KAT Exploration The Pre-Owned Jeep Store Executive Summary The Pre-Owned Jeep Store 6107 Highway 20 NE Cartersville, GA 30184 770-382-1616 Tim Broadwell 770-833-5333 KAT Exploration Inc. 15 Blade Crescent Mount Pearl, NL A1N 5L1 Canada Phone: 709-368-1024
Roswell Jeep Eagle. d.b.a. 1 The Pre-Owned Store Expansion of Main Store And Opening of Second Store in Orlando, Florida Executive Summary Jeep Sales are Up The Jeep brand saw a spectacular 41% sales rise in the U.S. last year, officials say. Globally, Jeep saw a 39% increase and hit the million-vehicles sold mark for the first time in its history. USA Today, January 14, 2105 Eleven months into 2014, automakers have sold about 780,000 more vehicles in the U.S. than at this point last year. One out of every four of those added sales was a Jeep. Automotive News December, 2014 Jeep expects to sell 1.9 million vehicles by 2018, an increase of roughly 160 percent from 2013 the beginning of a five-year plan from FCA to globalize the more than 70-year-old brand. It sold 1,017,019 vehicles in 2014. Detroit News January, 2015 Jeep -- which never before in its 73-year history topped 60,000 U.S. sales in a month -- scored a record 70,203 in May. It bested Kia, nearly beat Hyundai, doubled Volkswagen and tripled Buick. Jeep did so with almost no consumer cash and only modest financing and lease subsidies. Automotive News, June, 2014. Nothin But Jeeps
Executive Summary: Roswell Jeep Eagle, dba The Pre Owned Store Acquisition, Capitalization and Expansion Of New Location The Pre-Owned Jeep Store Cartersville, GA (Main Store) Central Florida (Orlando, Tampa) History KAT Exploration has acquired The Pre Owned Jeep Store. This Pre Owned Store has a record of success with revenue between $8MM and $11.25 MM since it s beginning in 2006. KAT will expand the main store in Cartersville, GA and open up the first expansion store in Atlanta, GA. The founder, Gary Grim will have continued involvement with a management contract for 5 years. Tim Broadwell has been named COO of KAT s new Automotive Division. Roswell Jeep Eagle, dba The Pre-Owned Store was opened in 2006. It was founded by Gary Grim. He was the originator of the Pre-Owned Store concept. Gary s history with Jeeps includes owning a dealership, Roswell Jeep in Atlanta. He has a passion for Jeeps and completely understands the mind of a typical Jeep owner. His goal in opening the Pre-Owned Jeep Store was to remove the hassle of dealing with the typical Atmosphere of a Dealership. The entire staff in each store is incentivized because each Jeep is sold by the entire team, rather than an individual salesperson. The return rate of customers is extremely high. They insure the staff is highly qualified through training and hands-on coaching/mentoring. Since 2008, they have averaged over 614 Jeeps per year. It is far removed from a used car dealership. The Pre-Owned Stores sells Nothing But Jeeps. Relying on a proven system if success year after year. Gary Grim also developed a proprietary system of multiple forms of profitability that brings together a host of built in features which create a cumulative profitability completely different and more prolific than in traditional car dealerships. In the early 90 s, when Mr. Grim bought Roswell Jeep, the store was virtually unknown and he brought it to one of the top 5 selling Jeep Stores in the country. Gary owned Roswell Jeep for 10 years, many of which his store was ranked the top 1 st, 2 nd, or 3 rd volume store in the country. Gary also led the country in Jeep leasing. Mr. Grim won many awards from Chrysler Corporation while at the helm of Roswell Jeep. He won the Golden Jeep Award and the Eagles Club Award. The Eagles Club Award for a Jeep Dealer is the most prestigious award for a Jeep Dealer in the country. He remained an Eagles Club Member his entire 10 years as a Jeep Dealer. The Pre- Owned store in Cartersville has had nine very successful years even through the tough economic times. Gary Grim has developed a proprietary Cumulative Profit Model which encompasses successful strategic measures to maintain the profitability in a multitude of processes in the Pre-Owned Store operations. Company Profile Store specializing in selling Pre- Owned Jeeps Location: Cartersville, GA Markets: Reconditioning and Sales of Pre- Owned Jeeps Year Founded: 2006 Present Gross Revenue: $11.22 MM (2014) $2.58 MM (First Quarter 2015) Capitalization: Expansion of Re-Con Area Expansion of Parts/Accessories Reduction of Floor Plan FF&A for New Location Expansion of Existing Off-Road Area in Main Store Building Off-Road Area in New Location Expansion to New Location Expansion to First Expansion in Atlanta o Personnel o FF&E o Inventory (Jeeps) o Part/Assec. Expansion to Other Locations Central Florida Nashville South Atlanta (Peachtree City) Birmingham Charlotte Richmond Mobile Charleston Etc. 2
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Phase One after Acquisition: The first phase of growth is to expand the corporate Cartersville location in several ways. Expand Service & Recon Area Establish substantial internet presence Increase inventory Addition of JK units Expand off- road success center Expand Parts and Accessories Department 4
Eight Years of Success In Cartersville, GA Phase Two: The second phase is to open a new Jeep stores in Atlanta (Woodstock Area). 5
Phase Three: The third phase is to open new Jeep Store in TWO CITIES PER YEAR ($7 MM/YR REVENUE PER CITY) with proven Market for Jeep Sales. This will begin in the calendar year of 2016. Duplicated In: Florida, Nashville, Charleston, Richmond, Mobile, Charlotte, Birmingham, South Atlanta, etc. THE SMILE OF AMERICA 6
