Business model & Business summary

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Business model & Business summary

Basic Information

Last updated: Nov 25, 2014

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Contents

Ⅰ

. Transitions in business model

P4 Switching from wholesale business to retail sale business

P5 Car Distribution Flow at Gulliver’s Directly Managed Stores（past）

P7 Car Distribution Flow at Gulliver’s Directly Managed Stores（present）

Ⅱ

. Wholesales Development

P9 Characteristics of used-car business

P10 Realizing leveling and optimization of the purchasing process

P11 Gulliver trajectory achieved

through enhancement of purchasing business

Ⅲ

. Retail sales Development

P13 Key Factor for Success of retail sales

P14 Gulliver’s 3 core strengths ～（1） Brand power

P15 Gulliver’s 3 core strengths ～（2） Attracting customers

P16 Gulliver’s 3 core strengths ～（3） Inventory

P17 Dolphinet System

(3)

(4)

Switching from wholesale business to retail sale business

Eco car subsidiary

assistance program

The Great East Japan Earthquake Closing down a subsidiary Operating Income

Expanding

retail

Expanding

wholesale

(5)

Car Distribution Flow at Gulliver’s Directly Managed Stores (past)

Appraisal

Purchase(Stock)

General

Consumers Luxury

foreign cars Foreign _cars People movers Eco-cars Light cars Older model cars

Directly managed store 160,000 Cars Franchise store 50,000 Cars

USS JU JAA Aucnet Wholesale B to B Auction Sites Approx. 120 sites ・・・

Bought by Used-car dealers

110,000 Cars

×gross profit

(Whole sale)

Inventory time:

limited to two weeks (hard-and-fast rule)

(6)

Foreign

cars Eco-cars Light cars Older model cars General

Consumers Luxury

foreign cars People movers

Appraisal

Purchase(Stock)

Car Distribution Flow at Gulliver’s Directly Managed Stores (past)

Pool Center ・・・ Auction Sites Approx. 120 sites USS JU JAA Aucnet

Wholesale B to B

110,000 Cars

×gross profit

(Whole sale)

Inventory time:

limited to two weeks (hard-and-fast rule)

(7)

People movers Foreign

cars Eco-cars Light cars Older model cars General Consumers Luxury foreign cars Appraisal Purchase(Stock) 50,000 Cars ×gross profit (retail + wholesale)

Car Distribution Flow at Gulliver’s Directly Managed Stores (present)

Auction Sites Approx. 120 sites USS JU JAA Aucnet ・・・ 30 units /month ×0.8 million yen

Low price cars

30 units /month

×1.0 million yen

Light car specialist

12 units /month

×1.2 million yen

Original Gulliver Stores

50 units /month ×1.5 million yen Mid-sized car show space 100 units /month ×1.7 million yen Large-sized car show space 10 units /month ×3.0 million yen

Foreign car specialist

5 units /month

×10 million yen

Luxury foreign car specialist

Monthly retail unit sales Average unit price

Wholesale B to B Retail Sales B to C

Inventory time:

limited to two weeks (hard-and-fast rule) 110,000 Cars ×gross profit (Whole sale) 50 units /month ×2.0 million yen

(8)

(9)

Characteristics of used-car business

Industry for which multi-store expansion is difficult

Assessing value of used cars requires a “discerning eye”

Detailed inventory management is required

Industry trending toward select specialists

Environment perpetuates illicit dealings

(10)

Realizing Standardization and optimization of the purchasing process

Centralization of storefront workflow at an HQ

(central kitchen method) to achieve leveling of storefront workflow,

which made multi-store expansion possible

Consolidate at HQ

Attracting

Customer Pricing managementInventory Overland _freight Sale

Realization of low-cost operations

Retail purchases

Overland

freight Sale

Receiving

customers Inspections Negotiations Contract

Attracting

(11)

Gulliver trajectory achieved through enhancement of purchasing business

Establishment of Gulliver International Co. Ltd

Establishment of listing on OTC market in 2nd fastest time ever

Launch of Dolphinet System operations

Achieving 500th Gulliver store opening

Listed on TSE Second Section in fastest time ever from founding

１９９４

１９９８

１９９９

２０００

Listed on TSE Second Section in fastest time ever from founding

Moved head office to Marunouchi, Tokyo

Designated for TSE First Section

Becoming Japan’s only Hyper Growth Company

Received Porter Prize

*

２０００

２００３

(12)

