LONDON - Ford Motor Co. has added Europe's largest maintenance and light-repair chain to its list of automotive brand names.
If shareholders of both companies approve, Ford will acquire Edinburgh, Scotland-based Kwik-Fit for $1.6 billion.
The purchase gives Ford a company that dominates its field in Europe in a way no similar company does in North America.
Kwik-Fit operates about 1,900 service shops in the United Kingdom, Ireland and Europe. Kwik-Fit specializes in replacing tires and exhaust systems and other routine service. It also sells auto insurance.
Kwik-Fit reported sales of £515.9 million, or $832.0 million, before taxes for the fiscal year ended Feb. 28, 1999.
'In order to become a real consumer-driven company, you have to expand your customer base and provide them more services downstream in the value chain,' said Michael Jordan, vice president of Ford Customer Service Division.
Kwik-Fit gives Ford access to a new group of customers, said Jordan. About 80 percent of the vehicles Kwik-Fit services are not Ford products. Those vehicles usually are at least four years old and no longer are covered by manufacturer warranties.
Kwik-Fit gives Ford a way to talk to these customers. Eventually, said Jordan, these customers might be lured into Ford dealerships.
Tom Farmer, the Scottish chairman of Kwik-Fit, will remain in his position. Farmer will reap a $124 million windfall from the sale.
Farmer is a noted philanthropist. Recently he spearheaded an emergency drive that raised $1.5 million in relief for Kosovo refugees.
Farmer will report to Jordan, who in turn reports to worldwide marketing chief Robert Rewey in Dearborn, Mich. Farmer also will sit on the board of directors of Ford Customer Service, which meets quarterly.
The two companies believe they can help each other, while preserving Kwik-Fit's independence. Ford can provide Kwik-Fit with the financial resources and local knowledge of new markets where Kwik-Fit wants to expand, such as Poland and other Eastern European countries.
Farmer also believes there is room to expand in Western Europe, particularly in Germany, the continent's largest car market.
'Wherever Ford wants to expand, we will participate,' said Farmer.
Kwik-Fit operates 163 centers in Germany under the Pit-Stop trade name. Kwik-Fit made a major move onto the continent in January this year by acquiring Speedy, which operates 373 centers in France.
Kwik-Fit's largest market is the United Kingdom, where it operates 644 tire, exhaust and brake centers. It also has 143 Tyre Plus service centers and 71 Apple Car Clinics.
Farmer said Kwik-Fit wants to provide service 'from showroom to scrap yard.'
That philosophy fits with Ford's recent change of direction. Ford now wants to be 'the world's leading consumer company that provides automotive products and services,' in the words of Ford CEO Jac Nasser.
Jordan said Ford spent months shopping for a good purchase candidate, and Kwik-Fit filled the bill. 'The acquisition provides Ford the opportunity to move forward in its strategy to become more customer-focused,' wrote New York City-based Moody's Investor Service in an analysis of the deal. 'Ford seeks to better understand the issues of ownership throughout a car's life. The ongoing service and maintenance of automobiles is an important element in customer loyalty.'