The Pre- Owned Store Plans for Growth Under Axiom Expand Inventory/Sales from an Average of $732,197 to $1,200,000 The Pre-Owned Store Present inventory at Main Store averages $732,197. The inventory after expansion will be $1,200,000. This is because of: The addition of the popular JK Units The Jeep Wrangler JK introduced a completely redesigned platform as well as the first 4-door model. Significantly larger than the model it replaced, the 2-door JK Wrangler has a 2 longer wheel base and 3.4 wider track. Although designed with a longer wheelbase and wider track, the JK is 2.5 shorter overall than the TJ to improve approach and departure angles. Continuing the use of body on frame construction with multilink coil spring suspension, the JK Wrangler is offered as a 95.4 wheelbase 2-door or 116 wheel base 4- door model. Still available in a right hand drive configuration, the 2-door JK Wrangler comes standard with four-wheel drive while the 4-door Unlimited JK Wrangler is available in two or four wheel drive. Powered by a 3.8L V6 or 2.8L turbo diesel (export only) engine, the JK is available with a 6-speed manual or 4-speed automatic transmission. Four wheel drive models come standard with the Command-Trac NV241 transfer case while the Rubicon upgrades to the Rock- Trac version of the NV241. For added safety, stability control, off-road tuned anti-lock braking system, and traction control are now available and in 2009 Hill Start Assist was added. The JK Wrangler is the first Wrangler available with some the standard features many vehicle have had for years such as power windows and door locks as well as seat-mounted side air bags and navigation system. New to the JK, a Sunrider convertible soft top comes standard while an optional 3-piece modular hard top is also available. Holding true to the Jeep tradition, all JK Wrangler models feature a removable top and doors as well as fold down windshield as well as a great selection of Jeep accessories and parts. Available in 2- and 4-door configurations, the Rubicon package still provides the Wrangler with the ultimate off-road equipment. Front and rear Dana 44 axles with a 4.10 gear ratio are still choice running gear while the air-actuated locking differentials have been replaced with electronic versions. A heavy-duty transfer case with 4.1 low range drives the wheels while an allnew electronic sway bar disconnect provides improved off-road performance. The TJ diamond plate rocker panels were replaced with body mounted rock rails while 32 BF Goodrich mud tires give the Rubicon a unique look with superior performance. Maintaining it s present 21-day turnover of inventory, this will result in sales increase of 14% or $1,020,000/mo. Selling the JK as 20% of its inventory will also result in an average increase in units sold from an average profit of $1,500 presently to an average profit of $1,700 per unit. Internet Presence/Sales The Pre- Owned Store will utilize Upgrade web presence for Internet Sales Increase: Provides Live Chats Real Video Walk Around Dealer Branding SEO- See Appendix F Aggressive Social Network Marketing (Facebook, Twitter, YouTube, etc.) See Appendix F Blogging See Appendix F Landing Page Marketing 7
Social Network Testimonials (Facebook, Twitter, Youtube, etc.) Automated Inventory Posting Vehicle Comparison Virtual Tours Meet the Staff Google Analytics Virtual Service Assistant Capabilities o Online Service Consultants o Full control over all options, leads, and reporting o Scheduling Online Accessories Sales Mobile Websites (Compatible with 1750 mobile devices) Embedded Videos E-Classified Posting ( One Button Integration with Craig s List and ebay) Expansion of its main location in Cartersville. Expand Inventory to include the JK Model of Jeeps. o Present inventory at Main Store averages $732,197. o Inventory after expansion will be $1,200,000. (This is because of the addition of the popular JK Units) Maintaining it s present 21-day turnover of inventory, this will result in sales increase of 14% or $1,020,000/mo. Selling the JK as 20% of its inventory will also result in an average increase in units sold from an average profit of $1,500 presently to an average profit of $1,700 per unit. Off-Road Success Center will be utilized patterned after the Off Road Success Center at the SEMA Show in Las Vegas- 2012 will include one-on-one consultations, demonstrations and free print materials (seminar dates and times to follow) on the topic of 4-wheeling. A range of Jeep vehicles illustrating the rich history of the industry will also be on display, including vintage models of Jeeps. (See Appendix A) Expand Part and Accessories Sales by 63%. Because of the addition of the JK to existing sales and inventory, the price and magnitude of inventory will increase from its present volume of $66,012 and a profit of $10,966 to $106,515 with a profit of 30% or $15,977. For a List of Parts and Accessories in Main Store and New Store see Appendix B & C. 8
Expansion/Increase in Service and Re-Con Area. Similarly, because of the expansion of inventory to include the JK series, service will increase from $22,044 and $15,631 profit presently to $26,452 and a profit of $20,039. In Virginia, using a similar method of using a team of buyers to stock the pre-owned inventory, they increased service from $30,000 to $100,000 per month. (Automotive News August 6, 2012. See Appendix E). Needs for Shop (Service Area) in New Store 9
Expand off-road test road drive area. This area always attracts customers from the road even more than lines of Jeeps. If helps raise the closing ability because they get caught up in the excitement of owning a 4x4 jeep and experience the utopia. By raising the closing ratio it equals more jeeps. Costs of Upgrading/Building Off-Road Area Open New Store (Furniture and Computers) 10
