Strengthening the Domestic Sales Division and Used-Car Business

「In the domestic automotive distribution business, we are pursuing structural reforms with a complete overhaul of the inventory vehicle mix and higher inventory turnover to improve gross margins as our top priorities.」

「株式会社カーチス has pursued structural reforms, making the improvement of gross profit margins through a complete renewal of its inventory vehicle mix and higher inventory turnover its top priority. Profitability has improved dramatically through a fundamental review of its organisational and operating structures and a revamp of its inventory strategy. As a result, the operating loss for the current consolidated fiscal year in the automotive distribution business narrowed by ¥112 million year on year, producing clear progress toward profitability.」

「株式会社カーチス achieved higher inventory turnover and gross profit margins through a major review of its organisational and operating structures and a complete renewal of its inventory vehicle mix. It will continue to actively promote direct sales of vehicles purchased from customers from the customer’s perspective under the slogan “Customer First.”」

「The company has sought to improve performance through active business development, including the scrap-and-build of existing stores and M&A. As part of this effort, 新興自動車株式会社 became a consolidated subsidiary in October 2024.」

「Under these circumstances, in the automotive distribution business, the group actively promotes direct sales of vehicles purchased from customers under the slogan “Customer First.”」

「Under these circumstances, in the automotive distribution business, the group actively promoted direct sales of vehicles purchased from customers under the slogan “Customer First.” Profit margins improved as a result of disposing of long-held inventory vehicles and strengthening the procurement of high-quality vehicles. In addition, the group sought to improve ancillary revenue by strengthening services addressing customers’ diverse needs, including warranties and maintenance packages, and enhanced after-sales services such as vehicle inspections and insurance. By strengthening ongoing transactions with customers after delivery, sales and vehicle gross profit at each sales location improved.」

「As a result of disposing of a considerable number of long-held inventory vehicles during the fourth quarter of the previous consolidated fiscal year, the gross profit margin improved by 1.3 percentage points year on year during the first quarter of the current consolidated fiscal year.」

「To establish a consistently profitable business from the first quarter of the fiscal year ending March 2024, the company disposed of a considerable number of long-held inventory vehicles during the fourth quarter. The resulting decline in gross profit per vehicle caused each profit figure to fall substantially below plan.」

「As a result, improvement in gross profit on vehicle sales has been firmly achieved. Going forward, to further strengthen sales capabilities, the company will carry out a capital-efficiency-focused scrap-and-build program covering 35 operating locations and strengthen earnings power by transforming its business structure, including the active use of its strength, the カーチス倶楽部 wholesale network of 22,000 member stores.」

「In its existing automotive distribution business, カーチス actively promotes direct sales of vehicles purchased directly from customers under the slogan “Customer First.”」

「The company sought to expand ongoing transactions with customers by enhancing after-sales services such as vehicle inspections and insurance, resulting in an 8.6% year-on-year increase in sales. Although the profit margin temporarily declined because the cost of sales increased due to the disposal of long-held inventory and higher purchase prices resulting from the procurement of high-quality vehicles, the company expects profitability to improve from the second quarter onward as it strengthens sales at each location, improves vehicle gross profit and further enhances service menus for ancillary products, maintenance and other services.」

「On the other hand, profit margins declined and the recovery in results was delayed through the third quarter due to delays in responding to the disposal of long-held inventory accumulated since the fiscal year before last and increases in purchase prices resulting from the procurement of high-quality vehicles. Going forward, based on the change in the management structure, the company intends to improve domestic operations by improving vehicle gross profit through stronger sales at each sales location and further enhancing service menus for ancillary products, maintenance and other services, while pursuing sustainable growth for the group and further increasing corporate value through the promotion of new businesses.」

「Under these circumstances, the group actively promoted direct sales of vehicles purchased from customers under the slogan “Customer First” and the new management team’s initiative to double purchases. It sought to enhance its displayed vehicle inventory by strengthening efforts to list vehicles on internet media and reviewing prices, while also strengthening ancillary services such as warranties and maintenance, as well as services addressing customers’ increasingly diverse needs, in an effort to improve ancillary revenue. The initiative will continue, and the company will seek to strengthen vehicle purchases and direct sales to customers by improving its product lineup in line with customer needs.」

