LONDON—Ford Motor Co. is buying Kwik-Fit Holdings P.L.C., Europe's largest independent tire dealership, and will expand the Kwik-Fit concept across Europe as part of its plan to become the world's leading supplier of consumer automotive products and services, Ford President and CEO Jacques Nasser said. Ford agreed to pay $1.6 billion in cash and loan note alternatives for Kwik-Fit, which will become part of Ford's Customer Service Division. The automaker has no plans at present to bring the Kwik-Fit name or concept to North America, a spokesman said.
Kwik-Fit Chairman Tom Farmer, who started the 1,600-outlet chain in 1971 as an auto repair shop in Edinburgh, Scotland, stands to make more than $120 million from his shareholdings alone. Mr. Farmer, 58, will continue to serve as chairman and CEO of Kwik-Fit under Ford's ownership.
Kwik-Fit gives Ford access to a category of customers its dealers normally don't come in contact with, said Michael Jordan, vice president of the customer service division.
The majority of Kwik-Fit's customers drive cars that are at least 4 years old—i.e., no longer covered by manufacturer warranties—and about 80 percent of the cars are not Ford products, Mr. Jordan said.
``In order to become a real consumer-driven company, you have to expand your customer base and provide them more service downstream in the value chain,'' Mr. Jordan said.
Kwik-Fit has expanded considerably in the past several months, purchasing 586 ``Speedy'' and ``Pit-Stop'' automotive service centers in France, Belgium, Spain and Germany from SMK Speedy International Inc. and acquiring full ownership of 70 ``Apples'' car care clinics in the United Kingdom. All told, Kwik-Fit spent $250 million on the acquistions.
In addition to 1,614 retail service points, Kwik-Fit operates a fleet of 171 mobile tire service vans, 92 car tune-up vans and 30 wholesale distribution points.
In fiscal 1999, Kwik-Fit derived nearly half of its $825 million in sales from tires and tire-related services. Exhausts and brakes represented the next largest sales generators, at 25.2 and 8.3 percent, respectively. It claims a 22-percent share of the U.K. replacement tire market and a 32-percent share of the exhaust market.
Kwik-Fit reported an 11.4-percent operating earnings/sales ratio, the fourth straight year in double digits.
Mr. Farmer built the Kwik-Fit chain into what it is today on the premise of ``100-percent customer delight.'' Its pervasive advertising jingle, ``You can't get better than a Kwik-Fit fitter,'' is known to consumers throughout the U.K. Kwik-Fit stores are open 363 days a year.
The Kwik-Fit business strategy—stick to the straightforward businesses of selling and installing tires, exhausts and brakes, and deliver quick turnaround at affordable prices—has been emulated by others, including General Motors Corp.'s European division and Ford, which operates more than 400 ``RapidFit'' service garages, aimed primarily at owners of Ford vehicles.
Kwik-Fit handles up to a dozen tire brands at any one time—including Dunlop, Firestone, Goodyear, Michelin and Pirelli—but its primary brand is its own Centaur private brand.
Ford offered $8.96 for each outstanding Kwik-Fit share—nearly one-third more than the share's closing price on April 9.
Bradford Wernle, Crain News Service, contributed to this report.