Replace Floor Plan interest of 25% to 12% o At capacity now $1MM Floor plan @ 25% = $250,000/year $20,833/mo. o Increase capacity to $1.5 MM @ 12% = $180,000/year $15,000/mo. (A decrease in the floor plan interest from 25% to 12% actually adds $5,833 to profit.) Develop a Training Program for New Jeep Managers/Sales Force (This will provide a shorter learning curve for new employees and insure consistency of success in new locations.) o Multi-media o On-line tutorials of management, leadership, fiscal operations, software training, sales philosophy, etc. o Role Plays o Case Studies o PowerPoint Presentations o Training Manuals o Videos o Training Room 11
To see the Financial Statement Estimates of a New Store see Appendix D. 12
Appendix A Announcing The Off-Road Success Center at The 2012 SEMA Show Posted on August 3, 2012 by Guy Calling all dealers, jobbers, installers and other specialty equipment industry enthusiasts attending the 2012 SEMA Show. Located in booth #30147 in the Upper South Hall of the Las Vegas Convention Center where other Truck, SUV and Off-Road equipment is showcased, the new Off-Road Success Center presented by OMIX/Rugged Ridge provides business owners and decision makers who want to be in the dynamic Jeep and off-road lifestyle market an area to exchange ideas, learn new concepts for success and network with other like-minded people. 1947 CJ-2A Fire Truck Hosted by several third party experts within the industry, as well as leaders from OMIX, the Off-Road Success Center will offer twice daily educational seminars where experts will discuss their first-hand experiences and formulas for success. Additionally, the Off-Road Success Center will include one-onone consultations, demonstrations and free print materials (seminar dates and times to follow) on these business-impacting topics. A range of Jeep vehicles illustrating the rich history of the industry will also be on display. British 1944 Willys Special Air Services 13
Appendix B: New Accessories Main Store New Accessories for Main Store New Accessories for Main Store (Cont.) 14
Appendix C: Parts New Store List of Parts for New Store List of Parts for New Store (Cont.) 15
Appendix D: Financial Statement New Store 16
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Appendix E: Automotive News (Example of Re- Con Expansion) 18
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Appendix F: SEO, Social Network Marketing & Blogging Seo Search Engine Optimization (SEO) is a process The Pre-Owned sill utilize in which creates links, pages, articles, and image libraries focused on increasing our clients business s exposure on search engines such as Google. We collaborate with clients to identify their needs and goals, and then utilize a suite of powerful tools to identify the Google search phrases that are most important for their business. We analyze and research our clients phrases, and we don t stop until we get their business near the top of Google s first page. This is precisely what The Pre-Owned SEO efforts will provide. We start by identifying the five most important terms to focus on, as well as simultaneously compiling a multitude of secondary terms. Once we get our client in position on page one of Google, we keep them there, shifting our core focus to new terms that can increase traffic to their website and exposure to their business. Social Networking As of the end of the first Quarter of 2012, Facebook reported 901 million active users, with 526 million of them logging in at least once per day. They also reported that there are, on average, only 4.74 degrees of separation between any two users on Facebook. Facebook marketing is a powerful way to increase brand exposure. When people see a company s content, they are seeing their brand, and brand exposure leads to brand adoption. They might not need the product right now, but when the time comes that a product is relevant to them, the familiar option will be their first choice. The added bonus is that when they re talking about a company s content, they re sharing it with potentially everyone they re connected to. Even though they might not want a product, someone they know is made aware of the content via that sharing and thus the brand is gaining exponential exposure. Blogging After SEO, The Pre-Owned Store considers a blog to be the most important digital marketing step for almost any business. A blog acts as a business s digital marketing hub, allowing clients to syndicate blog content to their social media pages. We also optimize blog articles to make unique content, an invaluable SEO tool in and of itself. The Pre-Owned Store will design a powerful Word Press blog, using the most up-to-date techniques to optimize a client s blog to show up in Google. We will create categories and SEO links, as well as insert a custom header image, designed to best represent any client s brand and/or product. At The Pre-Owned Store, we not only build a blog, but can actually handle the content management, too. We will identify the types of topics that would best relate to their business and determine what keywords we will focus on to increase Google search rankings. Once we have done that, we put our team of dedicated content writers to work, and will post 2-7 blog articles per week. We post content that is both relevant to Jeeps and also interesting for a general audience to read. This maximizes repeat traffic to the blog while simultaneously promoting brand recognition and search ability on Google. 21