「During the first quarter of the consolidated fiscal year, the company actively promoted direct sales of vehicles purchased from customers under the new management team’s initiative to double purchases. It also proceeded with the disposal of long-held inventory and other inventory accumulated since the fiscal year before last. As a result, merchandise inventory declined by approximately 20% from the previous quarter, leading to a temporary decline in the profit margin. The initiative will continue from the second quarter of the consolidated fiscal year onward, while the company will also strengthen vehicle purchases and direct sales and seek to substantially improve its product lineup.」

「In B2B transactions, the company continued to strengthen cooperation with members of the カーチス倶楽部 and pursued customer development, including shared inventories for export and the purchase and sale of commercial vehicles, through new business alliances with leading domestic companies. As a result, the gross profit margin improved by 0.8 percentage points year on year to 21.9%.」

「Under these circumstances, although export sales declined due to overseas lockdowns caused by COVID-19, operating profit improved by ¥44 million compared with the same period of the previous year as a result of measures focused on productivity and efficiency.」

「The number of customers visiting stores, which had declined due to the government’s declaration of a state of emergency and requests to refrain from going out in response to the spread of COVID-19, recovered rapidly from late May, after the state of emergency was lifted nationwide. In addition, by securing ancillary revenue, both retail gross profit per vehicle and sales per vehicle exceeded the initial forecasts.」

「By promoting direct retail sales of purchased vehicles, the company reduced the proportion of low-margin auction transactions and restrained cost of sales by cutting fees and vehicle transportation costs. As a result, the gross profit margin as a percentage of sales was 24.6%, an improvement of 3.8 percentage points year on year.」

「The company is promoting the procurement of quality vehicles through direct retail sales of purchased vehicles and strengthening high-margin retail sales to customers.」

「Since the beginning of the fiscal year, the company has promoted the procurement of quality vehicles by expanding direct retail sales of purchased vehicles and pursued sales initiatives focused on quality over quantity. This has improved productivity and efficiency as well as the average sales price per vehicle. The company has also expanded sales of high-margin direct-retail vehicles, with the gross profit margin improving to 21.0%, up 1.0 percentage point from the same period of the previous year.」

「In the domestic business, to expand direct retail sales of purchased vehicles, the company has reorganized its operations into a regional group sales structure centered on large sales stores and supplied by nearby purchase stores with quality vehicles, while seeking to reduce logistics costs, thereby accelerating improvements in productivity and efficiency.」

「Under its sales policy of focusing on direct retail sales of purchased vehicles, with an emphasis on the retail sale of quality, high-margin vehicles, domestic retail sales volumes totaled 5,602 vehicles, up 2.5% year on year and above the previous fiscal year’s level.」

「Going forward, the company will continue to focus on retail sales, while also strengthening new businesses and working to improve performance.」

「In this environment, under the New Medium-Term Management Plan announced on 9 May, the Group pursued sales initiatives for direct retail sales of purchased vehicles aimed at retail sales. As a result, retail sales volumes increased 10.7% year on year and retail sales revenue increased 6.6% year on year, indicating that the effects are clearly emerging.」

「Under the New Medium-Term Management Plan announced on 9 May, the company pursued sales initiatives for direct retail sales of purchased vehicles aimed at retail sales. Although retail sales volumes fell below forecast, margins increased by 0.4%, indicating that the effects are gradually beginning to emerge.」

「The company will move away from a business model dependent on sales through auto auctions and shift to direct retail sales of quality vehicles.」

「The company has been shifting its sales initiatives toward specializing in the sale of high-margin used cars, with the aim of improving productivity and pursuing greater efficiency. The effects have gradually begun to emerge, and by the end of the third quarter it had proceeded with the consolidation and closure of 12 operating locations, including the Yanagawa store in Kyushu」

「The effects of consolidating and closing operating locations to improve productivity and pursue efficiency, which began in the first quarter, have gradually emerged since the second quarter. However, sales and gross profit declined and the company recorded an operating loss as sales volumes and vehicle purchase volumes fell and temporary costs were incurred in connection with the closure of operating locations. As of the end of the second quarter, the number of operating locations was 57.」

「The Group is reviewing its sales areas with priority given to attractive markets and consolidating or closing stores based on profitability.」

「The company is consolidating small stores specializing in vehicle purchases and promoting a medium- to long-term plan to open large stores to expand sales」

「There have been no material changes in the issues that our group should address during the cumulative consolidated third quarter under review.」

「There have been no material changes in the issues that our group should address during the cumulative consolidated second quarter under review.」

「In addition to the domestic used-car business, the company will continue to strengthen the used-car business as a whole, including the used-car export business operated by 株式会社アガスタ.」