BACKGROUND OF THE CASE
1. Cycle & Carriage (C&C) was the 3rd largest car distributors in 1999 with its rich history and experience in automotive business back in 1957 where it obtained the sole rights to distribute Mercedes-Benz cars in Malaysia and Singapore. From the 1960s to late 1980s, C&C had explored from assembly of cars to distributing and retailing of cars, diversified in areas of marine, locomotives engines, medical equipment, television and radios products, and merchant banking. However these are small investments relative to the automobile operations.
During the mid-1980s recession, C&C ventured into the property market and by the late 1990s, it had focused mainly on the automobile and property markets as their two core business, with expansions into the Asia Pacific region. 2. In Sep 1999, the scene changed when Daimler Chrysler, the main manufacturer of the luxury and prestige Mercedes-Benz cars, announced to take back the distribution of these cars forced C&C to re-strategize their business plans as its stock price collapsed upon this announcement.
3. Among many plans of C&C to further diversify through acquisition and joint ventures, it seemed to have found their answer to this crisis, their viability and prospects in the early 2000. An opportunity in the huge automobile market in Indonesia was presented. PT Astra International, a very well-known automobile distributors company was facing financial problem from the 1998 economic crisis which caused it to accumulate a debt of S$3. 4 billion and had put up for bid of a 40% share.
C&C leverage on this situation and led a consortium to purchase this as it viewed that there was a great potential given Indonesia being the 4th largest populated nation and Astra’s accessibility of the extensive network. In addition, it was a business where C&C was good at. However, with the successful acquiring of the share in Mar 2000 thereafter, C&C was faced with new problems associated with Astra. The growths were not very significant due to the political instability and the devaluation of the Rupiah. C&C had to invest more into this acquisition and by end of year 2000 had 31% of the stake in Astra solely.
Nevertheless, with a strong vision of being the leader of automobile in the region, sheer perseverance, strong leadership and management team, and sound strategy planning, implementation and continuous evaluation of the strategies, C&C had gain in the long run with the latest underlying profit of US$812 million in 2010, an increase of 55% over 2009. AIM OF REPORT 4. This report aimed to analyse the strategy in a competitive and changing environment, and how C&C deal with radical changes in their underlying success factors.
The analysis is based on the process of Strategic Management as shown in Figure 1. Figure 1: The Process of Strategic Management Diagram (Source: http://www. bigbossmanagement. net/strategic-management-process/) ANALYSIS AND APPLICATION OF CONCEPTS 5. Strategy Formulation. Strategic management can be defined as the art and science of formulating, implementing and evaluating cross-functional decisions that enable an organisation to achieve its objectives (Pearson 2010).
C&C had focussed on accelerating their organic growth, overcoming their crisis and to reduce competition by venturing into the huge automobile market of Indonesia – a business which was core to them in its origin. However as in all other businesses, diversification was also one of the key considerations for C&C. They have included investment in property as their next important area of focus among others such as agriculture and mining. 80% of C&C’s total revenue was from sales of cars and the property development.
These would not happen overnight and must have been developed by the company’s strategists to bring the company to the next level as “failing to plan is planning to fail”. The acquisition of Astra fit perfectly into the company’s push for growth in the region amidst the threat of Daimler Chrysler withdrawing the distribution of Mercedes-Benz cars in Singapore and Malaysia. Astra being the biggest motor vehicle distributor in Indonesia fit the core business of C&C like “hand and glove”.
Other franchise such as Audi in Australia and the acquisition of MCL Land all fit into the company’s strategies. 6. Based on the Strategic-Management Model (Fred R. David, 1988), the strategy formulation of C&C in their acquisition of Astra is elaborated herein. a. Vision and Mission. The logical starting point for strategic management is the company’s vision and mission, and the following are that of C&C’s. (1)Vision: Aspire to be a leading automotive distributor, retailer and service provider benchmarked against the best in this industry.
(2)Mission: We will continuously strive to be the most successful distributor, retailer and service provider in automotive. In the region, providing the best customer expectations if not exceeding them, through the implementation of most competitive pricing; latest technology; the best service and support; committed to the highest ethical practices; bringing values to our investors and employee and financially accountable. The vision provides their visibility and steers the organisation in the long term (i. e. “what do we want to become”), which is being the best in automotive industry.
