Suncorp announced the sale of Capital S.M.A.R.T and ACM Parts to AMA Group on 1 October. Sam Street talked to AMA’s CEO Andy Hopkins (pictured) about how the business is planning to move forward.
The acquisition of Capital S.M.A.R.T by AMA Group continues the reshaping of the Australian collision repair landscape. Andy Hopkins, one of the biggest industry disruptors this country has seen, has been significantly influencing the market since he entered it from the UK back in 2006.
It’s by far and away the group’s largest purchase to date and would surely present some challenges? “Of course there are cultural differences but then we aren’t going to merge the companies, Capital S.M.A.R.T will be run independently,” Hopkins said.
There has been speculation in the market that Capital S.M.A.R.T could potentially offer its services to other insurers. “Capital S.M.A.R.T will always be exclusive to Suncorp. The fact that Suncorp chose to keep 10% of the business is an accolade to the way Dave Marino (Capital S.M.A.R.T CEO) and his team have run it, they have done a fantastic job,” he said.
Hopkins has big plans for Capital S.M.A.R.T, to grow it as an international brand.
“I think it can be a leading global brand, the best collision repair business on a global stage.”
AMA’s investor presentation on the deal referenced ‘significant value creation from the combination with approximately $17m of annual cost saving opportunities to be realised through AMA’s market leading procurement capabilities’. While Capital S.M.A.R.T has sourced its equipment and materials from Australian suppliers, AMA Group’s procurement net is cast much wider. Hopkins explained that the savings would come not from changing suppliers, but negotiating better terms and having a robust discount structure.
Regarding the acquisition of ACM Parts I wondered if there was a strategy to become self-sufficient in parts? “The majority of parts we use are sourced from OEMs, so no. What I like about ACM is the fact that it’s recycling cars and car parts which is much better for the environment than chucking them away.
“But really it’s all about people and I’m surrounding myself with a top drawer team. Campbell Jones (ACM CEO) is a natural fit for AMA,” he said.
Hopkins explained that his strategy has always been about people. This year he has appointed Steve Bubulj, former IAG head of supply chain who has also worked for other insurers as CEO of the Panel Division. After purchasing a number of heavy vehicle repairers including Wales Truck Repairs, he appointed Darren Wales as head of heavy vehicle repair. Now ACM,’s Jones will head up the automotive components and accessories divisions (ACAD) which includes the consumables, bull bar and Ute body manufacturing businesses and now ACM Parts.
Panel, ACAD and Capital S.M.A.R.T will run as three separate divisions with Bubulj, Jones and Marino in charge respectively. “It’s all about people, culture, ethics and team for me,” he said.
With many of the AMA Group facilities specialising in fast ‘factory style’ repairs I asked Hopkins what that the strategy is for dealing with ADAS and the recalibration and diagnostics that repairing those systems involves.
“Well nobody knows the answer to that right now,” he said. “We have teamed up with I-CAR to look into this. We’re not really seeing that many cars that need recalibrating at the moment – maybe one percent of the volume. However it will be a hockey stick change and will happen really fast. With Holden and Ford manufacturing here, those cars used 10 year-old vehicle technology which is both good and bad. Now I think the Australian market will be the fastest changing in a first world country. The cost of repair will inevitably go up, there is going to be a need to upskill and there will be costs associated with equipment.
“We see it as an opportunity. We will invest and train our people,” he said.
Looking forward Hopkins still sees massive growth potential: “It’s a $6billion market – there’s room for everyone. There’s loads of opportunities for growth and not just from a panel beating perspective..”
Hopkins started out in the collision repair business 30 years ago and says that consolidation is market driven, not AMA driven. “The increasing cost of entry into starting a repair business is a barrier as is the increasing complexity of vehicle technology.
“We go where the insurers want us to. We couldn’t have grown so fast without the support of the insurers.”
On a final note, remarking on the 15 year guaranteed contract with Suncorp with two five year options, which Hopkins says is worth $11billion: “The fact that Suncorp has realised that they need a vehicle repair network for 25 years should give everyone confidence in the future of the industry.”