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AAA AUTO soon to open fiftieth dealership, as expansion helps towards annual target of 100,000 car sales

By the end of the year AAA could be operating in 55 locations, with Poland seeing the fastest growth

Prague, 2 April 2019 – The AURES Holdings group will accelerate its expansion this year. Three new AAA AUTO dealerships in Poland and Hungary opened on 1 April, another two will open in Poland in a couple of weeks and more will follow by the end of the year. A call centre has been opened in Katovice, Poland, and Mototechna Drive has opened its first foreign rental operation in Slovakia. Expansion is the main tool for achieving this year’s ambitious aim of selling up to 100,000 cars across the group. This would mean the group beating last year’s record of 83,000.

 “We want to leverage the rapid development of the Polish market, where we grew by 53% year-on-year and we are doing just as well this year. The plan for Poland this year is to sell 16,000 cars, which is getting close to the total sales in our second largest market, Slovakia. In Poland we still have fewer dealerships than in Slovakia , but they serve larger regions. Together with the planned growth in Hungary, we trust that this year we leap forward to a total of 100,000 cars sold,” said Karolína Topolová, Chief Executive Officer and Chairwoman of the Board of Directors of AURES Holdings, operator of the international AAA AUTO network of car showrooms. A new purchasing dealership was opened on 1 April in Bialsko-Biala in Poland and in Hungary AAA has a new purchasing dealership in Miskolc and a full-service dealership in Budaörs on the edge of Budapest.

In the first quarter, the group sold 20,000 cars, but the newly opened and expanded dealerships will influence on the results later in the year. “In February, for example, we moved the dealership in Krakow, Poland, to larger premises and it now has great results. Partially thanks to this we are selling 75% more cars in Poland than a year ago. In Hungary the capacity of one dealership in Budapest was not enough for us, so we opened another one on the other side of the city,” added Topolová. In Poland, AAA AUTO is looking for suitable locations for dealerships in the various regional hubs. “Our expansion is naturally conditional on finding suitable locations for new sales points. Dealerships should offer at least 300 cars from the start, with the potential for further growth. We would like to set up in these 16 cities by the end of 2024,” added Topolová.

Most Popular Cars in Group Sales

In the first quarter, the best-selling used car in the AAA AUTO network in the Czech Republic was, as usual,  the Škoda Octavia, followed by the Škoda Fabia and the Škoda Rapid, which pushed the VW Passat back into fourth place.

Innovation

The company’s growth will also be supported by the launch of innovations. Last year, the company established the AuresLab innovation laboratory as a part of the group and it has been active for more than a year now. In that time, it has come up with projects for sales of investment cars, special segments for sales of cars running on alternative fuels and electric vehicles, launching a car rental business and carsharing for companies and online car sales. “At the current time these projects are running successfully in the Czech Republic and we are preparing to launch them in stages in other countries. For example, we will open the first branch of our Mototechna Drive car rental business this month in Bratislava, Slovakia,” said AURES Holdings Chief Operations Officer Petr Vaněček, who is responsible for innovation in the group. “Thanks to AuresLab, the new AuresApps brand focuses on the development and sale of specialised software solutions. Our Algorithmic Pricing application for car valuations and the Stock Allocation application for inventory management has already proved successful in several countries outside the area where we are active, such as Russia and South Africa, and we are negotiating sales to the USA and Kazakhstan,” added Vaněček.

New Legislation

An amendment to Act No 56/2001 introduced a ban on clocking odometers from 1 October last year, with fines of up to CZK 500,000. “We welcomed this change as a good preventative measure. At the moment we don’t have the feeling that the prohibition has had a direct effect on the used car market. We have not noticed that the number of clocked cars that people try to sell us has fallen in any way,” said Vaněček of the new legislation. According to AURES Holdings, however, the foundations are not yet in place for a system of recording odometer readings from manufacturers, service centres, insurance companies and other entities, which would increase transparency on the market. “We still think it is necessary to connect European databases in the future in such a way that odometers cannot be clocked before cars are imported into the Czech Republic,” emphasised Vaněček.

Missing Legislation

The European Commission is pressing for stricter emissions standards for newly-produced cars, but imports of environmentally-unfriendly older used cars to the Czech Republic continues. Cars over ten years old still predominate, at close to 60 per cent of the total. This primarily involves cars complying only with the EURO 3 and EURO 4 emissions standards and which are, of course, not subject to environmental charges (the cars are at least 11 years old, but could be up to 19 years old). In the past, environmental charges appeared to be an effective measure against obsolete imports. “The law, however, has not been amended since 2008 and applies only to the oldest cars without a catalytic converter (more than 26 years old) and the EURO 1 (more than 23 years old) and EURO 2 (more than 19 years old) standards. Today it is ineffective in practical terms and does nothing to reduce imports,” Vaněček pointed out. Increases in the share of imports of cars with the EURO 3 and EURO 4 standards should be halted by the expansion of charges to cover these cars—environmentally-unfriendly cars that are past their best and, if they are imported, lack a clear history. “In conclusion it should be pointed out that the first cars meeting the EURO 5 standard, which has been in place since 2009, are starting to be obsolete; they are already ten years old,” added Vaněček.

VAT Fraud

In March, customs officers and the police accused three people of reducing VAT during the import of used cars, with damage of CZK 7 m. This involved imports of 360 cars worth CZK 200 m. VAT tricks with imported used cars is a type of fraud AAA AUTO has been drawing attention to for a number of years. “We’re happy that the authorities have finally managed to document and arrest greater numbers of specific perpetrators. We hope that the customs administration and the police will continue with these activities, because every car that is imported in conjunction with a tax offence is, in addition to the damage incurred by the government, also a risk to customers. As with all goods that are the subject of criminal activities, they can be seized,” concluded Vaněček.