The mission statement is a comprehensive one which covers the components of Product/Services (automotive distributer, retailer and service), Market (the region- assumed to be the southeast region or East Asia), Technology (latest technology), Concerns for Survival/Growth/Profits (brining values to our investor and employee) and concern for public image (ethical practices). b. External Opportunities and Threats. (1)Political, legal and government forces. Acknowledging the crisis1, C&C embarked on numerous acquisitions in different countries.
The expanded markets are significant to C&C because of the dwindling market share in the domestic and Malaysia market. Going into the new market represent existing opportunities but it also had their fair share of problems (threats), because different countries have different legal requirements and different level of government support. The Indonesian legislation is one which there is various levels of bureaucracies and many “rad tapes”. The circumstances of the nationalist Groups in Indonesia who opposed the U.
S consortium (Gilbert/Newbridge) led to the latter’s break-up in their internal partnership, leaving C&C consortium competing with only Newbridge consortium. This presents great opportunities for the C&C consortium. (2)Economic Factors. Having business overseas means that C&C will trade in local currency against the import of vehicles or parts in US dollars or Euros. This will be subjected to currency fluctuation and also the fact that Singapore dollars are gaining strength will not be good for the group’s performance, especially when at that time of the Asian Economic crisis, and the devaluation of the Indonesian Rupiah.
(3)Social, cultural, demographic and environment forces. Unlike in Singapore or Malaysia, owning a luxury car in Indonesia may not necessarily portray a special status of an individual. This means different approach and marketing strategy. The rich people might not consider owning a luxurious made car. C&C saw a huge market potential in the country (such as Toyota, Daihatsu, Isuzu etc. ) and the extensive distribution network of Astra. With the calculated risk and strong beliefs that the economy will continue to improve and the people will be having more disposable income, the Indonesian market has great potential given its huge population.
(4)Technical Forces. With the continuous rising oil prices, it was not only more costly to own a car but also bring about higher cost of relating materials. This threatened the company revenues. But with good marketing strategies, it should be able to capture some market share for fuel efficient model or alternative power driven made. C&C saw the potential of other alternative or substitute products (e. g. motorcycles) which Astra also had great share of these markets. c. Internal Strengths and Weaknesses. Strengths and weaknesses are controllable activities of a company.
C&C would have analysed the strengths and weaknesses of Astra in their initial quest of acquisition of the latter. They aimed to turn their own weakness by leveraging Astra’s strength and vice-versa. However, such strengths and weaknesses may not be easily identified in open source (or within the article). Nevertheless, it is essential to identify both companies’ strength and weakness as follow: (1)C&C’s (a)Strength High level of professionalism in management Well-established name of luxury car distributor in Singapore and Malaysia Focussed automobile distribution and retailer
Leading firm of 20 – 25% of Singapore automobile market with unchallenged loyalty Strong financial ratio (b)Weakness Unfamiliar with Indonesian markets Unfamiliar with the Indonesian legalisation (2)Astra’s (a)Strength High level of professionalism management The dominating car assembler in Indonesia. A company every Indonesian knows Access to extensive distribution network throughout Indonesia Diversification of business which are “recession resistant” such as agricultural and mining Distributorship of premier automotive products Honda motorcycle assembler and distributor.
Lead in such substitute products. (b)Weakness A diversified family conglomerate Huge workforce of 90,000 employees Huge debts of the company after the economy crisis Business too diverse. d. SWOT. The SWOT analysis for C&C is summarised as shown below. Strengths: •High level of professionalism in management •Well-established name of luxury car distributor in Singapore and Malaysia •Focussed automobile distribution and retailer •Leading firm of 20 – 25% of Singapore automobile market with unchallenged loyalty •Strong financial ratio Weaknesses: •Unfamiliar with Indonesian markets
•Unfamiliar with the Indonesian legalisation Opportunities: •Astra is the dominating car assembler in Indonesia and is a company every Indonesian knows. C&C will have the share of Astra’s distributorship of premier automotive products •Alliances with Astra will also allow C&C gain access to extensive distribution network throughout Indonesia •Potential growth with Astra’s diversification of business which are “recession resistant” such as agricultural and mining •Share in substitute products (Honda motorcycle) market of Astra. Weakening Financial state of Astra
Threats: •Unstable political environment in Indonesia •Weakening Indonesian Rupiah •Daimler Chrysler’s withdrawal of distributorship of Mercedes-Benz cars from C&C •Huge debt of Astra- underperforming Table 1: SWOT Analysis of C&C e. Long-Term Objectives. C&C’s long term objective is to become a premier automotive group by providing customers with the highest quality products and services. With a focused business portfolio and dedicated workforce, they are confident of moving ahead and maintaining a strong present in the automotive market in the region.
