Treasury Today Country Profiles in association with Citi

Eurokars Group

Eurokars Group, Highly Commended, Best Supply Chain Finance Solution

Photo of Ong Lay Ling, Eurokars Group and Kartyono Wong, UOB.

Speed was a necessity in this project to organise a combined financing package and enable a seamless takeover and re-launch of the Mazda dealership under PT Eurokars Motor Indonesia’s (PT EMI) leadership. This is an end-to-end trade and supply chain financing solution.

Photo of Ong Lay Ling, Eurokars Group and Kartyono Wong, UOB.

Ong Lay Ling

Group Managing Director

A leader in the automotive industry, Eurokars Group has been driving luxury experiences and powering the growth of premium car ownership across Asia, with its headquarters in Singapore and businesses in Indonesia, China and Australia.

in partnership with

Financing ambitious objectives

The challenge

As part of the Group’s expansion strategy, PT Eurokars Motor Indonesia (PT EMI) was established in 2016 to take over the Mazda distributorship business from PT Mazda Motor Indonesia (PT MMI, part of Mazda Corporation Group Japan) in 2017. Mazda’s distribution network of dealerships was officially transferred from PT MMI to PT EMI in 2017.

Because of the takeover, PT EMI would become the sole distributor of Mazda cars in Indonesia and the company laid out an aspirational business plan to grow the brand in the country, bringing in new models and increasing sales volume within the next three years.

To execute its business plan, PT EMI required working capital support not only for itself but also its strategic distributors. Therefore it required:

  1. A commercial bank with appropriate credit assessment and appetite to customise a suitable facility structure, limit and tenor to ensure sufficient working capital through the supply chain from PT EMI to its dealers, until collection of sales proceeds from end buyers.

  2. Smooth and quick onboarding of PT EMI’s dealers on programme approach.

  3. A strong regional trade bank with in-depth local business/regulatory and automobile industry knowledge, which provides an option to replicate a successful model to its other markets.

The solution

PT EMI approached UOB in Singapore and Indonesia at the end of 2016 to provide an end-to-end trade and supply chain financing solution. The solution it wanted would see PT EMI as an anchor and PT EMI’s dealers as spokes.

Speed was of the essence in organising this combined financing package and in enabling a seamless takeover and re-launch of the Mazda distributorship under PT EMI’s leadership. UOB was able to successfully integrate all counterparties’ working capital requirements and to process multiple credit processes concurrently while keeping the workflow coordinated and transparent to the anchor and spokes.

“Winning an Adam Smith Asia Award, which is widely recognised as the definitive industry benchmark for corporate best practice, is an accomplishment that Eurokars Group is proud to have achieved.”

The success of the implementation was achieved through a well-planned collaboration between PT EMI and UOB.

PT EMI and UOB jointly pre-screened the list of strategic dealers and held a forum to communicate information about the programme. UOB also committed to provide appropriate financing packages to these targeted strategic dealers within the desired timeline.

Best practice and innovation

By implementing a customised trade plus FSCM solution based on PT EMI’s needs, UOB was able to meet its objectives. The well-coordinated efforts between PT EMI and UOB culminated in the following results:

  • A smooth transition of the acquisition by providing sufficient financing to PT EMI and its dealers.

  • Fast turnaround time from initiation to onboarding of dealers.

  • A win-win solution for all parties.

This integrated approach has enabled PT EMI to conduct its business, from assuming its new national distributor role to scaling up a fully-fledged Mazda dealership in Indonesia within months.

“It is a strong endorsement of the impact, innovativeness and efficacy of the trade and supply chain financing solution that we have put in place with the help and support of our trade financing partner, United Overseas Bank (UOB) in Singapore and Indonesia, to drive the seamless and successful takeover of the distribution of Mazda vehicles in Indonesia by Eurokars Group under its subsidiary, PT Eurokars Motor Indonesia (PT EMI). This award is also a firm validation of our approach towards trade and supply chain financing management in a market which is complex, dynamic and fast-paced.”

Key benefits

  • Smooth acquisition of the Mazda Indonesia distributorship and minimal disruption to its existing business model.

  • Sufficient financing for both PT EMI and its dealers.

  • Quick to market in onboarding dealers and extending financing solutions.

  • Ability to obtain trade financing to match both PT EMI’s and dealers’ finance requirements.

  • Supply chain stability.

Key learning points

When we first approached UOB in Singapore at the end of 2016, we were clear about our objective: to acquire working capital support not only for PT EMI but also our strategic dealers to enable us to execute our aspirational business plan to grow the market share of Mazda vehicles in Indonesia; introduce new models, and increase sales volume within the next three years.

We were specific about the kind of solution that we were seeking: an end-to-end trade and supply chain financing solution that would entrench PT EMI as an anchor and PT EMI’s dealers as spokes.

We also had a well-delineated criteria for the type of trade financing partner that we felt would deliver value and bring benefit to the equation: a strong regional trade bank with in-depth, and tried and tested local business, regulatory and automotive industry knowledge.

Apart from those key learning points, we believe that selecting the right finance provider and fostering a close collaboration with that partner is critical to the success of a supply chain financing solution.

In this case, our partnership with UOB has given us confidence that they are able to meet our trade financing needs not just in Indonesia but also the other markets that we operate in. UOB has a set of appropriate financing capabilities and credit assessment system to customise a suitable facility structure that has ensured sufficient working capital throughout our supply chain from PT EMI to its dealers. The entire workflow process was well-coordinated and transparent to both the anchor and spokes which brought about a smooth and quick onboarding of PT EMI’s dealers, thus allowing us to raise our flag as the new national distributor for Mazda in Indonesia sooner than expected.

We now have a win-win solution. This has helped PT EMI to increase the stability and efficiency of its supply chain financing structure while giving us the financial flexibility to pursue our other strategic objectives. If we continue to excel in achieving quality along our supply chain, our stakeholders and business partners will continue to reward us with their loyalty and trust.

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