Car Dealer Rolf Set to Enter India

Rolf Group hopes to start car distribution and retail operations in India this year, banking on a surge in demand from India's middle class, Rolf chief executive Nick Hawkins said Friday.

Rolf, Russia's leading distribution and retail company for foreign cars, opened a branch in India last year and is finalizing the list of manufacturers with which it will work there.

"I think by the end of this year we will probably have more tangible operations there. … We would probably enter at the same time with retail and distribution," Hawkins said.

"It's a billion odd people. It's a fantastic marketplace … but it is a longer-term investment," he said. "We can do an awful lot with brands that aren't already there," Hawkins added.

Outside Russia, Rolf currently distributes only Mitsubishi cars in Kazakhstan and Kyrgyzstan.

Hawkins said the company was also looking at making a retail acquisition in Kazakhstan and entering another Central Asian market, Tajikistan, before the end of the year.

In Russia, Rolf sells 13 foreign car brands through its own retail business, and has started distributing cars for Chinese automaker Geely. "We would hope to extend that into Central Asia going forward," he said.

Rolf is also considering two buys and setting up logistics facilities in Russia's regions. "We are also looking at doing a much more exciting and bigger transaction in Moscow," he said, declining to give details.

The money for this shopping spree would come from Rolf's own coffers, Hawkins said. "We have the resources to do that."

Turnover for the company is forecast to be nearly $6 billion in 2008, up 50 percent from last year, Hawkins said.

Growth in Russia's automotive market, which has seen yearly demand growth of about 30 to 40 percent for most of this decade, is widely expected to plateau in the coming years.

Rolf expects growth to begin stabilizing in 2012, while in the shorter term, a slowdown in profitability might come from growing supplies.

"I think you will see a lot more products coming to the marketplace if you compare it to the level 12 months ago," Hawkins said.

Some car dealers and manufacturers have also complained that the brief war with Georgia and the resulting turmoil on Russian financial markets, which have sunk 40 percent since May highs, have cut into consumer confidence.

To protect itself from these risks, which Hawkins said have been overblown, Rolf has diversified into the business of logistics and banking.

Hawkins confirmed reports that Rolf was in discussions about merging its automotive logistics business with that of Helsinki-based Avelon Group.

"It is quite clear that we would gain scalability from this, it would help in terms of management of that business. From my prospective yes, it's an interesting proposition," he said.