Despite the uncertain economic conditions and the declining value of the Indonesian rupiah, C&C is confident that the acquisition of Astra is on its right course as it has a market value of 45% in Indonesia. This is the long-term objective despite of the short-term fluctuation of revenues and profits which Astra had yielded. f. Alternate Strategies. Daimler Chrysler’s decision to take back the distributorship of Mercedes-Benz from C&C had resulted its stock price to collapse almost immediately. C&C responded with a few strategies to gain the confidence of its shareholders and ways to recover the lost value.
These are some of the strategies developed in such a competitive and changing environment. (1) Bid for 20% of share in the Malaysia largest metal-can manufacturer (2)Made a $16M bid for New Zealand Government-owned Vehicle Testing Limited (3)Doubled its stakes in a Singapore-based vehicle finance firm (4)Acquisition of an Australian car distribution firm (5)A 10% stake in an online car trader Autobytel’s Australian unit (6)Purchased a New Zealand trucking firm for about $40M (7)Started a used-car business
(8)Led a consortium for a bid of S$869M for a 40% of PT Astra International, an Indonesia leading auto manufacturer. 7. Strategies Analysis. Based on the above factors, this report analysed the adopted strategies of C&C in the quest for the acquisition of Astra through their joint-venture with the consortium using the SWOT matrix and SPACE matrix as follows: a. SWOT matrix. Reference to paragraph 6 of above and the SWOT matrix is shown below. It is evident to conclude that C&C had adopted the Strength-Opportunity Strategies in the acquisition of Astra.
They have leveraged on their various strengths to take advantage of the opportunities presented by the weakening financial state of Astra. These are summarised in Table 3. Table 2: The SWOT Matrix Strength Opportunity High level of professionalism in management Well-established name of luxury car distributor in Singapore and Malaysia Focussed automobile distribution and retailer Leading firm of 20 – 25% of Singapore automobile market with unchallenged loyalty Strong financial ratio Astra is the dominating car assembler in Indonesia and is a company every Indonesian knows.
C&C will have the share of Astra’s distributorship of premier automotive products Alliances with Astra will also allow C&C gain access to extensive distribution network throughout Indonesia Potential growth with Astra’s diversification of business which are “recession resistant” such as agricultural and mining Share in substitute products (Honda motorcycle) market of Astra. Weakening financial state of Astra Table 3: The Strength-Opportunity Strategy b. SPACE matrix. With reference to both the external and internal audit listed above, another strategy that C&C would have adopted are summarised in the SPACE matrix shown in Table 4.
Figure 2 revealed that C&C have adopted the Aggressive Strategy in their acquisition effort of Astra. This was reinforced at later stage that they increased their share of Astra to about 34% solely. Internal Strategic Position External Strategic Position Financial Strength (FS) Working Capital. Strong financial ratio with high working capital (extracted from Exhibit 2 of article, C&C’s 1998 financial position have an operating profit of $182. 4M, an inventory of $374. 3M, Net tangible assets at $1555. 8M with long term liabilities standing at only $604. 8M) (+3) Cash Flow.
Sufficient cash flow (+1) [Average score: +2 on Y-axis] Environmental Stability (ES) Barrier to entry. Barriers of entry for luxury cars are high for other competitors. (-1) Demand Variability. High demand of luxury cars in Singapore and Malaysia (portrayal of high status of such car owners in these countries) (-1) Technological. Technological changes for better cars and management system (-3) [Average score: -1. 6 on Y axis] Competitive Advantage (CA) Customer Loyalty. High market share -Leading firm of 20 – 25% of Singapore automobile market with unchallenged loyalty. (-2) Market share.
Sole distributors of luxury cars in Singapore and Malaysia (before the threats from Daimler Chrysler) (-1) Product Quality. Quality products assurance (-3) [Average score: -2 on X-axis] Industry Strength (IS) Growth Potential. Have the capacity for growth in the car industry with competent employees. (3) Technological-know-how. Have the knowledge of car industry and hence have the ease of entering into the Indonesia market. (3) Profit Potential. Strategist viewed that Astra has the potential for growth given its large share of the car industry in the huge market of Indonesia. (4) Ease of entry to market.
