Good afternoon. Welcome to Kamux's Capital Markets Day. My name is Katariina Hietaranta. I'm Head of Investor Relations at Kamux. Before we kick off with the full program, I'd like to take you through a couple of practicalities and the agenda. So we have scheduled a break in between the two parts of the program, and we have also scheduled some time for questions, both here from the audience, as well as via chat from our webcast viewers after each presentation. And then we will also have some time for questions at the very end of the presentation. And time-wise, we expect to be at the break around 3:30 P.M., but we shall see how the program goes. Now I would like to welcome Tapio Pajuharju here to introduce the rest of the, or the whole, Kamux group management team.
Thank you, Katariina. Welcome also on my behalf for the Kamux Capital Markets Day. I would like to kick off with introducing the team, so it's not a one-man show, this is a team effort, and may I ask you to jump on the podium? We do this so seldom, but we thought we would bring everyone on board, so we will get the feel and touch of the people. And here we go. I will start with the ladies, as usual. So we have Marja Nurmi, our VP of HR and Sustainability.
Nice to meet you all.
Then we have a newcomer, I think kind of joined us in the month of January, and is in charge of the marketing and concept work.
Yeah, nice to meet you all. Hello.
Then we have Vesa, and I think Vesa is in charge of the strategy, development, and then always when we are in doubt, we ask Vesa.
Good afternoon.
He has also the data and good insight to the industry, and I think has a great presentation later today on the markets. Then we have Jani Koivu. Jani is the Managing Director for our Finnish operation.
Good afternoon, all.
Then we have the man who is in charge of all the sourcing. Hello, Juha Saarinen. And he is all the way from Hämeenlinna, so, then we have Andy Rietschel, our Managing Director for Sweden.
Good afternoon.
Also a new beginner, started in the December the 17th, and learning very fast. Then we have one of the juniors, luckily to present our CFO, Jukka Havia.
Hi, good to see you.
We have Jarkko Lehtismäki. He's VP of Digital, IT, and everything in between, and has also very good insight into the business, so very happy to have Jarkko on board.
Thank you.
Then we have the small market, Germany, and we have Martin Verrelli, our Managing Director of Germany.
Hello.
So this is the team, and then within this team, you have people who are really making it happen, so that's why I wanted to introduce everyone on the podium. Later on, most of you will have something to say, and all day, people are here for the questions and comments, so please use the opportunity. Thank you.
Thank you. Thank you.
Vesa will continue with the markets.
Yes, indeed. Next, we will jump to the secrets of the European used car market, to give you some helicopter perspective on the, on the field where we play and the area that we operate, and, and, you know, to give some, some of our, our view as well, where the markets are going in the future, in the strategy period. I want to start with the margin size, market size, because this is a fact that surprises many. We are operating in the EUR 500 billion market, the European used car market, EUR 500 billion annual turnover, so really a big opportunity and very fragmented. There are 35 million or more than 35 million cars, sold in Europe as used every year, and the top 5 players only sell less than 500,000 of those, so 1.something percent.
Very, very fragmented landscape across Europe. When we go to our home markets of Germany, Sweden and Finland, the same story continues. Very big markets and still very fragmented. Germany here, of course, is the biggest opportunity with itself close to EUR 100 billion annual revenue potential, and also by far the most fragmented of our three countries. The top 5 players are only 2% of the market, and the rest is covered by 37,000 other players that operate there, mostly small and medium-sized companies. Then in the other end of the spectrum, we have Finland, largest of the three markets, but still quite sizable, EUR 5 billion market. Finland might be the most consolidated used car market in the world, at least in Europe.
But still here, the top five command only 25% of the market, which is really small compared to almost any other retail business that you could imagine. And then, you know, Sweden then comes in between. But in all countries, really, we have this huge opportunity to grow, to gain share of the market. The consolidation is something that has also happened strongly and steadily. Here are Finnish figures. Bottom one showing the top five market share from 16% back in 2019 to 25% today. And the upper line is the consumer business, which has been steadily declining, meaning that the business is getting more and more professional and established, as is typical for any retail market.
What is interesting, the consolidation has not mostly happened through M&A, but rather through organic growth of the biggest players, meaning that the big ones that have found a winning concept, they are gaining market share, and then the weaker ones will lose ground. By the way, in all our markets, we see similar graphs than this. The current stage is just somewhat different. It's been a very stable market, especially if you compare with, for example, new car dealing. Back in 2022, we had the biggest dip since at least early 1990s. There were several big macro events happening at the same time. The interest rates shot up very rapidly in Euro area and Sweden as well.
And then we had the Ukraine war that caused first the diesel prices to skyrocket, and then the electricity prices followed, then in the autumn. So that was clearly a shock to our markets, but then we've seen the rebound has been fastest in Germany. In Sweden, last year was still quite stable versus previous, but in the beginning of this year, we have seen double-digit growth figures versus last year. So I suspect that market also to rebound back to the EUR 1.3 million-EUR 1.4 million annual number of sold cars, that has been now the kind of level for the past decade. The next question, of course, what is driving this market?
Why, what is causing it to, you know, be this resilient and stable and still growing on a long time perspective? And I think the main driver is the sustained need to move, for people to move from one place to another. And it turns out that that's still for most people who can afford it, the car is a preferred way to move around. And people need to get to work, they need to take their kids to school, they need to go to their hobbies or they want to do so. And you know, car just happens to be, in many, many cases, the vehicle of choice, and if you can afford it, then you will likely have one, or some people have two.
You can see from the German, German statistics here that, you know, as wealth has increased and maybe amount of people has increased, the amount of cars has also been going up. Same thing in Finland and Sweden. One interesting aspect is also the age of the car park, and has been going up steadily in Germany, has been also going up steadily in Sweden and in Finland, and for example, in U.S. This a global thing. The, the age of the car park goes up, and that actually increases the share of the used car business of the total car market. What is driving this?
Many things, but I believe the main thing is that unlike you might hear at the local bar, the cars of today are actually better engineered than cars of the past. And if you take, let's say, a German premium car that's been driven 100,000 kilometers, it's still a pretty nice car. It's almost the same experience as with a new car, but the price has come down by 40%. And I guess many people have figured out that with their budget, they can have a better driving experience by going to the used side. And you know, cars are clearly used for a longer period of time.
Then thinking about the market size, of course, the price factor is important, in addition to pieces, especially now in the past years with the pandemic and supply side constraints, we saw the prices shoot up quite rapidly. Now it has come down to closer to, let's say, the long-term trend of increasing something in line with the inflation, roughly. There are several other trends as well. The most powerful one we already discussed, and there are other positives, as well. Of course, there are trends also that drive to other direction. And what we see and what I believe that in the most urban areas, in the centers of big cities, likely the private car will decrease as a share of transportation.
There will be more solutions driven by, you know, lack of parking space or higher pricing charges or regulation. But, you know, when you go a little bit beyond the central areas, the story continues, and you know, that's what also all these combined factors have been driving the total market and number of cars upwards. So, all in all, I believe that as a market, this continues to be a big opportunity. We are not limited by the market potential by any means. There's lots and lots of revenue to be done there by taking market share from the weaker players, and that's what we have been doing.
Of course, that's what we are going to continue to do, and my colleagues will tell a bit more about the actual plans there. I would then next jump to the different business models. We, as you probably know, are omni-channel operator, meaning that we serve the customers in the channels that they prefer. We have a store or showroom network to back up all the operations and also as a purchasing and sales channel. Then we have a substantial remote sales operation, and we are, of course, present in the digital channels as well. But we have that all, we are not, you know, let's say, pure play digital or just stores. We have all options available.
It turns out that in all our markets, the largest local player is an omni-channel operator. That's us in Finland, Riddermark Bil in Sweden, and then in Germany, we have a company called Autoland. All of them are omni-channel operators. In the pandemic years, of course, we had a big buzz around digital, pure play digital players being doing a little bit less well in the past years. One of the largest player in this field in Q4 lost some revenues versus previous years. This is the model we operate now.
Of course, the digital part has increased all the time and will increase in the future, but seems to be working well in all operating countries where we are, and then that's how we want to play as well. The competition dynamics are a bit different, or field of competition is a bit different, by country. In Finland, we are mostly competing against companies specialized in used cars. They might be pure play operators like us, or they might be used car subsidiaries owned by brand dealers like GoAuto or some others. And in Sweden, we have a bit of mixed bag.
We have, in top 6 players, we have 3 pure play used car players and 3 franchise dealers that consist the top 6 of that market. And, you know, in Germany, the competition is mostly branded dealers. So you have very few, actually, specialized used car dealers that have more than 1 or 2 locations. So it is a pretty fresh landscape from that perspective. And you know, I would argue that in development phase, maybe Finland is furthest, and then probably Sweden and Germany will follow. That in the sense that the specialists will take more and more market share, as we have seen to be the case in many other retail markets as well. Then, 2 more trends shaping our business.
Electrification is, of course, interesting one, a lot in the news, and, in the new car side, that's very evident. When you look at, Sweden and Finland, last year, more than 50% of the sold new cars, could be, could be charged so that they were either 100% electric or plug-in hybrids. Germany, Germany is, clearly lower, and actually last year, with the ended subsidies, the, the, graph points downwards. But anyway, the overall trend is clear. The speed is a bit uncertain, the used car market, new car market, sorry, but, you know, trend that will continue, on the new car side, and then used cars will follow, by a few years lag. Here in the past years in Finland and Sweden, the lag has been around four years of the electrification share.
And, right now in the used car side in Sweden, we are at 20% electric rate, and Finland is 10%, and Germany is a few percentage points. But that's a game, that's, you know, increasing in relevance, and, of course, we want to be on top of that game as well, and we already are, in many respects. The good thing is that fundamentally, buying and selling electric cars is a similar business to buying and selling any other powered cars, petrol cars or diesel. It's a, you know, same business, but of course, we need to have additional know-how to help us in purchasing and processing and selling these cars, and some infrastructure to keep them charged.
But, you know, this is clearly and also an area where we have some development steps ongoing. And then the last trend highlighting here is preference toward fixed price car services, whether it would be leasing or some other type of an arrangement. These are on the rise, still quite small, few percentage of the market total, but, you know, growing quite nicely. Reason for that, many reasons, probably, but I would argue two most important ones are, first of all, consumer uncertainty about the future of different fuel types. So, you know, before investing considerable money in a car, you might think that, okay, is it already a right time to buy an electric car, or should I wait for a year or two, or whatever?
Then you have, especially among the younger population, you have a general preference of buying services with a monthly fee instead of buying stuff. So these two combined are driving the monthly fixed price car market. And of course, we also want to be and are in that scene. A bit over a week ago, we announced a cooperation with an operator, Beely, that allows us to serve our customers with a wider solution in this area. And then we have some plans in our pocket for Germany and Sweden on financial leasing, and so forth. So we are going also with the trend here. That was my presentation, and now we have some time for questions on the topic.
Thank you. Now, time for questions. We have no questions from the webcast audience, so whilst they're thinking, perhaps we have some questions from the audience here. We will have microphones, if you just maybe raise your hand and you'll get a mic. Anyone? Very clear. Pia, please.
Yes, hello, Pia Rosqvist from Carnegie. Regarding your last point of Kamux joining forces, for example, with Beely, and you also mentioned some plans in Sweden and Germany regarding financial leasing. So, if I start with the Beely cooperation, what kind of value creation potential do you see in that business? And, thinking about Kamux's shareholders, how do you drive value with that cooperation?
I think that's a cooperation that allows us to serve a wider consumer audience than before. And in that sense, it's a positive also for the shareholders. So essentially, somebody who wants to go for this new type of a service can now access also our car fleet and get the service that they want.
And in the financial targets you published today, is. Do you include some potential from this cooperation?
That's inbuilt there, as is every other development plan we have.
Okay. And, when do you plan to start offering financial leasing in Sweden and Germany?
Maybe that's something that I'll leave to my colleagues from Sweden and Germany.
Thank you.
Rauli?
