As parts giant LKQ announced record revenue of $1.30billion for its third quarter on 31 October, it also revealed its plans for the Australian market in partnership with Suncorp.
In an open discussion with city investment analysts, LKQ’s Chief Executive Officer, President and Director Robert L.Wagman said that the joint venture with Suncorp plans to develop in or near each of the Melbourne, Brisbane and Sydney markets over the next four years at least one wholesale salvage yard, one aftermarket parts distribution business and one self-service salvage yard.
Wagman went on to say that Suncorp will supply salvage vehicles to the joint venture and help establish relationships with repair shops as customers.
"Suncorp acquires approximately 60,000 salvage vehicles from its policyholders annually, and approximately 37,000 of those salvage vehicles are acquired within 100 miles of the locations we intend to open" he said.
"Within these markets, Suncorp currently has 25 of their own repair shops and an extensive list of preferred regional repairers.
“These dynamics can provide, combine to provide the joint venture with an immediate and cost-effective source of salvage supply and instant body-shop demand on day one of operations,” Wagman said. He also commented that he didn’t feel there were many barriers to entry in the Australian market.
“I was actually in Australia last week, looking at the operation, potential operations, and I don't think it's going to be a major barrier to get the zoning permits we need. We're also looking at possibly acquisition opportunities, as well, so - in the event that does become a barrier. But we are optimistic that we can get up and running relatively quickly.
“It'll take some time but certainly within a couple of quarters, we expect to be -- start selling our first products. Likely be aftermarket initially but the salvage operations will open relatively quickly, I think, considering what we have to get done in the meantime,” Wagman said.
Commenting on the purchase of paint distributors in the UK and the Australian join venture.
"Our acquisition of five UK paint distributors and the forming of our joint venture in Australia further demonstrates our belief that the value proposition we offer insurance carriers and the professional automotive repair industry translates well outside of the North American footprint," stated Wagman.
Click here to download document LKQ plans for joint Suncorp venture relating to the LKQ joint venture in Australia and here for the full transcript on LKQ’s Q3 results.