(13)

Key Factor for Success of retail sales

Growth of retail sales operations as a second business

(1)Brand power

(2) Attracting customers

(3)Inventory

P15 Slide A P16 Slide B P17 Slide C

Strengths of Gulliver’s purchasing business

Over ¥

60

bn in accumulative

advertising fees

Nationwide network of primarily directly managed stores

1.2

million customers annually

Strong customer appeal

Regular inventory

(14)

Gulliver’s 3 core strengths – (1) Brand power

Over ¥60 bn in total accumulative advertising fees since establishment

1 2 Approx. 420 stores nationwide, primarily directly managed stores

420

40,000

60,000 70,000

50,000 (unit: million yen)

1996 Yuri

Mitsui Aug. 2003

1997 Naoto Takenaka

commercials 2002 NorikaFujiwara commercials

2003 Hideki Matsui commercials

2007 Title sponsor of the pro baseball

all-star game

Slide A Slide B Slide C

Brand awareness 96%

Approx.

420

stores

0 10,000 30,000 20,000 ‘98/2‘99/2‘00/2‘01/2‘02/2‘03/2‘04/2 ‘06/2‘07/2‘08/2 ‘09/2 ‘10/2‘11/2‘12/2 ‘97/2 ’05/2 Mitsui commercials Dec. 1998

IPO (now JASDAQ)

Dec. 2000

Listed on the second section of the TSE

Aug. 2003 Listed on the first section of the TSE

(15)

Gulliver’s 3 core strengths – (2) Attracting customers

スライドＡスライドＢスライドＣ

Online assessment application Combined service call center

Store visits

1.2 million online applications and store visits annually

1.2 mil x 33% 400,000

(16)

Gulliver’s 3 core strengths – (3) Inventory

スライドＡスライドＢスライドＣ 150,000 200,000 250,000 (unit: car) A commanding lead as

No.1

in car purchases

An enormous lead over car

purchase-only operators

NO.1

A regular inventory

Number of cars purchased

by major car purchasing companies

0 50,000 100,000 150,000

Gulliver Rabbit T-UP Apple Carchs CARSEVEN U-POHS Access Shop COW COW

Franchise store car purchases

Directly managed store car purchases

A regular inventory

(17)

Dolphinet System

Purchased vehicles are registered on Dolphinet

and

can be viewed at stores nationwide

Registered information

Detailed vehicle information

Schedule leading up to wholesales

・Vehicle exterior / interior images ・Model / Make / Year / Distance driven ・Main equipment (options, features) ・Past repair history ・Exterior condition (small dents and scratches)

(18)

Ratio of new cars and used cars in Japan and the U.S.

Japan’s ratio of used cars is less than that of the U.S./Europe,

and there is room for expansion in the Japanese used car market.

3

New cars

Used cars

Japan

2

:

3

Japan

2

1

U.S.A.

(19)

500,000 600,000 700,000 800,000 900,000 400 500 600 700 800

Car max, example for leading company in US used car market

(unit: million dollars)

(unit: car) 700 600 500 800,000 600,000 Wholesale

Earnings before income taxes Retail

Earnings before income taxes

700

million dollars (70 billion yen) Number of wholesale

320

thousand cars 0 100,000 200,000 300,000 400,000 0 100 200 300 400 ₄₀₀ 0 400,000 200,000 0 300 200 100

Number of retail car sales

(20)

2011 2012 2013 2014 1st

10th

Record High

20th

Reference: 4th straight year ranked in "Great Place to Work"

Rank Company

1st _{Microsoft Japan Co., Ltd.}

2nd _{Works Applications Co., Ltd.}

3rd _{American Express International, Inc.}

Unique ranking created using survey results from employees

Released in Japan since 2007. This year marks the 8th release of rankings.

20th

30th

40th

ranked

4

years in a row

29th

23th

29th

20th

4th _{CyberAgent, Inc.}

5th _{The Prudential Life Insurance Co,. Ltd.}

∫

15th _{Ryohin Keikaku Co., Ltd.}

16th _{Renaissance, Inc.}

17th _{Tokio Marine&Nichido Systems Co.,Ltd.}

18th _{ABBOTT Japan Co., Ltd.}

19th _{Mitsubishi UFJ Information Technology Ltd.}

Business model & Business summary