automotive Group extends national tyre growth strategy through Melbourne purchase
RPMAG adds Competition Tyres & More Hallam to its group of ‘class-leading’ tyre stores

RPM Automotive Group Ltd (ASX:RPM) has supported its goal of building a strong national group of class-leading tyre stores by acquiring a successful retail outlet in Melbourne’s south-eastern suburbs.

The acquisition of Competition Tyres & More Hallam, also known as Hallam 4x4 and Suspension, will strengthen both businesses.

This will also provide RPM Automotive Group’s (RPMAG) other subsidiaries with a very strong location/position in Melbourne.

Seeking tyre opportunities

RPMAG is focused on its strong position in a consolidating Australian Automotive Aftermarket and has a detailed plan to accelerate expansion through targeted acquisition of a number of related businesses and outlets.

Strategically, RPM’s board believes it is well-placed to take advantage of opportunities in the consumer,  commercial, off-road, truck and bus tyre industries and has identified a number of wholesale and retail outlets meeting these requirements.

Through subsidiary RW Tyres, RPMAG already owns a commercial tyre centre in Hallam, Air Anywhere, as well as Competition Tyres & More Murrumbeena, a diversified retail tyre and wheel store also Melbourne’s south-eastern suburbs.

Prime Melbourne location

Competition Tyres Hallam is in a prime location for retail trade with massive passing traffic during the week and at weekends and has a large retail space to exhibit the best of what RPMAG has to offer.

The workshop is well-equipped to handle truck and commercial tyre repairs and replacements.

Having direct access to Longmarch Tyres, a brand owned by another of the group’s subsidiaries Spider GT, along with better-known brands such as Yokohama and Michelin will ensure the store’s ability to comprehensively service its predominantly counter-front retail customers.

Formula Offroad HQ

The store is destined to become the Victorian Head Office of Formula Offroad, another RPMAG subsidiary that specialises in manufacturing vehicle accessories and the distribution of towbars and towing products.

Competition Tyres & More Hallam will also be Carline Hallam and as a company ‘hero store’ will provide a platform to promote RPMAG’s ‘one-stop-shop’ strategy.

Third new Carline store

This will be the third new store to join the Carline Automotive Group this financial year.

The company vision for the Carline group is to have strong outlets around Australia that are well-diversified across the various facets of the Australian Automotive Aftermarket.

This includes mechanical, towing, wheels & tyres, accessories, performance and emissions, batteries, brakes, suspension and conversions.

Competition Tyres & More Hallam sales exceed $275,000 thus far this financial year and the outlet is expected to turn over around $2 million for the 12 months ending June 30, 2020.

Having secured some key tyre brands, that are well accepted in Australia and growing internationally, RPM has the ability to not only organically grow across all of these distribution channels but also to retail tyres through the other business units it owns.

Increasing service offerings

The goal is to build a strong group of ‘class-leading’ tyre stores nationally, provide leadership and direction while leveraging off their individually strong supplier buying deals and work with them to improve gross margin and diversify their product and service offerings.

At the same time, RPMAG is able to introduce other products that it manufactures/distributes to improve the purchasing experience of customers while also improving the profitability of the group.

The current financial year is shaping up to be an interesting one for RW Tyres with strong retail sales on the back of lower levels of new car sales when the public tends to spend more on existing vehicles.

Quick facts: RPM Automotive Group Ltd

Price: 0.2 AUD

Market: ASX
Market Cap: $18.16 m

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