Rauli from Inderes, hello. You mentioned the trend that the consumer-to-consumer trade is decreasing, as we know, in the used car market. If and when that continues, does that mean that also you need to sell kind of more of the older cars that are now sold from consumer to consumer?
Well, I think the shift is mostly from the bit more expensive and newer cars being sold less and less from consumer to consumer, and the cheapest cars still continue to be sold mainly between consumers. I don't think that trend will necessarily mean that we would have to go lower. We would gain the market share basically in the segments that we prefer from the consumer-to-consumer trade.
How much would you estimate that is the kind of share of the section of the market that this is kind of too low for, to be interesting for you, and which we would assume that remains in the consumer-to-consumer market?
Well, I would say that, there's a difference whether between the cars that we take as a trade-in from a consumer and the cars that we buy directly from the market. So, as a trade-in, we are flexible. We want to help the customer to basically switch to a newer car that they prefer, and then we will help them with the trade-in situation. But then, you know, we would not buy, let's say, several thousand EUR worth a car from the market. That's not our segment. And yeah, there's no clear line, but clearly, you know, need to be a bit newer, fresher cars that we buy directly from the market.
All right. Thank you.
Any further questions from the audience here?
Jussi Koskinen. There was a slide where used car prices in Germany were increasing. How about then, margin that remains or margin that Kamux enjoys? Is it then, percentage-wise, remaining at same level or decreasing?
Our business model is in one sense a trading business. And we take fairly short position to the cars that we buy. So for us, actually, the absolute level is not very meaningful in the price levels. We can operate on low price environment than a high price environment because then the purchase price will also adjust if the sales price adjusts. So this has no direct impact on the margin potential. Then, if we have quick changes, very rapid changes in the market, then it might happen that we have either negative or positive impact from the price stages. But let's say that the normal fluctuations will have very little relevance.
Very good. Thank you. Now it's time to move forward with the presentation, and we welcome Tapio on board next. Thank you.
So thank you, Vesa, for a very comprehensive presentation, and also thanks for excellent questions on the topic. So next, we will jump on the strategy as such, and I think this is teamwork. We've been doing this together with the team, and I think we will entertain details as we go. I will do the overall pitch, and then we'll do country by country. And I think the way we've been doing it, it's in a three-year plan, and we've done a roadmap for each individual country. We're gonna follow it on a monthly, quarterly, and annual basis to make it work, and I think we will keep you on board on the progress on that. First of all, I think it's a team effort, and it's a team who is making it or breaking it.
I think now we have a team who can do it, that will execute, that will implement, and that's what is the most important thing. And that's what the team is working on day by day. I think some of you who already had the first opportunity to see the stores, you can see some gradual changes on the stores and the way we behave and how we work with the customers, and those are gonna be elaborated more today. Then I think one of our guiding lights on the strategy as well as we. It's a people strategy, and we need to have happy and motivated people on board. I think on the performance of last year, we are extremely happy how we rated on that one, and I think we even raised the bar going forward.
So our eNPS was very good last year, and we aim for even higher on that respect, so we are on a good go on that. Then I think we still do the basic things. We are very good in buying and selling cars, and on top of that, we try to do other things, and we'll learn what type of other things we've done. We are already of some size. We passed the benchmark of EUR 1 billion. We were slightly shy of 70,000 cars, and then we operate in 3 markets. And like Vesa explained, our position in Finland, we've been the innovator, we've been changing the game, we are the market leader over here. In Sweden, we are not. We are challenger, but we are among top 6, and we have a good room to grow.
And then Germany, it's a huge market, and we are a tiny, tiny player over there. But even though we are tiny, there are not too many of the big players, so I think we have a good opportunity on, on, on that one as well. The trend has been rather stable, and when you look backwards, Kamux has been growing rather fast. We've been doing also good volume growth. Okay, then we got a bit of a hit with the pandemic, with the interest rate, war in Ukraine, and all of that. And then the showrooms has been now flat on, on the go. But as you will learn today, we're gonna open more showrooms. We will have a fully omni-channel approach, and we will grow on top line and also profitability going forward.
Then maybe on the previous strategy, I will not go too deep on that one, but it was not badly wrong. It was actually rather good and well done. Some of the execution were hampered by the conditions in the marketplace, and now we will take a recap and we'll start implementing once again, back to basics on that one. We'll do that. Omni-channel will prevail. We'll strengthen that. Process, I think you will learn today, we will have even more diligent and more efficient process taking it forward.
And then the data, I think our own ERP, which is by the name of Kamux, we've been investing quite a bit time, effort, and also money, money on that one, and we feel that we have the state-of-the-art ERP in our system, so we can do wonders with the system. We still need to learn how to make it simple and visual for the people to make the right decisions, but the data we have, and then Vesa and Vesa's team have the good insight on the marketplace. We have all the. And this is an interesting market because all the data is available. It's almost online, and it's also in the regional, even on ZIP code in, in Finland, so you can follow what's happening rather, rather intimately in that respect.
By doing the right conclusions, that one, you can win the game, and I think we are on that path. Then I think I will jump on the next one. Like Vesa explained, the markets are gonna go polarizing, and I think the big players are gonna win. In the middle, it's gonna be rather difficult, and then in the small end, gonna be very challenging unless you are specialized. If you are specialized in classic cars, sports cars, maybe utility vehicles, you can be successful. But on the upper end, with the volume, you need to have scale and scope in order to manage that one, and that's where we are going. Kamux has been maybe even the most economical in terms of the pricing.
I think that position is maybe something which is not defendable. We need to be good value for money, but we need to offer also to the other direction, bit of scale and scope on the portfolio as well. And we will have more segmented approach. On top of the lowest price car, we will have the medium and even to some of the upper-end cars available, and also in the utility vehicles. And that's why instead of a very sharp bullet, we draw more of an oval ellipse, ellipse, positioning for Kamux going forward. Still, I think our vision unchanged, becoming the number one in Europe. It's rather high-flying. We are now number five, number six, depending how you count.
But as Vesa already stated, we've been doing this fully organic, without one exception, where we bought a very small local operator in Espoo, and that's mainly buying the inventory and getting the location. So I think we have still room to do on this one. And as the market is consolidating, I think Kamux has a role in the consolidation, and I think we will be proactive on that area as well. Then this is a busy slide, but I will take it in a very, very slow motion and take it easy. But I think we are part of the circular economy, that's in a way clear, and then go greener.
And there's a green heart, it means we're gonna be not only the more sustainable option, but it's gonna be more like Kamux used to be. Keep the customer in the epicenter of everything, deliver what the customer wants and likes, and then we're gonna be successful. And it starts that we. I think already in the past, we've been proven that we can improve our customer service, and we're going up on the ladder, and I, I think we are already quite, quite okay in, in multiple areas in that respect. But our aim is to be the most friendly, the easiest one to work with, and then to be the most trustworthy car retailer in the, in the used car market. And I think we're gonna be active, we're gonna be proactive, but we're not gonna be aggressive.
I think that's, that's where the limit is, and we try to help the customers to have the right, right solution. Then I think the price setting with the old data we have, the system we have, we will go for centrally driven, fair pricing in, in everything we do. And I think with the data supported with the KMS we have, and maybe even some support from the AI, we will have an excellent price setting, both when selling the cars but also when, when buying the cars. And that's where we can be mastering, mastering the game. Then I think the trustworthiness is, in a way, a prerequisite, if. And you need to have transparency on, on what you sell.
We are selling used items, and they have had a different type of usage in between, and if you wanna sell it on remote, on a digital platform, you need to be utmost transparent. That's what we are trying to do, and highlight everything we can, and then people can have a look, and they can buy it on the remote, and they can trust it's gonna be good. And if not, we will help them to make it good on that respect. Then all the channels, I think this will not become fully digital. It's gonna stay omni-channel, but the roles will change, and I think the new generation is more for the almost digital, if not the fully digital, and in between, they do both.
And like today, we were in the stores, didn't see too many people over there, but some people are coming in. When they come in, they come for a purpose. They are not kicking the tires, they are not just daydreaming, they have something to do, and then we can help them. And the same applies for the digital world. When people go on our website, they are on the chat, they are already into something, and then we need to help them to make the right choice in that respect. And then I think when the company was started, Kamux used to be the innovator of the industry. I think some of that we have left on the table, now we will bring back on the table and do it step by step.
Not all of those gonna work and fly, but I think some of the ideas we have are really, really breakthrough ideas, and we'll bring them to the marketplace. So that's in a way, the soft side with the, with the customer, then how are we gonna do it? That's on the more operational side. And on the operations, this is like an industry, and you need to be really running the productivity and doing it the process way. And I think that's something where we can improve, and we've been improving, but we'll still have quite a long leeway to do, do that. And then on the sourcing, I think the sourcing, and now we've been seeing that Finland, the number of new cars has gone down and maybe even, even further going down.
Sweden, roughly the same, and Sweden even have been exposed with a big amount of cars being exported out of Sweden. So then our choice is to go to the European marketplace, go and buy directly from the fleets, the makers, and in between, and I think you have will entertain more on this area. Now, that's where we can make a point of differentiation. Then on the refurbishment and on the reconditioning and documentation of the car, in Germany, we already been working some time with two partners who've been helping us to industrialize the process. The similar pattern we have now piloted in Finland, and we will share more about that. And I think when Andy is on the podium, we'll learn something about Sweden, which is all pointing in the same direction.
The pricing, and I, I think that's where. Things do change rather fast, like we, we saw in the German situation, the prices on the EVs, prices on certain brands, then you need to be utmost active and proactive. Like Vesa said, we have the position only very short time, so then you need to act. The earlier you act, the better you are. I think the speed is part of the Kamux DNA, and we'll, we'll bring back the speed on, on, on that one as well.
Then it's people, and I think we now have a good team of people, and I think we will hone. We will help people to train and learn new tricks, and then so that they will have all the focus on the customer at the other end, and on the other end, improve the process and productivity. So that's what we're gonna be doing. Teamwork, and I think one of the Kamux strongholds has been being utmost cost efficient. But during the pandemic and during couple of other things, they were hampering the cost efficiency. Now we will bring it back on the track as well and do the productivity. And then I think the speed. Speed is something where we can be better than anyone else.
So with the data, with the knowledge of the market, with the insight, we can do fast decisions, and that's, that's how you're gonna win on this market. And then a very, very, thin line on the, on the right-hand side of the slide, that's the M&A track. And I think Kamux will be part of the, consolidation one way or the other, proactively. We may have a look on the, on the car trading as such. In our existing markets, potential new markets, don't have to be always a full, buy-in of something, can be also teaming up, partnering, strategic partnership, or co-owning, or then buying. And I think that's, that's something we will learn.
We've done our homework, we have long lists, what to do, how to do, and then we also have a list on the adjacent services, what to have a look and, but there is no guarantee that they're gonna be available today, next week, or even, even next year. But at least we know what we are looking for and what, what to do on, on that respect. Then I think the friendly, convenience, trustworthy, customer service, quality, transparency, and then the add-on services. The one who were already on the earlier tour today saw that we don't only sell the car. That's only half, half of the meal. Then you sell the, finance, you sell the Kamux Plus, in a way, warranty or guarantee, you sell the insurance, and you can also sell other services.
I think in our innovation platform, we have some ideas what to do on, on top of that. Even today, you will learn some of the things we have coming up on the table. Then standardized operations. I think today, I will share some of that, and Juha will share some of that sourcing. And I think, having a look maybe for last year, we've been really sales-driven. It's important. Equally important is to buy well and buy smart. And I think today we're gonna be hearing about how to buy smart, how to have smart supply chain, and what to do, and I think that's gonna be also an added on opportunity for us.
Processing and logistics, I think it can be also somewhat industrialized, not always, because you don't know what is available next week in Germany, or you don't know what is available in Sweden, and you don't know what's gonna happen in the eastern part of Finland this week or next week. They will come when they come, but you need to be prepared and you've been planning for how to do things forward on that one. Fixed pricing, maybe not, but centrally driven fair pricing. So prices are fair, and people who come to us, they know that, hey, these people, you cannot get the incremental EUR 1,000 away. You may do a bit of discussion, negotiation, but it's always fair and right price. But we're not gonna go deep discounts and you cannot negotiate.
