Business Overview 4. DX Regional Collaboration Project Signpost's DX and Regional Collaboration Project started in March 2022 with the establishment of the DX and Regional Collaboration Division. It aims to provide products and services that contribute to regional collaboration by collaborating with local financial institutions nationwide, utilizing its own DX technology and open innovation. In August 2022, it began working with Oita Made Co., Ltd., which was established with the investment of multiple companies in Oita Prefecture, including Oita Bank, to sell original products made in Oita Prefecture to both domestic and overseas markets and to match local companies and Signpost's products and services in order to promote the revitalization of Oita Prefecture's economy. In addition, in April 2024, it started offering DX support services for medium-sized and small businesses. As the first effort, it supports the creation of DX declaration by (The) Fourth Hokuriku Bank, Ltd. (Niigata City, Niigata Prefecture) to deploy DX declaration support services to the market. Furthermore, it will realize new solutions by commercializing its own technology and open innovation and promote regional collaboration through innovation.
1. Business content The main business of Sakai Heavy Industries <6358> is the manufacturing and sale of road rollers used for road paving, and road roller related products account for about 95% of its revenue. In addition, the company's corporate philosophy is to contribute to the world's land development through its road construction machinery business. 2. Characteristics and strengths As previously mentioned, the company is a specialist manufacturer of road construction machinery such as road rollers, but has the following characteristics and strengths. (1) Long history as a specialist manufacturer The company's biggest feature (strength) is its long history as a specialist manufacturer of road construction machinery, including road rollers. In other words, by focusing on and specializing in its global niche strategy, it has accumulated its own unique technologies. This long history and experience have enabled it to enhance its technical and credit strengths. (2) Technical strengths Simply saying "compacting or paving roads" requires different pressures, rotation forces, etc. (compaction technology) depending on the location, soil conditions, etc. According to the company, the construction function of the roller itself determines the final quality (density, flatness, lifespan) of the road or embankment, and it is generally said that if the compaction density is increased by 1%, the road lifespan is extended by 10%. Therefore, for construction clients and contractors, product quality (performance) is also a very important factor, in addition to the price of road rollers. Since the company has been a specialist manufacturer of road construction machinery, including road rollers, for a long time, it boasts high technical strengths in compaction technology that are not easily matched by other companies in the same industry. In summary, the technical strength of the company can be described as "knowledge about entities and concepts." In other words, it is their engineering ability to oversee the entire construction project and their ability to adapt to a variety of materials. Specifically, it is the combination of various technologies, such as mixing with tires, vertical vibration to increase the compaction force, horizontal vibration to scrape the ground, vertical vibration to form a thick layer of compaction, further high-density compaction by tire vibration, and solution to difficult compaction problems through high-frequency vibration. An example of the company's high technical strength is the ability to control the relationship between "mechanical vibration technology" and its "vibration suppression technology." Various mechanical vibrations are an important means of improving construction performance in road rollers, but this vibration itself can cause machine malfunctions and have a significant impact on operator comfort. Therefore, the power (technology) to control the conflicting relationship between vibration compaction strength and machine quality is important, and this cannot be accumulated in a short period of time.
Nissan Tokyo Sales Holdings <8291> provides one-stop services related to the car life, focusing on electric cars, and is divided into three business segments: automotive-related businesses, information system-related businesses (all shares sold in October 2023), and others. The automotive-related business accounts for more than 90% of the sales volume of the 2024 March period, of which new car sales account for nearly 60%, and the profit is well balanced among new cars, used cars, maintenance, income handling fees, information systems, and others. In addition, Nissan Tokyo Sales not only buys new cars and parts from Nissan Motor and sells them to ordinary consumers, but also plays a role in connecting Nissan Motor and consumers by promoting advanced technology cars such as EVs, ProPilot, e-POWER, and e-4ORCE (Electric Drive 4-wheel drive control technology), organizing test drive events, and expanding fast charging stations.
(1) Automotive-related business Nissan Tokyo Sales sells all new car models of Nissan Motor. Although there was a temporary shortage of vehicle supply due to the COVID-19 pandemic, sales have been activated because Nissan Motor has continuously launched new models, and the number of new customers is increasing. In response to the expectations and lifestyles of diversified customers, the company is promoting a renewal to a new generation store called "Nissan Retail Concept (NRC)." As for Renault vehicles, the company operates five sales outlets as a virtual company specializing in Renault vehicles within Nissan Tokyo Sales, boasting the highest sales volume among Renault dealers in the country (in fiscal year 2023). However, the number of new car sales has remained flat at about 5 million units nationwide due to the aging and declining population and the decreasing automobile ownership rate. To grow as a company, dealers must increase the profitability of new and used car sales through scale and aggregation and develop unique strategies based on growth drivers other than new and used cars.
