AAA AUTO plans another dealership in Russia. The Profit expects in 2013.

Moscow xx.of March (reporter of ČTK) – Russia is, for  the first foreign used cars dealer at local market, Czech company AAA AUTO, „an unlimited country with many possibilities“, says company boss Anthony Denny. In a interview with ČTK indicates, that the plans do not end with one dealership, but the second arrival will be located more likely at north of Moscow than in St. Petersburg. The profit of the Russian business would be achieved next year.

The company has only one dealership between Kalingrad and Vladivostok since last autumn, in Scerbinka, south of Moscow. Originally, back in 2008, planned to begin in Russia with three branches.

„Crisis has reduced plans“, admits Denny. „In this phases we are cautious and focus on the experience from Scerbinka. From June it should generate profit, then evaluate the options. At the moment nothing is definite.“

This includes the opening of another branch. „St. Petersburg represents an interesting market, but according to our research it would make more sense to open another branch in northern Moscow,“ suggested.

In the Czech Republic and Slovakia the company has 26 branches, which last year sold almost 45,000 cars. In Russia this year Denny envisages selling about 2,000 cars.

„Start business in Czech Republic was in the early 90´s easier. Now the business environment in both countries is comparable and more complex. But we are in the beginning now,“ explains.

Scerbinka, according to Denny, reaches planned sales and in operating profit slightly exceeds, although for this year still will report slight loss. Net profit of € 1,2 million to bring another year, „unless we have another tsunami in global economics“. These plans exclude possibility of opening of the second dealership.

The offer in Scerbinka already includes about 400 cars, but as „a critical mass“, which would be able to make citizens of Moscow visit branch, no matter what congestion is in their way, he considers 700 cars.

 "Customers in Czech Republic and Russia are alike: everybody wants to get car as cheaply as possible, get biggest possible discount, and sell their cars for biggest possible price. Russians are perhaps more interested in condition of the car, appreciate a service book, low mileage, proven car history, and never smashed cars. Clocked odometers are horrible problem. In the Czech Republic you can check everything in a database, in here nothing like that exists, so Russian clients demand original service book and proven history without anything odd in it,“ explains.

 While in the Czech Republic an average price of used car is around 160,000 CZK, in Moscow it is the double, 520,000 rubles (about 327.000 CZK). Trader´s gross margin is in the both countries around tenth of car price, net profit on the car in Czech Republic was 3,100 CZK last year. In Russia AAA AUTO is in a slight loss.

While in the Czech Republic is the most popular used car silver Fabia, in Russia it is black sedan Ford Focus with automatic transmission – we have „never enough“ of these. Russian customers surprisingly begin to show interest in cars with diesel engines, these used to be because of bad reputation of Russian oil almost unsaleable.

The Russian used cars market has “an incredible dynamism and strong demand“, says Denny. According to estimates around 4 million of used cars are sold in country every year, mostly „from hand to hand“. But 25 Russian speaking employees of call-center of AAA AUTO to respond to two thousand calls every day.