The people who are not intimately familiar with the car industry, they never know whether EUR 63,999 is the right price. They think, "Could it be EUR 59,000?" It just got sold. Yeah, it's. This one, this one is sold, and we don't give any penny for discount. So that's our idea. It's what it is, and then if time tells that it's not gonna be sellable in a certain time, then we change the price. But we do it with a centrally driven model and make it work. So everything is sellable, the price has to be right. And then the people, these are the people who will do it. We will train and focus on people being highly performing on all of the markets.
M&A, like we discussed already, Beely is more or less both an opportunity in the car trading, maybe on the acquisitions and related services, can be partnering, can be strategic alliances and all, all of that. And I think, like Vesa mentioned, we have not seen lot of mergers and acquisitions on the used car business. New car business, Hedin has been rather proactive and active, some others have been following. Now, I think there's a bit of a transition, what's gonna happen and how it's gonna happen? Some of the families who've been long time in the business, they consider, "Mm, should we invest or should we step out, or what should we do?" And I think that's creating opportunities for our type of a player going forward in that respect.
Then, I think sustainability and ESG, and it's not by accident we have the green color. I think we are part of the circular economy, no matter whether we like it or not, we are part of that, and we've been executing rather well on that area. The things we decided to measure is trustworthiness, and we follow that with the NPS numbers, and I think today you will learn how we've been doing that. Then I think we will not, in a way, oblige people to buy EVs or hybrids and low- emission, but we will help them to make the right choice, and always to help to find the lowest emission car available on their needs, and that's what we are doing.
And then we are, as this is people business, it has to be thriving, inclusive, and also diversity in our way of operating. And a small detail, I, I think half of the customers, by theory, are ladies. When we look at our people who do the customer service, we don't yet have 50% of the people helping the customers ladies, so I think that's something where we need to improve and will improve. And that's in a way, the industry, when you go to any of the conference in the automobile industry, it's rather male-driven, and I think we can also make a point of difference on that direction going forward. Then long-term targets, and I think Jukka will have a deeper dive on those later on.
They are easy to remember, 100,000 cars, equaling roughly EUR 1.5 billion, and then a profitability which is adjusted EBIT margin of 4%. And those, you may always ask, is this at the end of the three-year period? It's not. It's a couple of years thereafter. But on the other hand, if the M&A opportunities come, it can be also earlier. But that's roughly where we are. And then on the non-financial things, we have the NPS for the group, and we had a very nice number. We've been raising the bar now to 60, and then on the eNPS, we've been now raising it also substantially. But we are already very good and very happy for our past performance on 2023. Now, I think we are just recapping, and then Katariina will come and help me with the questions.
We are ready for questions to Tapio. Perhaps we'll take questions from the audience. I would expect there to be some.
Can be.
Y es, Rauli from Inderes again. A question on the targets and the vision which you reiterated to be Europe's largest. So do you expect to, both in respect to the financial targets and that vision, do you believe that the current markets are enough, or would it require for you to expand to new markets as well?
I think especially when being the number one in Europe, these three markets clearly not enough. You need to go beyond that. Now then you also need to have means how to do it, and by organic growth only you cannot do it.
What about the financial targets, are those for the current markets or?
These financial targets are mainly for the current markets. And it's basically without any major M&A activity. It can be something very small, but not nothing major.
Yeah. And do you have any time frame when you would be seeking to expand to the new markets? Is that possible in the strategic period you now outlined, or is that further away?
I think first we need to make these three markets work, strengthen our position in Finland, and be the clear market leader, and increase profitability, make Sweden profitable, make Germany profitable, and then we will take the next steps.
Clear. Thank you.
Further questions?
Hello, Pia Rosqvist. Regarding your growth target, you don't open up much about your ambitions now, how to speed up growth in Finland versus Sweden and Germany. Can you share, shed any more details on this regional split?
I would maybe not like to steal the thunder from Jani, Andy, and Martin. I think they will come, but I think we may come back to this one after the whole presentation, because then we get the highlights of Germany, Finland, and Sweden.
Okay, and then regarding the different revenue streams, I mean, the split from used car sales versus other services, the other services, or integrated services has represented some 5%-6% of sales. The other services you plan, should we, you know, think about you reaching 10% of the total sales, or do you have any details on this?
We have not put it in that type of a perspective, but it's gonna be gradually increasing part of the revenue stream, and especially in the margin area, that's enhancing the margin.
Thank you. Then if I continue still on the mergers and acquisitions, can you help us imagine what kind of businesses you are looking at? Is it used car retailers in your current operating countries? Is it companies offering something completely different within you car. I think first we need to make these three markets work, strengthen our position in Finland, and be the clear market leader, and increase profitability, make Sweden profitable, make Germany profitable, and then we will take the next steps.
I think we try to keep us close to home in any case, something we know and we understand and can do. In that respect, it's very close to home, and then it's also the adjacent services. And I think on top of the used car retailing, I think ideas which will keep our customers in the epicenter and have a contact with the customer and dialogue with the customer, even between the time when they are exchanging the car. So something which will keep the customer in the, in the loop.
So could it mean car services, car maintenance, services?
May, maybe that as well, but I think that's not our stronghold, and we don't know it so well. If we would consider something like that, maybe then through a partner and/or alliance, then there's something else. But we could also sell the services on behalf of someone. I think that's in the way, where we think.
Okay, I'll continue with questions later.
Thank you, Pia.
Hi, it's David Candela from eQ. About the organization and the leadership group, you have a quite new group. Is it now structurally ready, or is there some areas you still want to strengthen?
No, I think it's structurally ready, and even though some of them been only short time on board of Kamux, they have a long experience in other businesses where I think the analogy is roughly the same. And I think we've been. With this team, we've been working since January first, and it feels longer, and all of those have been part of building the strategy, and in that respect, I feel rather good on what we have. And by the way, rather good is a Finnish understatement.
Mattias Kjell from Hasselhult, and I'll continue on the topic that Pia just touched upon, and it's interesting regarding these, this M&A track. So, and Vesa just pointed out the over time decreasing part of C2C businesses, so consumers selling their cars on platforms and more and more going to professional dealers. So in terms of M&A, I understand that you wanna keep at home, you know, in omni-channel, but is there anything on these C2C platforms that you look at and think, "Mm, that would be nice to have," in terms of, you know, the Kamux concept? Or is the C2C kind of Autotalli.com and these platforms, are they completely out of scope, you know, in terms of interest for Kamux?
I think our logic on those one has been that if we would be deeply involved, even maybe potentially a major owner of some of the platforms, that would turn off quite a lot of traffic and lot of attention on that one. So in that respect, we would be maybe partnering, we could be co-owning, but we would never be a majority owner of any of those, is our current read.
Okay, and then you clearly just mentioned, you know, the additional services that might be of interest for you in terms of acquisitions. But if we just think about buying a mirror picture of Kamux just on a smaller scale, is there anything in addition to buying the inventory, you know, the cars.
Excellent question
That you are kind of looking for in such a player?
Especially in entering areas where Kamux has not been, then you acquire also knowledge, you acquire know-how, and you acquire contacts, and I think that's still clearly more valuable than the inventory only. And this is people-to-people business, and people appreciate brands. And when you have reputation, reputation you can build, and you can. Otherwise, you start from zero.
Good. Any further questions from the audience here?
I'll be back. I'll be back.
Good. We do not have any questions from the webcast, the chat, so, I'm counting on them to leave all their questions till the very end. Thank you, Tapio.
Thank you.
Now it's time for Aino to come on board.
Okay, Aino Hökeberg, and I'm responsible for marketing and concept here at Kamux, and like Tapio told, started first of January, and excited to be here today to tell about our new strategy. We celebrated last year our 20th anniversary, as you can see on the Helsingin Sanomat first paid ad here. If we go back the 20 years to 2003, there were no smartphones. There were just the sliding Nokias and the BlackBerrys you should remember. So how did we engage with our customers? Well, it was mainly the showrooms and then the interactions with the showroom personnel. Fast-forwarding for today, the showrooms are still very important for us, but more than 9 out of 10 customers start their purchasing journey online. We get more than 1.2 million visits monthly to our web pages.
That is how we engage with our customers today. We also do social media, of course, whether it's proactive advertising, extending our brand, or reacting to customer questions or issues we want to take care of. Both online and remote channels are increasing, like Vesa told here in the beginning, and digitalization enables us to show our attractive assortments. It also enables us to show a lot of information about the cars, the enormous number of pictures, and soon, the videos. And all of this attracts more customers to our industry and to Kamux. Imagine the 1.2 million monthly visits to our web page. If we would translate that figure into what it would mean to showrooms, it would actually be 513 daily more visits per store, so that would actually keep our store personnel very busy.
Despite of the fact that digitalization is increasing and more and more customers are moving to the digital channels, they will not replace the showrooms today. Majority of customers still want to see, touch, and test-drive the vehicles. How would you otherwise know how much headroom there is? So customer want the digital-first experience, combined with the online convenience, but then combine it with the reassurance of the store personnel. And there's a lot of things going on in the market. Vesa presented a few macro trends, and looking at from the consumer point of view, one big shift is that the customers are no longer looking just one industry or one category. So, for example, candy bags. We used to look at candy bags and tell, "Okay, which one is the best one?" But now the shift is towards looking at the industry pan, like cross-industries.
If I have a great experience in, for example, in a coffee shop, I expect the same experience from all the brands that I engage with. So the customer focus is going from one industry to pan-industries. They also have higher expectation of the buying journey these days. They invest a lot of time in researching, comparing, and deciding which brand to interact with, and this is what we have to deliver. They also have increased expectations of customer service. Customer service needs to know the needs of the customer, be empathetic and be friendly, and this is what we will deliver in our customer promise. And then customers want all of this in a seamless, omni-channel way and experience. Some customers prefer digital channels, some remote, some showrooms, and a whole bunch of them want this in a combinations, in their own unique way.
And then technology is also driving the transparency in the market. Customers want to know more about the car, the history of the car, the condition of the car, the service records of the car, and this is what we will deliver. So to be able to deliver the customer promise presented here earlier, and to be aligning with the market trends and the changing customer needs, we need to move from this multi-touch point model to true omni-channel experience. Customers are always connected, and they expect the brands that they engage with, like Kamux, will always be connected. And we need to offer a hybrid of online and remote and showrooms, showrooms to our customers. Well, to be able to deliver that, in marketing, we need to focus on five key areas. One is the seamless omni-channel experience that I opened up.
In that, we place the customers in the middle, and also bring the omni-channel elements to all of our channels. Then we'll also re-renew our store concept and our web concept. Again, customers in the middle, and we need to find a way to have a unique experience and a unique look across our channels. This will also drive customer loyalty and trust. We will do store specializations, either whether it's a store or part of the store. So, for example, can focus on EVs, utility vehicles or premium cars. And we have a new flagship coming up in a few weeks in Tampere, in Finland, in Lakalaiva, which we are very excited about, and it will already have some of these new elements from the new store concept. Then the third area is trust and building transparent quality.
This is paramount in our business and in our markets. Customers are pretty, sometimes pretty insecure. They, they make a big investment. It's emotional purchase. And imagine when we can say that, "Hey, all of our cars are inspected by the third party." You have all the information of the car online available, and we can also go through it together with the customer. So this, this decreases a lot, the increased riskiness that is combined with buying a used car today. Then the innovative services discussed earlier today, on top of increasing penetration of our current services, like Kamux Plus, we will also introduce new services and new add-on products. For example, tire sales or charging boxes, all the way to these services in the mobility area. Then customer-centric service and customer satisfaction is a focus area for us.
We measure customer experience closely and systematically, and develop it based on the feedback we get. Today, we do it through NPS or Net Promoter Score, and the target is to reach 60 during the strategy period. We also want to focus on customer relationships and customer retention, to be able to deliver the meaningful experience with the trustworthiness, it will drive longer and stronger customer relationship for us. So we started to change the industry 20 years ago, and we have another great opportunity to continue to do so. We'll continue innovating with our services and with our offering, and making our experience better and better all the time.