(2) Individual lease "P.O.P" For modern consumers who consider automobiles as things to use rather than to own, personal car leasing is a highly convenient service, and sales locations can be described as a new form of new car sales in which the sales points are leasing companies. Among them, Nissan Tokyo Sales' personal lease "P.O.P" is a proprietary business that has been around for more than 25 years and boasts a high market share of about 40% in Tokyo. Characterized by "zero down payment, all inclusive, fixed amount," "P.O.P" is a very efficient business for the company because more than 70% of customers switch to the next new car in 3 years, and the repeat rate exceeds 90%. At the same time, it has the advantage of being a source of high-quality used cars with a holding period of less than half that of the general market. Due to the characteristics of personal leases, various industries are entering the personal lease market, which is expected to expand choices for consumers and activate the market, providing a tailwind for "P.O.P." From April 2023, the company also started selling used cars through personal leasing, a new form of used car sales.
(3) Non-new car automotive-related businesses
Personal car leasing is highly convenient and can be seen as a new form of new car sales which is more usage-based than ownership-based. In addition to being a source of supply for high-quality used cars with holding periods less than half that of the general market, it is also expected to expand choices for consumers and activate the market. Nissan Tokyo Sales operates a personal lease called "P.O.P," which has been around for more than 25 years and boasts a high market share of about 40% in Tokyo. P.O.P is characterized by "zero down payment, all inclusive, fixed amount," and more than 70% of its customers switch to the next new car in 3 years with a repeat rate exceeding 90%, making it a very efficient business for the company. Beginning in April 2023, the company also began personal leasing used cars, a new form of used car sales.
(3) Non-new car automotive-related businesses.
In addition to new cars, they also buy and sell used cars, maintenance, and inspections, and have built a stable value chain where sales of new cars improve the turnover of used car sales and stock businesses such as maintenance. The purchase of used cars is done through Nissan's dealer network, including the "Nissan Kauzo", which excludes intermediate margins and provides high-priced purchases. Sales are handled by "Quality Shops" like their own company, which have cleared strict service levels and handle Nissan's certified used cars, offering excellent guarantees and after-sales service. Nissan's official site for used cars allows for comparison and examination of more than 14,000 used cars.
Maintenance is one of the pillars of Nissan Tokyo Sales' stock business and is deployed focused on each base. However, NTT Auto Service Co., Ltd., a large-scale comprehensive automobile maintenance company subsidiary, performs sheet metal painting, inspection maintenance, and delivery maintenance with a reliable service quality as a specialty and state-of-the-art equipment, and plays a central role in the group's maintenance. There are seven bases in Tokyo and one base in Saitama, boasting a top-class technical power that can also handle aluminum bodies of luxury imported cars, and has a track record of about 33,500 inspection maintenance and a total of 17,000 sheet metal painting and painting (for the fiscal year ending March 2024). In addition to Nissan Tokyo Sales, the vehicle inspection is also handled by the vehicle inspection specialty store "Shakenskan", which has a network of 12 stores in Tokyo, Kanagawa, Saitama, and Chiba, and has all stores equipped with the latest equipment designated factories where cars of various models regardless of maker can be stored, and the inspector with the national qualification inspects with reliable technology as a sales point. In addition, they have a good reputation for price, service, and technology, and more than 80% of their customers are repeaters with high satisfaction, so they continue to have good business performance.
In addition to being an agent for casualty insurance and life insurance, they also engage in vehicle transportation and registration agency business, camping car specialized dealers based on Nissan cars, real estate rental, etc. Through diversification into these automotive sales-related businesses, they enhance synergy as a group and attract a wide range of users.
(4) Information system-related business
Nissan Tokyo Computer System, which is at the core of this business, has been selling software such as hardware, integrated managed services "ITte", and has been managing and operating information assets such as data centers and supporting business efficiency and productivity improvements to nationwide automobile dealerships as a managed services company. In addition, on October 2, 2023, the company transferred all the shares of Nissan Tokyo Computer System to Canon Marketing Japan <8060>, a subsidiary of Canon <7751>, and on October 30, Nissan Tokyo Computer System was delisted and changed its name to TCS Co., Ltd. on November 1. The purpose was to solve various problems related to parent-child listing, optimize management resources within the group, and concentrate on the automotive-related business, while also encouraging synergy between the IT companies of Nissan Tokyo Computer System and Canon Marketing Japan, resulting in a win-win-win relationship for the three companies.
(Author: FISCO guest analyst Nobumitsu Miyata)