Ability to tap on the extensive network of Astra in other line of business (e. g. the motorcycle market) (4) [Average score: +3. 5 on X-axis] Table 4: Variables and Scores for SPACE Matrix of C&C FIGURE 2: SPACE Matrix Analysis for C&C- Aggressive Strategy Approach 8. Strategy Implementation. The next stage after the strategy formulation is the strategy implementation. In this case study, we analyse how C&C implement their strategies in their acquisition of Astra. a. Annual Objectives. The Profit and Dividend of C&C from 1998 to 2000 revealed that there were significant turnover profits (from -23% in 1998 to 61% in 2000).
Appendix 1 showed the details of these reports. It is believed that the target of achieving annual profit would be one such annual objective and this is evident in these positive reports. C&C’s investments in Astra since 1999, have not only established them as a leader in Southeast Asia’s automotive sector, but has expanded and diversified C&C’s earnings base and interests with its non-automotive businesses. This is seen as a success with the turnover increments which has profited from the year 1998 to 2000. However, uncertainties such as unsettled economic conditions, value of Indonesian Rupiah, impact of the exchange rate fluctuation etc. had drove C&C‘s sales down by 22% in year 2003 and net profit reduced by 41%. b. Policy. With the new acquisition of Astra, C&C was only allowed up to 4 seats on the Astra’s supervisory boards. It was not revealed as to why C&C accepted this policy. Without intimate involvement in management roles, C&C might not be influential in certain critical decisions making. A case in point was that Astra had allocated their resources through restructuring and diversified to focus more on its operations and as a result gave up the distributions of BMW and joint ventures with Honda in the motorcycles business.
In year 2000, C&C increased its stake in Astra by 6. 4% and bought over the shares of two partners who disposed-off their investments. C&C was fortunate that within that year itself, Astra was able to boost its automobile sales by 3 folds. c. Employee Motivation. It was not stated in the case-study whether both C&C’s and Astra’s employees were motivated due to the acquisitions. However, it can be assumed that since C&C was strong in their management, and with automobile sales tripled in year 2000, employees of both C&C as well as Astra could be well-motivated to bring such results. d. Resource Allocation.
In Sep 2000, as part of the strategic implementation, C&C had increased its stake in Astra by another 6. 4% by buying the shares of the 2 consortium partners. Jardine’s success in achieving 50 per cent ownership of C&C shares increases the support programme which was outlined in 2003 with the aim of strengthening the automotive sector in the region. Hence, in the same year, C&C increased the share by another 3. 2% to 34. 3%. In essence, C&C’s implementation of the strategies were consistent with their long-term objective- which is to be the leader in Southeast Asia’s automotive sector, despite some short-term setbacks. 9. Strategy Evaluation.
It was evident that C&C had their strategy evaluation activities performed on a continuing basis so as to develop the necessary Corrective Action Plans. a. Political. The 40 percent-stake shares that were up for bid were owned by the Indonesian government. It was also a publicly-known fact that the U. S. consortium which was led by Gilbert Global Equity Partners (“GGEP”) and Newbridge Capital Ltd. (“NCL”) was the “preferred bidder” by the Indonesian government. In the process of bidding for the 40% share of PT Astra International, C&C consortium capitalised on the situation of the withdrawal of Gilbert Global Equity Partners from the U.
S consortium, joined forces with the consortium led by Lazard Freres (a French consortium) so as to reduce the number of competitors and increased the chance of winning. Eventually, this paid off and the C&C consortium won the bid with C&C owning 24. 9% of the 41. 1% of Astra share. C&C’s share prices increased by 25% in reaction to the acquisition. This episode revealed the political influences in Indonesian and C&C’s ability to change their plan to seize opportunity. b. Economic.
The devaluation of the Indonesian rupiah, which had affected the financial performance of Astra and Astra’s ability to repay the huge foreign-denominated debt within the initial two years from acquisition by C&C. The weakness of rupiah led to the sale of the 42. 5% joint venture with Honda in August 2000 by Astra, in order to settle its debts and improve their cash flow. The Indonesian government had also reduced the tariffs on imported cars in 1998, which placed great pressure on the pricing and profit margins of the sale of cars. This had led to a concentrated competition among the automobile industry within Indonesia.
Thus, these factors attributed to the tremendous increase in the debt of C&C since its acquisition of the shares of Astra. However, C&C had their long-term plan in mind and hence continued increased their shares of Astra to remain dominant in the Indonesia automotive and motorcycles markets, and the opportunity to increase shareholding at a low price by issue discount to existing share prices. c. Socio-cultural. Based on the table below, the Indonesia’s GDP per capita had declined significantly since the economic recession which struck Indonesia and Southeast Asia in 1998.