This is done by delivering a unified, transparent, more personalized experience, and we really tailor it to the customer needs, and no matter how they choose to buy or sell the car to us, and this is what we call the true Kamux experience.
We are now ready for questions. Pia, please.
Thank you. Regarding the transparency, so these full reports you talk about, can they be monetized, or is this something consumers expect as an add-on free service?
Consumers expect to get a lot of information about the car, fully available online, and also something that we can discuss and go through in the stores.
Okay, so it's not a service, it's not like EUR 10 you can add on to when you make a deal or sell the car?
No, they expect this information to be available.
Okay, thank you. Then, can you reflect upon the differences between the Finnish and the Swedish consumer? Have you, have you met any or experienced any differences, in how you need to market, and reach out to the consumers in these two markets?
Yeah, I think we need to have a quite unified Kamux experience. So the cornerstones of the experience and how we want to sell or buy cars are quite similar across markets. So we want to be the transparent, the friendly, the reliable partner across the markets.
S o just to specify the, I mean, the you, you meet, or this works in both countries, so you haven't experienced any, no need to alter the message?
Yeah, of course, there will be some market localizations that our managing directors for each country can comment on, but the cornerstones apply for all markets.
Thank you. And then finally, the NPS and the target over 60, so what was, what was the level in 2023?
The level is around 60, depending on the market. Or 50, depending on the market.
Okay. Thank you.
Yes, thanks. One of your points was this seamless, omni-channel experience. So, what are you currently missing or what do you, what's the main things you want to improve or add there to the kind of things you have as of today?
Yes, so becoming this seamless omni-channel company, it's a journey. And we have started working on it a few years ago. And what it means for us is that we need to know where the customers are, and when, and be there together with them, and always be connected. So not just to the showrooms or telephones, but for example, through the chat, which we have now established in all markets.
So does that mean some kind of new systems or new data for you, or is it more just kind of more of the way of operating, and how are you contacting the customers?
Well, it's, it's about being able to provide a wide variety of touch points to the customers, and being available so that they can engage with us in the way that they want to.
Okay, thanks.
Mattias?
Just wanna make sure I understand. The Net Promoter Score, the 60, how is that measured? Is it basically, like, six out of ten from customers, or how is that defined?
Yeah, the goal is the 60, but at the moment, the last year, it is around 50, depending on the market. So Net Promoter Score is based on the question that, how likely is it that you recommend Kamux either to a friend or a colleague? And then it's calculated based on a scale from 0 to 10, and zero to six is these detractors, nine to 10 are the loyals and promoters, and then we have the middle people there from 7 to 8. And then it's a number where the loyal ones are deducted from the detractors, so that's the number.
It's basically a set of questions which are ranked from, or that can be pointed from 0 to 10?
Yes.
Yeah.
Based on the question, how would you recommend Kamux?
Any further questions from the audience? No further questions from the audience, and I'm starting to think that our webcast lines need to be checked, so if maybe someone on the webcast can just post a note saying hello, so that I know that you guys are there, and that the questions are coming through, if any. But again, expecting them at the very end. Thank you, Aino, and now we welcome Juha to the stage.
Hello, Juha Saarinen from Sourcing. I'm gonna walk you through how we are going to take Kamux sourcing to next level by strengthening our international sourcing and supply chain management. How we're gonna build trustworthiness in eyes of the customers with standardized and industrialized processing of the car, meaning inspection and preparing the car for sale. Thirdly, how we're gonna go to original sources of cars. We buy cars from 16 different European countries, so basically all over, and there are 3 main supply categories that cars are purchased from: professional channel, meaning leasing companies, rental companies, other car dealers, auction houses, auction platforms, so basically business to business, type of purchasing.
Then, directly from consumers, and thirdly, the trade-in of the cars, so meaning that customer comes to us and wants to buy a car from us, and brings his or her old car to us as a trade-in. In Kamux operating countries, actually, the main channel is different in each of the countries. In Finland, most of the cars that come in are trade-ins, when in Sweden, we do direct purchases from consumers, and that is more than 50% of the cars. In Germany, it's dominated by B2B purchases, so those professional channel cars.
All of the cars that come in to Kamux point of sale go through processing, and processing means preparing the car for sale, so washing, cleaning the car, inspecting the car, doing needed repairs, being big or small, might be paint work, might be some tire work. Of course, then modeling of the car, which includes also taking the photos. So that's what we mean with processing. We can do processing either centralized or locally in stores. Process is the same, no matter where we do it. We do have processing centers at the moment in Finland, in the north, in Oulu, our own operated hub, and then we are just piloting in southern Finland operations with the outsourced model, supplier there is SE Mäkinen.
In Germany, we are having two hubs, other one in nearby Düren, and other one in Hamburg area. Both of those are operated as an outsourced model. In Sweden, we are looking for options still that how we're gonna be doing it, but these are the kind of like the main options there as well. So the five strategic priority areas for our supply chain in the strategy period are here. So cross-border collaboration, utilizing Kamux presence and footprint in three countries more. We saw in Vesa's presentation that market in Germany is huge comparing to what it is in Finland. So we will go to market where the cars are, so to Europe, and we will invest on that in purchasing team. Also, strengthening the purchases from original sources.
So, minimizing the margin loss with those intermediate players who are there, taking their share from the value chain, but not necessarily bringing the value as much as they could. So we aim to go directly to the original sources, meaning also opportunity to purchase from bigger fleets and larger batches of cars. Then the centralized hubs for standardized quality, so increasing that. As mentioned, we have this pilot ongoing now in southern Finland, and planning to also do that in Sweden, and already operating in Germany. But that, that's really is about ensuring the standardized quality, and also enabling certain certain maneuvers in supply chain, like using them as a delivery center for logistics routes, et cetera. Then this active and smart supply chain management.
So we already have a good ways with our good current ERP to see where our cars are and how we manage the supply chain, but we will also there take a next step to really see where our cars are and make sure that they are at the right place at the right time. And importantly, reducing the lead times with continuous improvement methodology. Because time is money in this business, meaning that the stock rotation, stock days of the cars, it's in essence. So also in the supply and inbound supply chain, every day that we can squeeze out will be good for us. And this active vendor management, we are also taking steps to take on the stronger grip, also the so-called indirect sourcing at Kamux.
Meaning like maintenance work, tire work, repairs, fixing of the cars, et cetera. And then about this quality and transparency for the customers. Actually, maybe I'll go to the next slide. So in Finland, kamux.fi, you can also already find for some cars examples of condition reports. So they are, as seen here, certified by Kamux, and a customer can in Kamux webpage give their email, and then they will get back the condition report of that individual car. And we're gonna be increasing share of that in future. And also, we are planning to have, at some point, a third party doing the inspection, to also again increase the trustworthiness in eyes of the customer. So to summarize, so it's about industrialization and standardization of the operations and processing.
We're gonna be putting more effort on cross-border purchasing and international sourcing, going to original sources and bigger batches, and also using these hubs bringing the trustworthiness and quality, similar way of working, everywhere at Kamux, and also then improving the visibility on our supply chain in a smart way, and shortening the lead times.
Thank you, Juha. Again, time for questions, and let's begin with the audience and be hopeful, for the webcast. But they're live. We've got several messages. Thank you for those.
Thank you. Regarding your sourcing strategy, and I hear you loud and clear about centralizing the operations and making it efficient from that perspective, I'm not quite sure I understand the advantages of kind of outsourcing that inspection in comparison to keeping that fully in-house. Can you explain that to me?
We have defined in very detail that how the inspection is done. And whether it's outsourced or insourced in our processing center, it will be done in the same way, in Kamux way, and that inspection report will be also entered in our ERP in a similar way, whatsoever. The value add then, if there is a third-party inspection report, like I think Andy will be talking today about, in Sweden, we have today announced that we start a collaboration with a third-party. Inspection is that customer might also value more if there is a third-party stamp on the inspection report.
Yeah, very interesting topic. You mentioned that you source cars from 16 different countries, and I assume that you have your kind of favorite trades, so to say, picking from one country, selling to a specific one. But what can you say about, you know, co- you know, assuming that the margin on a car is. Obviously depends on the car and b ut it's at some range. So just thinking that you will, you know, bring a car from, I don't know, Central Europe with the fleet, with the ship to Finland and all the processing and stuff like that. So can you say anything about how much of the margin that goes to this, these kind of logistical costs? Because it's, for an outsider, it's a. At first glance, it's, you know, you feel like almost the whole margin is eating up by all the logistics. So what can you share and say about that?
If I give you a very rough and rounded number on how much the transportation of the car, let's say, from Germany to Finland is, I round it up, so, EUR 1,000. That's a ballpark that you can maybe use.
Maybe I ask that question later on the day there.
Yeah. I can continue on a bit of the same topic. You mentioned that you want to increase or improve further the cross-border sourcing, and then I've thought that you have been already doing quite a bit of that earlier. So, are you looking to really significantly increase the quantity of the cars or the share of the cars being sourced cross-border, or is there some qualitative elements you want to improve?
Yes, we have been doing it for a long, long time, and it's one of the, I, I think, strong, strong points in, in Kamux and has been. But we are looking to increase it.
What can you say, how much will that be as significant.
It depends also on the market situation. So for example, now, when Swedish krona has been weakening, Sweden has been actually the main channel to purchase cars to Finland. And if you go some years back, Germany might have been the main channel. So it depends on how also the market develops, what are the prices of the cars in different markets? Like, how does the EV market in Germany behave? All these impact on it.
Okay, good. Then you also said you want to decrease the amount of intermediaries or whatever in the sourcing value chain. So can you say some ballpark number on how much of your current purchases are coming through such intermediaries?
I don't think we have given that number out, and I probably don't even have, like, an exact number for that to give. But that's our target, that we have those suppliers who add value there, and if there clearly is just, like, a middle man putting a markup on the car, then not necessarily our supplier.
Yeah. Okay, okay. And then finally, you said that the sourcing channels in the different countries are pretty different. So does that itself have an impact on the margin levels in the various countries, or is that just the way that the markets operate in various countries?
Not that much that I see that it would be impacting margin levels, but it's more impacting how we do the sourcing work and how it's conducted, the transactional purchases, but also how we source for the channels. Good. Clear. Thank you.
But we have questions from online, so, we're gonna take those here in between. Thank you, Mark Leonard. How many days do you currently need to turn stock on average, and where do you think you can be in the future after the improvements are implemented? And connected to that, how can this improve your overall working capital?
We aim at 45 days of average stock.
When we improve? That's after the improvements, 45 days. Okay, thank you. Pia, did you still have a question?
Yes, thank you. Thinking back on Kamux to when you were listed, I'm trying to paint a roadmap now in my mind on how your purchasing or sourcing strategy has looked like. So can you remind us, how much is purchased locally at the showrooms, say, in Finland, versus. Or has it changed in any way? Are the ratio unchanged compared to, say, when you were listed?
I've been in the company two years, so.
Okay
M ight be a question that I necessarily don't remember that far. But, during my two years, it has not significantly changed. The share of the and we call them door purchases, so, has been pretty much on the same level.
Okay, thank you.
Mattias?
Topio. Yeah, on the sourcing still, so, just in terms of car dealership, it's been taking a while to understand the competitive advantage that a firm like Kamux can have. But in my mind, of course, you know, a data-driven approach with a large volume is something that you could think that would have clear benefits. So in terms of buying cars, with the increased volumes that you now have, help me understand how much sense it is in, you know, assuming that with data and large volumes, you can kind of notice situations where a certain model, for example, I just throw this out, Volkswagen Golf 1.4, year model 2015, is for some reason spiking in demand in a country or in a city, and you are able to source it all of a sudden, very cheaply in another location.
This was just an example, but identifying these situation based on large own volume, sales volumes and data. How much of a reality is this? Or is it just like imagination in my mind? Is this actually happening, and what ways do you use in order to kind of find these lucrative situations, so to say?
