Martin Ward

AUSTRALIA’S largest listed pure car retailing group, AP Eagers, will move the centre of gravity of its Brisbane operations from Newstead to its planned automall at Brisbane airport as part of a bold plan that seeks to pre-empt the revolution that is widely believed to be unfolding in the way cars will be sold over the next 50 years.

The company is already four years into a 50-year strategic plan to completely reinvent the way it sells cars as it prepares for potential disruption to the traditional auto dealership business model.

The strategy revolves around a hub operation at the airport automall, turning exiting suburban dealerships for one brand into boutique showrooms for multiple brands, and expanding the company’s retail presence in shopping centres and opening service-only operations – one of which is planned for the rooftop car park of a regional shopping centre.

Carzoos, which is located in two regional shopping centres to date, will be expanded into AP Eagers’ airport operation and will become responsible for all the company’s used-car sales over time.

The entire strategy is overlaid, integrated and linked in a virtual online world seamlessly connecting the various showrooms and service facilities with each other and with customers either at home or within AP Eagers properties.

The details of the plans were revealed by the CEO of AP Eagers, Martin Ward, at a breakfast briefing held by investment group Morgan Financial that was recently posted on YouTube and in discussions with GoAutoNews Premium.

Mr Ward said the key factor was the virtual links “which pull the whole thing together”.

”One of these pieces of the jigsaw without that other is probably not a good plan,” he said. “A standalone service department on its own won’t work.

“A couple of four-car showrooms in a shopping centre is probably not going to satisfy a manufacturer, but when it is linked into an automall at the airport, (they buy in).”

Mr Ward said the plan, in time, had the potential to reduce the company’s representation costs by 30 per cent compared with today’s costs and increase sales by between 40 and 50 per cent.

“The new hub of AP Eagers for the next 50 years is going to be at the airport,” he said.

Auto Mall Brisbane

Mr Ward said the company has made a commitment for 64,000 square metres which is leased effectively over 76 years. He said the land was leased “because you cannot own freehold at the airport. It is owned by the federal government”.

Mr Ward said that while the Brisbane airport location was a reason for Eagers to relocate to the airport and that there was a strong attraction in the test track and skid pan (which is already said to be attracting keen interest in track time bookings), the big attraction was the short time it takes to get on to the Brisbane motorway system.

“Within two minutes of leaving the automall you are on the motorway heading … in three different directions,” he said.

“Effectively, with the way retailing is going to change over the next 50 years, that hub can serve probably the whole of Brisbane.

“It cannot serve the whole of Brisbane on its own. I am not suggesting that every other car dealership is going to close down and the only place you are going to go is the airport but that (airport) is going to be such an attractive location.”

Mr Ward said that the airport properties would not house traditional dealerships.

“We are going to have 12 brands out there, maybe more in the longer term,” he said. “It will not look like 12 car dealerships with a $10 million glass box and a service department behind it and a parts department behind that with parking out the front and used cars.

“The reality is that Carzoos will be our used-car operation and there will be a Carzoos structure out at the airport that will look very much like Carzoos in the shopping centres

“There will be hubs where we offer subscription services (see separate story), probably charging stations at each car parking location because obviously we are building this for 76 years and eventually, in 2030, 2035, 2040 or whatever, everything will be electric. So there will be charging stations out there and there will be solar panels out there.

“Now, what do I need to do to back it up?”

Mr Ward told GoAutoNews Premium AP Eagers had now purchased a former Bunnings store in Albion in Brisbane’s inner north which will be converted into a 50-bay workshop.

Bunnings Albion Qld, new AP Eagers stand alone service operation

“You are not going to be able to buy a car there,” he said. “You will not be able to do anything other than service your car within a very close distance from the centre of town . It will not be for one brand. It will be for 12 brands.

“We will satisfy the brands because it will have 12 different counters over two different levels with six in one area and six in the other area. That is going to be a standalone service department that will complement the airport.

“We have a Holden dealership in Windsor in Newmarket Road. There is no way that is going to remain a single Holden dealership. That is likely to end up having four or five boutique showrooms with maybe three or four service bays behind those boutique showrooms.

“But the master showroom will be at the airport. So we are not assuming that every single customer is going to … leave the city and do everything at the airport.

“So there is going to be a hybrid between the mothership at the airport and some boutique locations that are close to town.”

Mr Ward also went into greater detail on his plan for greater exposure at shopping centres.

“We are currently negotiating with a major shopping centre to put eight brands inside a shopping centre,” he said.

“Four cars per brand in a standard retail store. Four cars of another brand next to that etc. And the reason we are negotiating with this shopping centre is that it is going to be like an automall.

“And instead of having, for example, one BMW store and then no other (car) store in that shopping centre, this is seven OEM brands in one location with Carzoos next door to it.

Carzoos Westfield Northlakes

“We are (also) currently negotiating to put a service department on the roof. At the moment, the roof is used for staff car parking for the shopping centre, and they believe they can move some of the staff parking and we will have a 20-bay workshop on the top for customers at that location.

“The reality is that our retailing structure for the next 20 years in Brisbane is a hybrid between shopping centres, boutique stores, standalone service departments and the airport.

“Now everything I have just described we can do for about 70 per cent of our current costs.

“Our view is that based on today’s business model, we can probably sell 40 or 50 per cent more because we will probably keep 95 per cent of our current customers.

“I might add that means we are not going to be at Newstead. Now we are going to be at Newstead for the next 10 years – not for all of the brands but for some of them.

“Don’t assume we are going to be out immediately. The airport will not be finished until 2025. We don’t get the land until December 2020. We will move in in December 2021 and we will have completed everything by 2025.

“This is not a five-minute journey. We agreed the (airport) deal two years ago.

“We are genuinely excited by these different components we are preparing and many of these things started three or four years ago. Most of it is in play right now.

“So there is a long journey and I don’t know all the answers on which way it will go. But it is all going to happen over the next 50 years and it is really exciting and I can see that AP Eagers is going to be a significant company that is actually at the leading edge of all of these changes,” he said.

By John Mellor

Queensland Airport Automall