The GDP per capita declined even further when the rupiah weakened in 2000. GDP per capita is often used as a form of indicator on the standard of living of the population for the country. When the GDP per capita weakens, this signifies that the standard of living in Indonesia had dropped which could also be attributable to the weakening of the rupiah. This may have affected the ability of the Indonesian to own a car. Nevertheless, C&C saw the potential of the substitute product, the huge motorcycle market in Indonesia and hence made that calculated investment.
GDP at Current Prices GDP Per Capita Foreign Direct Investment 1996 217,343 1,100 6,940 1997 221,533 1,110 4,700 1998 130,600 640 -400 1999 125,043 600 -2,700 2000 119,900 570 -4,600 2001 145,000 680 Table 5: GDP of Indonesia (Source: Asian Development Bank) d. Technological. Astra was “extensively engaged in the assembly of cars and engines from kits imported into the country”. However, it was unknown as to why Astra had not considered manufacturing the parts of the cars and engines in Indonesia itself, since the cost would be much lower.
It was not known if this was due to the lack of technological support in Indonesia. By importing the kits of the cars and engines from other countries, Astra would have suffered a great exchange loss due to the weakening of the rupiah. C&C could have considered allocating resources, both technological and finance in developing self-manufacturing of the vehicle parts locally in the relatively cheap labour market of Indonesia. RECOMMENDATION 10. This analysis report opined that the plausible strategic choices C&C had selected and implemented could be further strengthened with the following recommendations: a.
Expanding into other regions. While Indonesia offers a huge automotive market (market share of 45%), the political instability and the fluctuations in the rupiah, C&C could consider extending their presence in other countries such as Thailand or China which are prospering bode well for automotive businesses. b. Embrace e-commerce. E-commerce on sale of cars or motorcycles or other automotive services can provide an alternative marketing or sales channels for the more tech-savvy and younger customers. c. Reducing losses due to currency exchange.
C&C and Astra had not considered manufacturing the parts of the cars and engines in Indonesia itself, since the cost would be much lower. By importing the kits of the cars and engines from other countries, Astra would have suffered a great exchange loss due to the weakening of the rupiah. d. Exploiting the motorcycle market. The traffic conditions in major cities of Indonesian make owning a car less of a preference over owning motorcycles although the cars, especially luxury cars portrays high status of the owner.
Moreover, motorcycles are affordable the average income population which itself is another huge market, not only in Indonesian but in countries like Thailand and Vietnam. (Motorcycle sales by Astra Honda Motor grew by 26% to 3. 4 million units, enabling it to maintain a 46% market share reported in the JARDINE CYCLE & CARRIAGE LIMITED 2010 FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT dated 25th February 2011) e. Increasing the influence of management of Astra. With C&C’s increased share of Astra to 34.
3% valued at $143million, it should have more dominant positions in the management roles in Astra to safeguard its interest. f. Review of strategies. Having the long-term objectives in mind since 1998, C&C would have reviewed their objectives over these years. Strategy re-formulations and new strategies implementation and continuous evaluations of these strategies will bring further success for C&C’s venture of Astra. This is especially so in the Political, Economic, Social-Cultural and Technological aspects in countries like the Indonesia. CONCLUSION 11.
Acquisitions are often made as part of a company’s growth strategy whereby it is more beneficial to take over an existing firm’s operations and niche compared to expanding on its own. C&C had implemented their chosen marketing strategy in the acquisition of Astra based on its big share of the automotive markets and extensive networks in the huge country. This well-established vehicle-distribution business complements C&C’s core business in Malaysia and Singapore automotive market. Astra had been proven as a well-run, well-diversified and a strong conglomerate if not for the difficult times during the economic crisis in 1998.
In the bid for the 40% share, C&C had chosen its alliances carefully and the success of the bid saw C&C’s share prices increased by 25% in reaction to the acquisition. C&C had leverage on its years of experiences in automobile businesses and sees a potential in the huge vehicle market of Indonesia (world’s 4th largest populated nation). It valued Astra as being the synergy for further expansion into Asia and its extensive distribution network in Indonesia. This belief did not change and the acquiring of more share of the company increased to 34% (to a total value of S$664M).
12. The vision for long-term success was evident in their strategy formulation, cautious implementation and timely evaluations of their strategies had bought success in the long run though there were various ups and downs in the initial years. C&C remained confident that they are on the right course. This is evident in C&C’s 2010 FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT. 13. In ending and a valuable lesson learnt, for any organisation, big or small, strategy planning or strategy management is the key to success in the volatile business environment.