It's everyday business for us. We do it every day, every week, and we also have a process called demand supply planning, DSP, where sales, purchasing, our data guys and management comes together, and we look at the data and we see these changes. But it's daily work that we look at the data, what is selling in the market, what is selling in our own stock. It is. So it is very much reality, what we do.
In those situations then that you would find, like, a large batch, for example, from a professional dealer or something, isn't it then the case that you have a few number of fierce competitors that squeeze the margin? And, you know, I can just imagine this professional dealer calling through, you know, all the five and just best price wins. Is this, on a daily basis, the case that you have this fierce price competition on those batches, or is there any way that you can kind of get, you know, on top of the deal, so to say?
Yes. There is no way that there would not be competition. There is always several others who are bidding. So we just need to be the one who then gives the best offer. And it's kind of fitting our need, what's there in the batch. Because, of course, the batch also is consisting of individual cars, and car is sold, then we sell it as an individual car. So we need to really look into details of what cars there is in the batch.
Maybe if we have a mic for Martin as well.
Yes.
So I want to make a comment on your question. Martin Verrelli, the MD from Germany. What we are currently doing and what the advantage of Kamux is, is our international presence. Right at this moment, you may know that the EV, the used EV market in Germany is more or less not existing, whereas it is existing in the Nordics. So in that regard, we have huge advantage with this international organization. We can buy the EVs for low prices in Germany and get them to Finland, and that's, which brings us ahead of a lot of competitors.
Great. Thank you for great questions, and now I think it is time for a break. We will be back at 3:45 P.M., so 20 minutes break, and look forward to seeing you back then. Welcome back. We are ready to continue with Kamux Capital Markets Day, and, next, we have the country presentations, and I welcome, welcome on stage, Jani Koivu, who's the Managing Director for Kamux Finland. Welcome.
Hello, everyone. My name's Jani Koivu. I'm the managing director for Kamux Finland. In Finland, we are the market leader, what comes to the volume, sold car. Number of sold cars and also what comes to the revenue. And we have 46 showrooms nationwide in the whole Finland, and we are also, that many might not know, we're also the market leader in utility vehicles, clear market leader in utility vehicles. We have processing center in Oulu, and also Juha mentioned earlier that we have a partnership with SE Mäkinen on piloting processing center in the southern part of the Finland. You can see here the revenue profitability numbers, and as you can see, and numbers of cars sold.
You can see after a difficult 2022, we got back to the speed on the Q2 last year, and then the second half was already somewhat better, and the direction is good. Our aim in Finland is to strengthen the position as the market leader, both in volume and also in revenue. It's a twofold. It comes with that we grow the volume, i.e., the sold cars, but also that we shift the business a little bit towards the more expensive cars, like EVs, hybrids, and so forth, in order to drive the average price of the sold car. Also, we will scale up the commercial utility business, commercial vehicle business, and we have a lot of services around that one, and we measure that business separately, have own staff for that one and own locations as well.
Then we have a lot of add-on sales, and historically, Kamux has been pretty good on integrated services. We will push that one even further. There's much more growth to be done. And also we have a, we will have new services, such as accessories, EVs, charging kits, cables. And also, we will take a little bit back that innovating theme, what was in the originated from a Kamux's history, to piloting new services to the market. We will have something around tires and so forth. On network optimization, we will move towards the large showrooms. You have already saw today, some of you saw today, our Koskelo store, what was upgraded. We have done quite a few in Helsinki capital region.
Aino was mentioning that we are opening our flagship store of over 400 cars in Tampere, Lakalaiva, in early April. Also, we will build the dedicated sections in our showrooms towards the EVs, hybrids, premiums and so forth. Central standardized inspections, we have started the pilot, piloting the condition reports. We have now cars over EUR 50,000 available online, and our aim is to bring it down to all the cars above EUR 15,000. Furthermore, on pricing, I already mentioned earlier, we will have a central-driven, fair pricing. Either you buy or sell cars, the consumers knows that they get the best price, price from us. Strengthening the leading position comes from the rework retail network.
We will have a more focused showroom concepts, upgrade large stores, new flagship stores, and also we will be building the stores in Jyväskylä, Turku, northern Finland, Helsinki region. Then smaller stores, we either upgrade them or close them. As said earlier, improved offering on EVs, plug-in hybrids, and a more focused approach on the concept, Kamux concept in mind. We see a lot of potential on the commercial vehicle concept and offering. We will drive that one even further. The whole idea behind the all of this one is to drive the profit orientation, how we lead the business in Finland, and also enhance the productivity, because we do have the scale. Customer is always the king in the center, epicenter, as you may say, and this is, this is what we will take a huge focus going forward now in the strategic period.
And then the new services, like mentioned earlier, when the owning, for example, owning a car is not an option, we have a services around that one going forward. Car excellence and customer experience with transparent omni-channel concept, as Aino was explaining earlier, you need both the brick-and-mortar, but also the online. We have a selection of cars and services to build to match them on, on customer needs in Finland. We have a largest car selection in Finland. We got currently 5,100 cars in country for sale. And then we will plan to, and already started to utilize more our cross-selling opportunities. We have 1,600 cars in Sweden, just over 1,000 in Germany. We have altogether 7,000, nearly 7,800 cars today, what is available for our customers in Finland. If that's not enough, we can find you one.
We are ready for questions, and Pia begins.
Thank you. You talk now a lot about centrally driven fair pricing. So can you give me some concrete examples on how you change your way of working now? And how does this differ from your previous way of pricing cars?
We have a lot of data, as has been mentioned earlier. Both our own data, but also in Finland, there's market data available as well as, as you have mentioned earlier with the zip codes and so forth. We also have data about, you know, repair cost, after cost, something related to cars' life cycle already from our own data. And then we have data what cars selling very fast, you know, for example, the BMW over there, that we got it in here, now sold. So then that might mean that we need a little bit maybe have a different kind of pricing approach of that one, or buy them even more, or something like that.
So our idea is that with our ERP, which is called KMS, Kamux Management System, we will bring a tool to help our sellers and purchasers to have with the data, both in the market, but with our own, to support the pricing decisions.
Okay, thank you. Then, regarding your showrooms, you have 46 now. So, the net level after the changes of increasing the size of some and closing some smaller, so is 46 kind of the level where Kamux will be now in during the new strategy period?
That remains to be seen. We are working on it.
Okay, thank you.
I had pretty much the same question, but I'll continue on it. So I think you have quite a lot more stores than your main competitor, so do you think you have some advantage on your wide store network, or do you think that if the customers go more and more online, you could do with, like, clearly fewer number of stores than you have today?
I think we have, if you go to the smaller cities and smaller locations in Finland, we are clear number one over there as well, by country mile, if you may say. We definitely need to beef up our store network in the capital region area, Turku, central Finland as well. We shall see how it goes, but the whole idea is to move to the larger locations in order to have a better offering of the cars for our consumers at the one location when you come over there. We might have a few less during the three-year period, if you may say, but that needs to be seen.
Good. Thank you.
Any further questions from the audience? Our webcast audience seems to be very satisfied with the delivery. Again, no questions. Thank you, Jani.
Thank you.
We are ready to move forward with Sweden and Andy. Welcome.
All right. Hello, everyone. My name is Andy Rietschel, and I'm the new, I would say, Managing Director for Sweden. Today, we will talk a little bit more about how we will strengthen the Swedish business to ensure profitability in the new strategic period. As mentioned before by Tapio, Kamux is a market challenger, and we are the number 6 in Sweden at the current time. We have approximately 26% of the consolidated group revenue, and we have a more or less nationwide presence with 23 locations as of 31st of December, 2023. We have grown really fast in Sweden in the past years and consolidated that growth a little bit in the past couple of years.
But we also need to look forward, and we will take a lot of interesting steps in the strategic period to actually grow further again, both in terms of revenue and in terms of sold cars. Maybe this is the most interesting slide. A lot of information, but also a lot of the focus on a lot of the information where we will focus on in the coming two years. What we had noticed when I came in as well, and even before that, is that since we growed, we grow very fast in Sweden, we had more or less 23 separate units, not really currently working as one team.
This is obviously a really important part of strengthening and streamlining all the core processes to enhance the customer focus, to rebuild the teamwork, and the confidence that comes with working as a team. With that, obviously, also comes the productivity improvements and how we can improve cost control by setting the right processes and make sure that we have the right resources in place. And at the same time, as also Tapio mentioned, in the end-of-year report, we noticed a little bit of misconduct, which we have corrected. And going forward, I think if we set the right processes and routines on how we do things, that will also be a thing of the past.
Overall volume increase is really important, as we mentioned, in terms of revenue, in terms of growth of volume. It has been mentioned many times before today, but the focus of having the right cars in the right place is key to that. But also how we increase the add-on sales and the new products in terms of for instance tire sales implementation. So tire sales, obviously, in the Swedish and Finnish market, is really important to have an extra set of wheels for the winter season. And that is a really important thing that we will push much harder going forward. Also financing, and I can answer the question regarding financial lease already now. When is it coming to Sweden? It's already there, has been.
We are working together with two of the main partners of financing, DNB and Santander, for financial lease, so that is something that we already have in place. But that level needs to increase, and we need to also increase the level of insurance and Kamux Plus warranty services, as well as adding even more things such as leasing and private leasing options for the customers. With growth also comes increasing the store network. Really important to have the right places, the right locations. Jani was talking a little bit about it for Finland. Obviously, the same is true for Sweden.
We have to adjust the network as we become more unified, and we need to have a country-wide presence in the right locations and to give the right opportunities. Part of this whole centralization theme is also, obviously, to clarify the Kamux concept for all the stores in Sweden. We need to make it clear what values are the Kamux values for both internal and external to grow the brand awareness in Sweden, where we have a little bit further to go. It's not as commonly known as in Finland, so this is really important as we move into this strategic period as well.
And also, as Juha mentioned previously, we are also looking at establishing this hub concept, but more important to build the trust for the customer, the trustworthiness. It's super important to have the third-party inspections for all the cars sold in Sweden. And I'm really happy to announce, actually, today, that we have signed partnership agreements with two of the main players for this in Sweden, Opus and Svensk Bilprovning, and they are super excited to get started with us. And also, this feels really good for us as a retailer, to be able to tell our customer the built-in added value into this in our products. Same concept goes for pricing as all the other countries. Obviously, centrally driven and fair pricing is a key.
I know from previous experiences that this is something that is definitely possible, and this is something that will improve the customer experience, but also our margins going forward. We spoke a little bit about adding and looking at the network. Something that is very clear, looking at Sweden, as a very long country and big country, that we are currently not present in the northern, further northern part of Sweden. We know that there's a market there, in particular along the coastal regions. And also in the really far north, there are cross-sale opportunities with Finland. So this is something that we are planning to enter within this period, and we will get back to you when we open those showrooms.
We also need to look at the current locations. How are they today? Are they too small? Are they in the wrong locations? Can they be upgraded in any, in some way, to improve the efficiency and productivity of the current showrooms in the key cities? So there will be some adjustments, but they come natural as we grow, and look how we can be more efficient in the network. And last but not least, it's important to say as well that the market is, in some sense, it's a lot of dynamics happening in the market, so we need to be ready to catch opportunities if they arise, whether it is to buy competitors when they close.
There has been a couple of closures for new car businesses, particularly for the private leases coming back, where they have taken residual values, and they cannot sustain that in their balance sheets. Those opportunities could be very, very interesting for us, both in terms of buying fleets, but also in terms of looking at new locations. Going back to the profitability, super important, obviously, you cannot build a house without a good foundation. This is the core. So we need to strengthen this a little bit more with the processes and the policies. And we make sure that we need to make sure that also the corrective measures are being done with the productivity improvements and the cost control, as mentioned before.
The showroom upgrades is also very much part of this. As mentioned before, what we saw, some of us saw earlier today, will obviously also come to Sweden, to upgrade the showrooms in a good way. We will also expand home deliveries, really important with such a big country as Sweden, to give the absolutely best customer experience. And then obviously, car offering. I come from the EV industry, I think that's quite clear as well, from those who have spoken with me before, and I think this is a really important thing. It's a natural transition, as we've shown before. Vesa showed a nice graph of the growth of the new car market, also happening in the second-hand, in the used car market.
