Amid a drought of public share offerings (IPO), a company debuts on the stock exchange in a different way. Under the ticker AMOB3, Automob arrives at B3 () from the spin-off of its sister Vamos () dealership business, which – leasing trucks, machinery and equipment. The next step will be completed in the coming weeks, when the shares of Automob itself – the light vehicle dealership business – will be incorporated into the new listed company.
The Simpar Group () now has four subsidiaries traded on B3. It is worth remembering that in addition to Automob and Vamos, JSL () and Movida () are also on the stock exchange. The holding company itself is also listed.
Despite being new to the stock market, Automob has a road ahead. The dealership business within the Simpar Group dates back to the 1990s, when the then Transportadora Júlio Simões acquired Original Autos.
Since then, a series of acquisitions have made the company the size it is today. The heavy vehicle dealership business developed in a similar way, but within Vamos.
With the two forces combined, Automob arrives on the Stock Exchange with the status of the largest group of vehicle dealerships in Brazil. There are 188 stores, present in all regions of the country and 35 brands in the portfolio, including light vehicles, trucks, machinery and equipment. It is also the first in this segment to be listed on B3.
Natural consolidator
Automob’s CEO came from the mergers and acquisitions area of Grupo Simpar. In an interview with InfoMoneyAntonio Barreto explains that, as a listed company, the company ends up becoming a “natural consolidator” of an extremely fragmented market.
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“Just as in the development of more mature companies in other countries, part of the [nosso] growth will be through acquisition. But a lot will also come from organic, from selling more cars, from concessions for new brands”, he explains.
In the twelve-month period up to the end of last September, Automob “root”, light vehicle dealerships, accumulated revenue of R$9.382 billion. The heavy goods segment, coming from Vamos, in turn, had revenues of R$2.730 billion in the same period. Last year, this was a segment negatively affected by a turbulent moment in the Brazilian agricultural sector.
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“The agricultural business lives in cycles, this is nothing new to anyone. Diversification will help us navigate these cycles”, says Barreto, highlighting the advantage of bringing this part of Vamos into Automob.
Thus, the new company arrives on the Stock Exchange with net revenue of more than R$12 billion and EBITDA (an acronym in English for earnings before interest, taxes, depreciation and amortization) of R$439 million.
Shielding, consortiums and insurance
Barreto reveals that an important part of the company’s strategic planning is to develop the used car business. Automob has two own brands on this front, SeuCarro.com, for light vehicles, and Mundo dos Caminhões, for heavy vehicles.
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“Our medium-term objective is to transform the business so that for every new car, I sell two used ones”, explains Barreto.
Automob also wants to extend the relationship with the customer, beyond the sale of the vehicle, promoting the sale of added products.
“We already have an armorer within the group and are working to expand this business. […] Consortiums and insurance are also fundamental pieces that we will develop to increase the profitability of the business”, he states.
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The impact of macro
Automob’s debut on the stock exchange coincides with a period of deteriorating inflation and interest rates in the economy at increasingly higher levels. Barreto highlights that the situation directly impacts the supply of credit, the most sensitive point for the company.
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“For now, we have not seen banks lose their appetite because it is a product that they really like, aimed at individuals, with good profitability and guaranteed. And default levels have fallen”, he explains.
On the vehicle supply side, the volume is considered “very low” by the CEO, in relation to previous periods. “So there is no excess supply to bring many risks to the operation. The point of attention is really the appetite of the banks, which, for now, we have not seen cooling yet”, says Barreto.