APPENDIX 1 CYCLE & CARRIAGE LIMITED 1998, 1999, 2000 and 2011 PROFIT AND DIVIDEND ANNOUNCEMENT (Source: http://www. irasia. com/listco/sg/jmweb/news/press/js/20010221_1. html ) (Source: http://www. irasia. com/listco/sg/jm2/news/press/20000222_1. html) (Source: http://www. irasia. com/listco/sg/jm2/news/press/19990225_1. html) . JARDINE CYCLE & CARRIAGE LIMITED 2010 FINANCIAL STATEMENTS AND DIVIDEND ANNOUNCEMENT (Source: http://www. jcclgroup. com/pdf/news/20110225JCCYE2010ResultsAndSlides. pdf) CHAIRMAN’S STATEMENT Overview
Jardine Cycle & Carriage achieved a record result in 2010 as most of Astra’s operations benefited from the strength of the Indonesian economy. Performance The Group produced an underlying profit of US$812 million in 2010, an increase of 55%, while underlying earnings per share at US? 228. 34 were also 55% higher. Profit attributable to shareholders of US$944 million included a non-trading gain of US$132 million, largely due to the fair value gain attributable to Astra’s oil palm plantations, compared with the non-trading loss of US$12 million in 2009.
The Group’s net asset value of US$3. 7 billion, or US$10. 52 per share, at the end of 2010 was 29% higher than at the end of 2009. Astra’s contribution to the Group’s underlying profit increased by 62% to US$798 million, reflecting a stronger rupiah and improved performances from most of its major businesses. Underlying profit contribution from the Group’s other motor interests was, however, 5% lower at US$56 million, mainly due to reduced earnings in Singapore. Corporate costs and withholding tax on dividends received from Indonesia amounted to US$42 million.
The Board is recommending a final one-tier tax exempt dividend of US? 82. 00 per share (2009: US? 47. 00 per share). This together with the interim dividend will produce a total dividend of US? 98. 00 per share, an increase of 69%. Business Activity Astra Astra enjoyed an excellent year, achieving a record profit with improved performances from all its businesses except contract mining. The wholesale market for motor cars experienced strong growth, with Astra’s Toyota and Daihatsu marques maintaining their market leading positions.
The wholesale market for motorcycles also grew strongly, and Astra Honda Motors did well to maintain its leading position amid intense competition. Astra’s consumer finance operations achieved improved profits as they benefited from the growth in their overall loan books, stable interest margins and good liquidity in the banking sector. In December 2010, the group completed the acquisition of the 47% that it did not already own of Astra Sedaya Finance, the largest of the Astra Credit Companies. Bank Permata also reported better results in the positive economic environment.
In the last quarter, Bank Permata enhanced its capital adequacy ratio through a rights issue and also completed the acquisition of domestic credit card issuer, GE Finance Indonesia. Astra Agro Lestari saw its profit rise thanks to higher palm oil prices and increased production. United Tractors’ results were largely unchanged despite a significant improvement in Komatsu equipment sales owing to shortfalls from its coal mining subsidiary, Pamapersada Nusantara, which was adversely impacted by poor weather conditions and the weaker US dollar.
Other motor interests The Group’s Singapore motor operations produced a lower profit following a sharp reduction in the government quota for new vehicle sales. While sales of Mercedes-Benz were resilient, they were insufficient to offset the shortfalls in Mitsubishi and Kia. In Malaysia, Cycle & Carriage Bintang made an improved contribution following an increase in Mercedes-Benz sales. In November 2010, the company announced the conditional acquisition of a small Mercedes-Benz dealership in Penang, Malaysia.
In Indonesia, Tunas Ridean also had an excellent year as it benefited from growth in the Indonesian automotive market. Truong Hai Auto Corporation in Vietnam made a lower contribution due to the weaker Vietnam dong, lower margins and higher financing costs, but did well to enhance its market share in difficult trading conditions. People On behalf of the Directors, I wish to thank our 156,000 staff employed across the Group. This excellent set of results would not have been possible
without their commitment, dedication and diligence. I would also like to thank our customers, shareholders and business partners for their continuing support. Outlook Jardine Cycle & Carriage’s main businesses achieved excellent earnings growth in 2010 and the results also benefited from the strengthening of the Indonesian rupiah. While the economic outlook for the Group’s markets in Southeast Asia remains encouraging, the rate of earnings growth is expected to moderate in 2011. Anthony Nightingale Chairman 25th February 2011