It's a natural transition that we will grow EVs and plug-in hybrids also here. And once again, the add-on services and increase the tire sales penetration is also a really important key to the profitability in Sweden. Last but not least, the competitive advantage to ensure profitability. Obviously, we have the fantastic opportunity of a nationwide more or less coverage and the cross-sale opportunities that that give. We have the expansion of a very clear omni-channel concept, and obviously, the international sourcing and availability of cars from Finland and Germany will also support this competitive edge. So, happy to take any questions.
Yes, so we will begin taking questions from the audience here. Go ahead, Pia.
Thank you. You did not mention a lot about sourcing in Sweden. Sweden has been a market where all the players have sourced cars. So do you see this sourcing as a challenge or an opportunity for you to grow?
I mean, sourcing is always on top of our mind. It's I told the team that it's one of the most important thing. It's how we do business. We need to buy first to be able to sell. But also, as you have showed, I think there are different channels we need to look at, and we need to look at the most efficient ones. Currently, the main channel is from private individuals that we're buying, but we need to look at how can we expand that into other channels as well. This is also a group effort in many ways. We must not forget that we have the competitive advantage of getting cars from other countries as well. Whether it is that we give cars to, not give, but that we transfer cars to Germany or Finland or the other way around.
Thank you. Then, regarding the volume increase, can you quantify the volume increase you look for now during the strategy period or to meet your long-term financial targets?
Well, it's obviously a good question, and I understand that that's something that would be interesting to hear, but of course, we have our targets and how we will move forward with those. But I think that also depends on how we execute on the network growth and how we adjust that part.
Regarding the network growth, I think during the past two years or last year at least, it has become evident that Kamux has the network but lacks the volume. Do you really need to expand your presence with more showrooms, or can you just grow happily with the current network?
Well, I think, once again, we grew very fast in Sweden, and with that came the fact that maybe we didn't actually grow the showrooms in the absolutely right locations, maybe in the right cities, but not in the right locations and with the right sizes. So some of our showrooms are fairly small. Obviously, they can be larger, and we can get some benefit of scale by essentially switching houses.
Okay, and then you discussed the brand awareness. So what kind of marketing investments, or how do you plan to step up the marketing to get Kamux more visible in Sweden?
Well, I think today is a great start, right? We can finally start to talk about our, our new brand concept. We can show what we want to do, and I think these are key ingredients to, to really step up the marketing efforts and, and to show where we want to go and, and how we want to do it. Once again, as Tapio mentioned, it's about trustworthiness, and I think that's a, a big key to everything that we will do going forward in Sweden, in the used car market. Also, Swedes, they want to have a, a very trustworthy car deal when, when they buy a car. So everything that we do now and, and going forward will point towards that direction.
Okay, but just in terms of euros or Swedish krona, so I mean, what kind of investment levels is this significant or, you know, business as usual?
No, but this is a, this is a group effort, right? And, and I think, you can do a lot, with, with little, so to say, as long as you have the right message.
Thank you.
Yes, thanks. A couple of ones from me. You mentioned that you have been operating more as, like, independent stores than a unified, you know, country company. So where do you think you are in kind of that process? Because I would imagine that changing that kind of way of working and culture is not an overnight process. So are you in the beginning or closer to the end of changing that?
No, but I think that the Kamux way of doing things and the culture has always been there. I think it's just a matter of making sure that we are aligned fully on the processes and the routines and exactly how to do things, and how we meet the customers, and what the store looks like, and that a customer would feel at home, whether they come to a store in Stockholm or in Gothenburg or in Örebro. And I think that's really what the main point here is.
And are those type of changes that should happen during this year or during the strategy period, or what's the timeframe?
It's a continuous work, but definitely, it's—that's our aim.
Yeah. Okay.
Yeah.
Then regarding the integrated services, I think if I look at your numbers, your penetrations are actually fairly okay in Sweden, if we compare it to Finland. But my understanding is that your contracts are such that you are making clearly less money on those kind of similar penetrations. So, is there - do you think there's a chance that during the strategy period where you are starting now, that you would be able to make it significantly better contract terms for you in terms of integrated services? I guess, mostly financing.
No, but this is, this is obviously something that we're reviewing constantly and looking at, you know, the market offer, and how we can make our add-on services as attractive as possible. I think in general, in Sweden, it's very clear that you finance your car in some way, in one way or the other, independent if it's a new car or a used car. So it's – I think that's a natural way of transitioning towards looking at what the customer actually wants. And I think we can always improve on those skills, whether it is financing or insurance or Kamux Plus or wheel sets in that sense. So that is something that we're working on to get even better penetration rates.
Okay, thank you.
We have a couple of questions from the online. In terms of market share, which rank could you be organically in next three-five years?
Yeah, that's a good question. No, but, but, I mean, at the end of the day, we are going to grow. And the main growth, as mentioned before, will be organic. Whether there will be opportunities that arise remains to be seen, and how that will add on to the growth.
Thank you. Another one: how long do you think it will take you to get back to more meaningful profitability?
That's a good question. We obviously have very similar targets as the group in general, and I think that looking at how we starting to work in the organization, we're putting new KPIs and new measures that should give effect in both short, medium, and long term. So this is on top of our mind constantly how we're going to improve this profitability part.
Okay. Perhaps, in the end Q&A, we might come back to some of the timings as well. Let's take one more question from the audience, and the question that we have remaining, from the web audience is also something that we're gonna save, to the end. Go ahead, Mattias.
Yeah, so, yeah, Kamux Sweden is an interesting part and, and in a, in a very different situation than Kamux Finland, where volumes are on a different level and, and profit, profitability and so on, also having a, a clear market, market-leading position. So help me a little bit understand which fight or which fights you think are the most significant ones in order to take on Riddermark and the other top fives, in order for a Finnish-based company to slowly but surely gaining market share in Sweden.
Well, I think first of all, just going back to one of the first slides, that Vesa showed, I mean, the market is incredibly fragmented, and there is a big opportunity for everyone in that sense. At the same time, the Swedish market is about twice the size as the Finnish market, you know, challenging my colleague, Jani. But, you know, jokes aside, I think, w e all work in a little bit different ways. I could not say much about how our competitors work, only how we plan to implement, you know, our priorities in during this period, and with that, there will be, as far as we believe and think, a growth in the numbers based on that.
Thank you. Now it's time to move forward, and then we may take further questions at the end. Next, we have Martin Verrelli from our German business. Welcome.
Martin Verrelli from Kamux, in Germany. Yeah, Germany, the biggest market in terms of size, the smallest Kamux market at the moment, we will see. Kamux started its operations a few years ago, eight years ago, in the northern part of Germany, in Hamburg and Schleswig-Holstein. Kamux Germany GmbH represents 9% of the group revenue. And at the moment, we are running nine showrooms in Germany. Last year, we moved out of the metropolitan area, Hamburg. We opened a store close to the Belgian and Dutch border in Düren, in the Rhineland. And at the end of the year, we opened a store in Hameln, which is North Rhine-Westphalia, so that we are now, as I said, a bit more spread. Kamux grew relatively fast over the last year, last years, sorry.
In 2022, due to some external impacts, war, corona crisis, lack of supply, which was the main driver, we did not grow. And now, for this year and for the future, it's all about profitability. What we did last year, we focused on implementing processes to make this business scalable. It doesn't make sense to open stores in such a big country like Germany, if you do not have processes that you can replicate and that will help you to scale the business. How are we going to achieve our profitability, our profitability targets? First of all, sounds very obvious, via volume. As I said, we have worked on the processes last year and are still working on them, are improving them. So now, we will, via organic growth, achieve higher volumes.
One thing we also did, we moved back a little bit from the more expensive cars to somehow cheaper cars, more in the direction of the cars that our colleagues in Finland and Sweden are selling. And that will help us as the market there shows higher margins and much higher volume than the sectors that we were acting in before. One focus area for us in Germany is to Kamux. Everybody in Finland knows Kamux. In Sweden, it's also relatively well-known. In Germany, we are not yet well-known. In the northern part of Germany, in Hamburg area, yes, but in the rest of the country, not so much. So that's something we need to work on.
We also need to work on our add-on sales on other products, financing, and I cannot say guarantees because we do not sell guarantees in Germany. That's legally not correct. We sell repair cost insurances. That's practically the same thing. Legally, it's a different thing. Therefore, it's quite important to be precise. Something else we are doing at the moment, we will be starting to sell leasing contracts from April on in Germany, starting with 3 stores as a pilot. That's specifically of interest for, well, small businesses, independent companies. They have a tax advantage of leasing in Germany. So far, we haven't done this. Now we can also attract those companies, those customer groups.
That will also help us to move the business forward in two senses. First of all, we attract new customer groups, we can sell more cars, and we can sell this additional service as well. Showroom network, what I already mentioned at the beginning, until last year, we were focused mainly on Hamburg and parts of Schleswig-Holstein. We have relocated one store there in Heide. We are relocating another one this month in close to Hamburg. We have opened two new stores last year, and we are going to open another one in the southwestern part of Germany in two weeks time. What we have also done, and that's quite important for us, we talked about processes earlier.
We have these hub partnerships, so the two hubs, you have already mentioned them in Düren and in, close to Hamburg, Norderstedt, where we process our cars. The aim was, and it works quite well to, first of all, speed up process, and, secondly, also to increase the quality of our cars, that we sell to our customers. Of course, as everything we do, we do it for our customers. We want to sell better quality, but we also want to monetize this better quality, and that's the idea behind these processes. There was a question earlier about stock days. To show you that we are relatively efficient here, two weeks ago, the numbers for 2023 were published by the Deutsche Automobil Treuhand, DAT.
The average stock days in Germany for used cars in the network is roughly 100 days, and we, today, in Kamux Germany, we are at 39-something. So we have quite some efficient processes in the meantime. And we will continue these operations when we open new stores, of course. We will benefit from the economies of scale that we are having there. Yeah, one other point that also my colleagues already mentioned, the centrally driven fair pricing. I think Jani mentioned it in his presentation. It's exactly the same in Germany. We want to be fair when we buy cars from customers, C2B, which is, at the moment, a smaller scale compared to the other markets. Our-- The majority of our sourcing really comes from the fleets that we are buying, manufacturers, leasing companies, and others.
So there's room for improvement, therefore, fair pricing is very important for us to get more cars. And on the other side, when we sell cars, we also want to show our customers that we have the best quality for the best price. We talked about this already, the store network. You can see on the map that the strong focus on Northern Germany, two stores opened already. The next one will also be in southwestern part of Germany, and later on, we will move into Eastern Germany. Why are we doing this? Southwestern part of Germany is an area with very high car density and a very high used car demand. People need cars to go to work there.
In Eastern Germany, it's mainly lack of public transportation, so also there, there is a huge demand for cars, and that's where we think we should be and where we should act. And by the way, especially southwestern part of Germany, the competition is relatively weak or not existing in a sense. There is no big used car brand. It's different in Eastern Germany, but in the area where we are expanding at the moment, we find I wouldn't say greenfield, but there is enough room for us. What we have also done already, what I mentioned, we have upgraded our showroom in Hamburg. We have relocated one store, are relocating another one, and are working on some of the existing stores as well. Building up scale, what is important for us, selection of cars.
We heard about sourcing earlier. Sourcing is key, and in used car business, it starts and it ends with sourcing. If you buy the wrong cars for the wrong price, you will never get profitable. So that's yeah, why we really need to continue to focus on it, and I think we are doing quite a good job there already. Can be improved, but it's okay. Third-party processing of cars. As I said, the quality of what we are offering our customers today is much better than what we have offered two years ago or one and a half years ago.
And the time we need, and that was our biggest fear, that the process would slow down because we have to transport the cars to those hubs, then they get prepared, and then they get transported to the stores. In the past, cars got transported directly to the stores, cleaned, repaired in the store, and they were ready for sale. But as I mentioned earlier, that's not a problem at all. The processing times are really good, and recently, we also gained some days because of the transportation times, which were a problem during the Ukraine war at the beginning. That has normalized again.
