CDP Group: a lone voice?
A bright new office environment and the company’s relatively young team make CDP Group’s enthusiasm palpable. The impression is that they work with commitment to a project they believe in and are proud of. Based in Forlì, Italy, CDP Group SpA, which started from scratch only three years ago, is now amongst the top ten tyre distributors in Italy, with 2010 revenues of more than 38 million euros.
So what’s the secret of the company’s success? Andrea Reggi, CDP Group CEO, explained: "Our business is founded on the idea of a public company: we all work as if the company is a fund with the sole objective to create profitability, not sales. What counts for us is to create value."
CDP prioritises financial soundness and transparency. The goal is to leave behind the mentality, common in Italy, of businesses enriching its property and/or encouraging personal business at the expense of the company. The CDP Group is composed of 11 shareholders. Two are external (some friends who wanted to invest in the project), the others come from the field. The capital was one million euros at the company’s foundation, but Reggi says that thanks to profits in 2010, that figure will be doubled by the time the 2010 budget is approved.
“Financial stability means earnings, and our data are excellent, our profit will be important in 2010 (ed. precise data will be announced by April with the official approval of the budget). And it is our style, open and modern, that makes it easier to converse with other countries. “CDP Group has been working for 80 per cent with foreign suppliers,” both for the conditions and the flexibility they offer and for the approach similar to ours: concreteness and transparency, without frills. We are in pole position in purchases not because we are better, because we pay cash. We are a healthy company and we have the total support of banks, with whom we have great relations, thanks to our fiscal transparency and fairness and results we have expressed in only three years of activity.”
CDP distributes about 30 brands, but has no exclusively, but rather intends to offer a very clear choice, because “the market is changing at the speed of light, unfortunately and fortunately. The tyre trade now watches only the price, there is no loyalty and the future is increasingly oriented in this direction.”
The 38 million euro turnover for 2010 was made on a volume of about 600,000 tyres due to a careful selection of product mix: “we do not care the 13-inch diameters, we only work on large sizes and exclusively on the car, SUV, 4×4, TL, with a small share of motorcycles and scooters.
“The financial leverage is our strength: we buy abroad in cash and if we did not have this financial strength we would not have this purchasing power. The seriousness that we have with our suppliers, however, means we expect the same from our customers. We are ‘hard’ with them – as we pay our suppliers immediately, so we ask that our clients pay us. At the first outstanding order we block the supply.”
An innovative approach. Perhaps hard, but very clear. Judging by the numbers it seems that the market has appreciated this. “Yes, the market has rewarded us for both the aggressive approach we have taken, and our hardness that actually means also seriousness.”
CDP, based in Forlì, operates in central and northern Italy with a central warehouse with capacity for 100 – 120,000 tyres. A sales network comprising of more than 40 agents can be added to an employee roll of 20 within the headquarters themselves.
Warehousing and the logistics are outsourced with customers numbering about 8,000. The margins for further growth are there and, as Reggi said, “thanks to the total computerization of the company even if we double the turnover, would be sufficient only a few more people.”
When we asked Reggi what he thought of the recent spate of raw material price increases, had no doubts: “Price increases are a blessing! Tyres are a key component of the car, but have often been treated as products of no value. Consumers are willing to spend money on stupid options and speculate to save money on tyres, which are essential for safety. The increases will eventually add value to the appreciation of tyres. “
CDP represents a different business model in the Italian tyre distribution, which focuses more on profitability and fiscal transparency than on product and dealers. Will it remain a lone voice or become a model with to compete? “At this historic moment the correctness and financial capacity is becoming increasingly important in dealing with suppliers and banks. Today, many companies only care about turnover, but their soundness and profit is almost non-existent. The times have changed now and, even if the manufacturers will continue to lend their support, the banks are no longer willing to grant trust to those companies that do not have a solid foundation and make inadequate profits from their turnover. According to us, in the near future, companies that are not managed in a healthy way will disappear. “
When Lucia Tonini, editor of Tyres & Accessories’ Italian sister product pneusnews.it asked Reggi for the outlook for the coming year for CDP Group, he was confident: “2011 will be a wonderful year in which our only interest is to further increase profit and make more and more financially sound CDP”, in other words, the challenge continues.
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