What we are doing now, in April, we will be starting with independent third-party inspection reports, as a pilot in three stores, in Hameln, in Düren, and in the new store that we are going to open. Why independent? It's not a Kamux's report. It's from an independent assessment company or assessor company. Germans need, certificates. They love it. That will help us to, gain trust. We will be very transparent with those reports, and the customer can really get a good impression on the, the real condition on, of the car. And there was a question earlier, if we sell those reports, and Aino rightly said, "No, no, we do not sell them." It's, o n the other side, it's also not free of charge, of course. The business case here is very easy.
The costs for such a report at the moment are between 65-75 EUR that we pay, but we are expecting that we will be able to charge between 200-300 EUR, and for the more expensive cars, even a bit more with having such a report. I mean, that's, from my point of view, pretty straightforward business case in our business. I mentioned already the integration, integrated services. We are increasing or inventing something new, the leasing, that which we didn't have until now. We are professionalizing our tire sales. That was something we have done aside. Now we are doing it in a more professional way. Again, sourcing, our main topic. We have now, since last year, been able to purchase cars directly from manufacturers. That's something we will expand further.
We have contracts also with leasing companies where we can source cars from, which will secure that we have enough volume to really, yeah, be able to grow as fast and as much as we want. Our strengths, our USPs in Germany, again, sourcing. We can offer really favorable prices to our customers. Why? We have the professional sourcing. We have different sources, so we also have a huge variety of cars, and we have quite strict cost management. And as I said, two or three times already, our processes are in pretty good shape, in the moment, at the moment. Then, easiness is also quite important. Not sure how familiar you guys are with Germany, but when we talk about digitalization, Germany is not really.
Yeah, advanced, let's put it like this. So we can really do contracts, yeah, digital for the car and for, financing, and really this, in Germany, it's something special. Now, you, you might think, okay, fine, but, we've been approached by many potential partners who cannot offer digital contracting banks. And that's something we won't do because our customers are, in the meantime, used to this, yeah, modern way of buying and selling cars. And last but not least, what we already mentioned earlier, our international capabilities. We, we can sell cars, or our colleagues in Sweden and Finland can sell cars from our stock, and we, at the same time, we have access to, to stock in those markets. That's something that not many players in Germany do have, so that's also another USP that we can offer. That's it from my side.
Thank you. We are ready for questions to Martin. Pia, please go ahead.
Thank you. So I hear loud and clear that you are expanding steadily in Germany. So choosing the location is, of course, key. So how do you manage the risk? I mean, in expansion, choosing the right location and deciding upon the correct size of the showroom so it's not too small, not too large, how do you do, h ow are your plans looking like?
Yeah. When we look at locations, we have at the moment, if you want, t hat might sound a bit cynical, but we have the advantage that a lot of dealerships are closing down in Germany. The franchise dealers, many of them stop business because of manufacturers changing their model. They are moving to an agency model, and that gives us the opportunity to take over quite good locations, and that's what we are looking for, to be honest, these kind of stores. Then, of course, we do an analysis of population density, population age, used car density or car density, demand. We check the situation of public transportation and a few other factors, and then we take a decision.
We do business case calculations, and our board of directors then approves or doesn't approve, whatever, our business case. So that's the way we do. We try to be as data-driven as possible and not just say, "I like the trees around the store," or whatever, so.
There's a question directly linked to this, from the webcast: "Why don't you go south to, for example, Munich?
Mm-hmm.
Big population a lot of used cars to buy.
First of all, we go south, as you can see. Logistic-wise, it makes sense to not go from Hamburg, next step to Munich, because then you do not have anything in between, and the distances are quite big. At the moment, we can with the two hubs, we can serve both or all the stores, so the distances are under control. That's quite important. Second answer, especially to Munich, I don't think that Munich is the best location to open a used car business, to be very honest. When you look at the percentage of new cars sold and used cars sold in the Munich area, particularly, then there are other regions which are favorable.
Is Munich a sourcing market, then?
Well, it depends. I mean, the sourcing market, the way we do sourcing, is we source cars from fleets, leasing companies, manufacturers, and we source them from them. So, yes, there is a manufacturer in Munich, and, yes, there is also a leasing company in Munich. From that regard, yes, but the remarketing is going on in other parts of Germany.
Very good.
If I can continue, you talked about the lease or about buying from leasing companies and from manufacturers. So how does that work with your strategy to towards lower price points?
Yeah, I mean, we have leasing companies. The cars that we are interested in are mainly of the age of between two and five years. We have certain relatively strict regulations, accident-free limits with the mileage, so we try not to buy cars with more than 100,000 kilometers. That's, a nd then we have also a list of vehicles which we do not buy, so because the risk for us is too big. The price that we are aiming for, the average sales price that we are aiming for at the moment is between 18,000 EUR and 19,000 EUR. So from that regard, cars between the three and five years very often match in that area. Yeah, especially of the non-premium brands, including Volkswagen, we very often have cars that fit in there, plus the smaller models from BMW, Mercedes, and Audi as well.
Okay. Let's take one more question from the webcast, and then the rest of the questions we leave till the end of the presentation. "What is the main reason for not being profitable in Germany, and why-- What is the way to get profitable?
Yeah. So the main reason why we have not been profitable is we had no processes in Germany. We were running seven or eight independent stores, and we did not benefit from the economies of scale. The answer how to get profitable is increase the volume and live the processes that we have invented.
Very good. Thank you, Martin. Now we are going to move forward with the financials, and I welcome Jukka Havia.
Good afternoon. We are closing, we are close to be at the final stretches of the afternoon. What I'm gonna do, I'm gonna tell you how we're gonna drive the performance. That's now linked to what Tapio already mentioned, the financial and non-financial long-term targets, and give a little bit more perspective on, on those. If you look at now what we have done, we have set the targets, which we published this morning, for the long term, and like Tapio noted, we haven't explicitly defined the time frame, it's long term. We're gonna do the strategy actions that have been discussed earlier today in Sweden, in Finland, in Germany, and in sourcing, in Aino's marketing area, and they're gonna then drive us towards these targets. We have set the aim and target, and we think these are doable.
We think and we believe we can do this organically, and then if needed, and if the opportunities arise, now we have an additional option to utilize the M&A as well, either to accelerate the development, speed it up, or alternatively, to add something on our offering. Of the targets, the first one is linked to the volume. So in total, as a group, we aim to sell 100,000 cars per year. So that's the annual target. Secondly, as well as the value of the sales is concerned, our aim to be at EUR 1.5 billion in the long term. Thirdly, and that is important, the growth which we aim to do shall be profitable. And how we're gonna measure profitability is as a relative, which is a percentage of that revenue, so the Adjusted EBIT margin target set at 4%.
So that is the financial set of targets. Before going on to the non-financials, referring to what was asked earlier in the audience, of course, even if we don't have any explicit targets on the balance sheet, on the, or the capital, capital management, net working capital management, where inventory is one part of it, is, of course, very important. It's important for us both to make the growth happen, but we think there are a lot of opportunities to be better. And it's not only the inventory, it's not only, you know, what you had just said about the sourcing, it's all the other parts. It's the, the receivables management, it's also the payables management, it's always the cash conversion cycle as a total. Then we also have now explicitly stated that for the whole group, each one of us, customers is- customers are in the epicenter.
Whether they are consumers, whether they are businesses, we will measure on a frequent basis, the feedback, listen to that, and we wanna improve our performance. So the NPS, Net Promoter Score, the target is 60. And what is really important is the employees. Like Tapio stated in the beginning, this is all about the people, all about us, and the employee NPS, we wanna improve as well, and the target has been set at 40. And now, looking at how we have been developing and starting from the financial performance and this target we set, we have been growing, of course, over the last few years, and now maybe for the last couple of years, the growth stalled based on some external macroeconomic and other sort of impacts.
But our thinking is, well, if you look at the left-hand side, you see the sold cars from 2018, and we reached 68,000 cars last year. We are aiming to go up by about 50%. The revenue in euros for the total group, EUR 1 billion, we just made it last year. There's also about 50% uplift, and we think organically doable, and then if and when needed, the M&A can add something on top of that. And then finally, what is really important going forward is profitability. So the adjusted EBIT margin that has been dropping over the last few years, we want to return to the back to the levels where we were. So the 4% line, which you can see, which we actually have reached a few years back, 2018, 2019, 2020, is gonna be the target.
We're gonna be back there. So in that sense, is nothing extraordinary. On the other hand, lots of things to do. And how we're gonna do that, first of all, is to increase the scale, utilize the scale, which is the top line. Secondly, be much more effective. It's about the productivity, it's about the efficiency, it's about the cost control. And all of that should drive towards the same direction, applies to all the markets, applies to all the functions. Then looking at the non-financial targets, the NPS is already at the high level, okay? 50 + 50 is actually a high number. So most of our customers are happy, they are satisfied, but we think building the trust, having the new concepts that Aino talked about, being much more proactive, we think we can drive it forward.
That should then also correlate positively to the financial targets, both short term and long term. Then finally, the employees. Having the employee satisfaction, having the employee well-being, we think is gonna be a positive driver as well. The frequency of in, you know, getting the information is a little bit different. On the employee side, we're gonna do it twice a year. So we're gonna have a pulse survey in the summertime. We're gonna have a more extensive survey end of the year, so it's twice a year. Whereas for this, for the customer side, we gotta get, get it in all the time. So much more data points, larger sample, higher frequency, so they're a little bit different.
And the eNPS, we have already covered and had from 2021, whereas the information for the customers, the NPS, is a little bit younger, so we have only had the information for a shorter time. On the other hand, I think this is something that if we nail this one, it's really gonna have a positive impact on the financials as well. And now, the other thing which we decided what's gonna be, you know, kept intact, kept as it was, is the dividend policy. That's more, of course, from the owner's perspective. But we have had, and we will have going forward, a dividend policy that states that we're gonna pay out at least 25% of the net profit we make in any single financial year.
So at least 25%, and if you look at what we have done, including the latest proposal that's gonna be decided in a few weeks' time, 18th of April, at the AGM, we have actually paid a little bit more. So the payout ratio you see on the right-hand side, that's the dotted line, so it has been fluctuating from about 40 to 70%. And we think this dividend policy that we have is actually quite stable, and it's gonna be doable, and it's gonna be feasible for the company to execute the strategy. And now, if Tapio would be willing and able to join, we would like to do the conclusion, concluding remarks jointly.
So I hope you've been enjoying what you've been hearing, and I think at least you've been very active with the questions, and you can still continue with the questions, and we try to entertain. But I think it's been evident that profitable growth and underlying the profitability, and then on top of the organic growth, we may operate on the M&A toolbox, either on a acquisition or partnering or alliance in that respect. And then the customer and personal is really in the epicenter of being successful in this business. And especially the customer thing, we go back on the starting phase of Kamux, where Kamux was really for the customers, and then Juha and the founders were helping the company to grow. So we will do that in all of the three markets going forward.
Then on the international scope, I think the economies of scale, both in our sourcing and then on top of the direct sourcing for the cars and the vehicles we sell, I think you have opened the door a bit about the indirect as well, and I think that's where we have room to improve and do better and increase our profitability and productivity in that respect. And then I think our balance sheet is strong, so we are ready to move ahead. For sure, if there will be a very sizable M&A opportunity, we could not maybe potentially act, but I think we have firepower for the normal ones we see in our long list, at least going forward.
I think if I sort of try to figure out where we are heading, and it's quite clear, we're still gonna be a growth company. We're gonna be aiming to be profitable, much more profitable on the relative perspective. I think we have a lot of things to utilize better. The platform, the engine we have, which is the Kamux engine, we're gonna tune it up, so we're gonna get more out of the capacity which we already have built.
So we have the green heart, and we are worth the trust. Thank you. Now, I think it's time to entertain questions.
Thank you. On the financial targets, I would like to ask about the profitability target, which you actually raised a bit, even though your profitability has been clearly below both the old and the new target for a few years. So what kind of led you into the target of 4%?
I think having a look on the past, I think as an individual country, Finland, we've been there and even beyond. And then we have a grip on the way how to operate in Germany, get the Sweden in place and deliver profitability and all adding up, I think that's something which is really, really doable.
Yeah.
Then, to add, Rauli, on your question: of course, they are already in the marketplace, some other players that are at that level or above.
Or even above.
Exactly. So we think there are ways and means of making it happen. And I think we just, you know, with the existing capacity, with the existing engine, doing smarter moves, like, I think Juha's smart logistics, as one example, or just, you know, being a little bit more successful in turning around businesses in Sweden or Germany. Maybe we have good practices in certain parts of the companies we haven't utilized elsewhere. Just by doing some practical, pragmatic actions, we do believe we can improve the profitability.
Yeah.
That's why.
Good. And, can you share anything about the contribution from individual countries to the sales or.
Like.
Profitability targets?
No. Like said, we have set the targets for the whole group, and like Tapio stated, there are plans to execute, you know, and we're gonna follow that up on a monthly, quarterly, annual basis. So we have it, but we're not gonna publish it.
Good. Thank you.
Hi, it's Pia again. Regarding your strategy, so how. Now you have, you have published your strategy for 2024-2026, and then you have the long-term target. So how do we, as outsiders, know if you are successful during your strategy period? So what are you satisfied with? What kind of levels are you satisfied with, when we talk about sales and profitability?
I think those detailed and exact targets we have not disclosed. But on the strategy journey, the roadmaps we have done for each individual market, I think we will come back and share where we've been good at, and if we've been not good at, we'll share that as well.
Okay. Thank you. And then still on this roadmap, so are there any specific step changes we should be aware of, or is this a gradual journey towards the 4% margin target?
It's more of a gradual journey in all of the three markets. Having said that, it's very fundamentally important that we break even in Sweden and Germany as fast as we can.
Thank you. Maybe a question on the demand situation now in all your markets. And then, do the strikes in Finland, have you seen any impact on your sales?
Maybe the strikes is the easiest one to tackle with. Our transportation and our smart supply chain has been maneuvering extremely well. We have not felt any major issues on the strikes. And even if we have partners who are repairing and fixing the cars, I think everything has been running rather smooth as we speak. But in terms of the market, I think the statistics from Finland are available, and then I think Kamux has been continuing to be strong on the Finnish marketplace. Sweden, I think we've been roughly. Let me now think very carefully. We've been following the market, with the exception that the Riddermark is doing extremely strange, good things, and they have taken a quantum leap on their growth. We've been following quite nicely the rest of the market. And then I think Germany, we've been improving the game as we speak.
Thank you. Another question regarding your group costs. The group costs, they have been not on an improvement path, but on a growth path during the last year. Last year, I think you were at EUR 9 million. How should we look at the group costs, which are not allocated to the countries?
Well, couple of things to note. One is, of course, that Jarkko is here. You can have a chat with him if you want. Of course, we have invested, to some extent, into the digital development, which is a cost as well. It's part of it. We have the management, all of us, most of us are sitting here. Of course, some of the guys are running their sort of segments, the countries, but most of us are sitting in the HQ. But like you sort of see, and what we have been telling you guys, is that we're gonna utilize now the scale better. We're gonna have some of the more centralized processes. So in a way, hopefully, that will then bear fruit going forward.
So whatever we have as the total sort of central cost shall be positive for the businesses as well going forward. That's my thinking. And then, of course, being a publicly listed company, there is some cost which is driven, you know, just because of the fact that we are publicly listed, which we have to have, which might not have direct impact on the businesses, but that's part of the legacy.
But I think when seeing how we operate on certain rather standard procedures, mainly in the back office area and related documentation, I think we can streamline and upgrade our game quite a bit on all that respect. I don't have a number in mind of what I would do on the, on the.
Pia, can we take one more question, and then, then we take some questions from the web, and perhaps there are others also in the audience? Okay, Mattias, did you have a question?
Actually, I have three. Should I wait?
Okay, go. Well, I'm counting.
Please should.
Yeah. So the first one is a question that I think I ask too many chief financial officers.
Yeah, tell me.
But, the definition of adjusted.
Yeah.
Without giving a definition
Yeah.
What does that mean? Is it? Can you say what will be in adjusted and what will be not?
Yeah. If you look at. Of course, it's company by company, it's different. But the basic idea is that if there are one-off items, like restructuring-related cost, that is they typically taken out. It, of course, might be an income as well, if you get an insurance compensation. So something that is one-off, that is not recurring, consistent going forward. That's the idea. In case of, in case of Kamux, I think they have been quite small margins. I think going forward, they should be not too extensive either.
Store openings?
Store opening?
Just like refurbishing showrooms, opening up-
The refurbishments we have done is put into the normal results, so nope, nope.
Great! And then one question is, well, ambitious financial target 4%, glad to hear that. Seems to be really doable. But one thing that is interesting compared to, like, 2020 and 2021, maybe 2019, was this, you know, when you finance, to my understanding, you have a large financing need for, like, 3-4 months during the summer when you stock up in spring, and then you sell off a lot of cars during summer months, if I'm not wrong, and then you have the cash inflow. So my understanding is that you kind of issue term notes for a short period of time to finance this. So comparing interest rates, 2019 to now going from zero or close to zero to today, like 4, 5. That's a big difference compared to, you know, the target margin of 4%. So what can you say.
Well, yeah.
About this? Has this financing environment changed, and can you say anything about the financing level right now? You know.
Yeah.
Thinking about 20.
Yeah, two comments. So first of all, of course, any interest cost is below EBIT, okay? It's gonna have an impact on the earnings per share, but it's below EBIT, so in a way, it doesn't affect the adjusted EBIT margin, unless the financing would be a bottleneck, and we wouldn't be able to finance it. But I think more fundamentally, we do have a seasonality, and of course, the net working capital changes. So part of the efficiency productivity is gonna be how can we not only change the level, but hopefully reduce the volatility and the variation, fluctuation as well. But the financing, what we do, we do have commercial paper, short-term financing on the market directly, and then we do have bank facilities which we utilize, to get it done.
Maybe then we take one question here from the web, and this is actually for Aino. So Aino, if you please join us here.
We do it jointly.
The question goes: On Trustpilot, the average review for Kamux.se is 2.5, 2.1 out of 5 on about 500 reviews. The better competitors have 4.2 and 4.4 out of 5.0 on a couple of 1,000 reviews, respectively. What do you think that Kamux has? Why do you think Kamux has ended up here, and does it matter? And if yes, what will you do to improve that score?
Yes, good.
I think this is already stating time before Aino, and I think we have not paid any attention to Trustpilot and not using it, and that's the outcome when you don't pay attention - and don't use it. Now, I think, I don't know, as of when have we started using Trustpilot, so?
Yes, we have just launched a cooperation and partnership with Trustpilot so that we are able to systematically collect all the reviews from customers, so that it will actually give a proper picture of the experience when engaging with Kamux. So the current rating does not give a full picture, and it's a skewed picture. We have been working in the group level with Google Reviews, which have been the main partner in Sweden, and there we have the rating of four out of five.
So we'll climb up as fast as we can, and we'll be the normal.
Yes.
Thank you. Okay, a bit about Sweden. There was a question about the timelines for Kamux. What kind of timelines Kamux has for launching leasing offering in Sweden and other similar plans in other markets.
I think, Andy, you answered already.
Andy answered. And I think we will do it as fast as we can. And then I think there was a question earlier on, on the Beely as well. It's just one of the options we have in the toolbox, and we have no exclusive with them. We are very happy to work with them, but I think we can also test the waters on our own if needed, so.
Okay, very good. You mentioned earlier about using artificial intelligence to gain edge in the business. So particularly, in what type of areas of the business could AI be most useful?
I think fairly many, and I think we are having more of a. We don't have lack of ideas where to use it, and I think we've been piloting and testing it, and in most of the cases, we've been using, we've been very happy with the outcome, so multiple places where you can use it. And I think as we speak, we're gonna see that in the visualizing the cars. We can do the content on the cars. We can do pricing. We can. It's multiple things, and I think if you would ask Jarkko this question, we're gonna be here till seven o'clock, so.
Okay, let's not do that. Let's not do that. Okay, there's a couple of financial questions here. In terms of, X number of profit, profit going towards dividends, then where will the remaining profit go?
So if we don't share, if we don't pay all of the 100% of the net profit, it stays on the balance sheet, so it goes into equity. So it increases equity on the balance sheet.
And.
Of course, if there's a cash implication, it stays as cash to be used, of course.
Okay. At 4% margin, what kind of growth does that imply?
Of course, it depends on how much capital we employ, but if you look at, you know, it depends what is then the top line. But assuming we're gonna make EUR 1.5 billion, assuming we're gonna make 4% EBIT margin, implies about EUR 60 million in absolute terms of EBIT. Then the capital, if you look at the total balance, it's around EUR 200 million as we speak. Of course, it's not static, it's gonna change, but let's assume it's gonna be 200-300 million of the negative side is going to be 60 divided by that, so. And depends what's the capital, the different metrics, what is the definition of the capital? But let me say it's in the double-digit region anyways, I'd guess 10%-20%.
The role of ROCE in decision-making?
Well, I think in the long term, driving the value, I think it's important that the return on capital employed is good, and it's better than what's your weighted average cost of capital. So I think it's gonna have a, so impact longer-term perspective for the value generation. But as said, we haven't had, and we don't now have a long-term target set for any return on capital metrics.
Okay.
But I think if you drive the profitability the right direction and are efficient on the balance sheet, that should drive the return on capital up as well.
Very good. More maybe a comment, saying that without any timely and local milestones, your goals, goals are mostly in the air. Really hope that you reveal country-wise targets ASAP.
I think you can rest assured we know exactly how the targets are. We've been doing the roadmap on a country level, and unfortunately not in a position to share it and disclose it, but we'll follow on that one. Good rule of a thumb is that make Sweden and Germany profitable, and then Finland continue improving. That's unfortunately the level best we can share as of today, but further news to come.
Okay. One last chance or maybe two out of the audience, if there's anything burning.
If not three.
Thank you. We have heard a lot of new and small changes like it usually is in retail, a lot of details. So, do you need a cultural change in Kamux to reach these new targets? And how do you ensure that your employees are incentivized and with you throughout the strategy period?
Excellent question, and I think we are in the process of trying to paint a unified picture, how does good look like, and what are the prerequisites to be successful on a certain function of our retail chain. And I think some of the things take a bit of a longer time, but I think people, when they see and they realize, oops, that's the way you can also do, and by the way, by doing that, you can achieve better results. And as most of our people are paid for performance, I think they're very fast to learn.
If you pass it to Jussi, please.
You said, in the beginning that the industry is quite fragmented. Do we know what's profitability in industry on average?
Some of the average, we don't know, but we know who's been extremely good at what they can deliver. They can even deliver up to double-digit on the profitability, like one of our dear German colleagues is saying. Then some of the European familiar companies, very difficult to say the real profitability. And then when they have cars and real estate or whatever mix, it's very difficult to say what is really the profitability of the car part, but I think, we can do clearly better. That, that we know.
Do we see any trends on that, let's say, used car company's profitability trend? Is it going up, down or being flat?
I think what we have seen and the success defined by growth and profitability, the big ones have been able to grow. The smaller ones, if you're a specialist, you can do very good profitability, maybe not growing. And the ones who be fully online, they've been really struggling, and even profitability has been hampered quite badly.
Thank you.
We have one more final question, from the back, correct? No. Okay.
No.
Very good. Then thank you all for very good questions.
Thank you. Excellent.
Thanks a lot.
Thank you.
Thank you.
Wish you all the best.
Thank you to the team. And, the obligatory disclaimer, at the end of the event, and then thank you, and, have a nice, trip home.
By the way, still the opportunity for store checking is valid, and I think we're gonna be leaving in, say, five minutes. Thank you.
Thanks.
Have a good day.
See you.