When Sydney-based Asia Motors ended last year, so did the sales and distribution of Daewoo bus chassis in this market. Yet its demise has given rise to a new player in the Australasian bus scene: Whites Commercial Vehicles. ABC magazine had a cheeky chat with new general manager Lou Riccardi.
On a snoozy afternoon in the sun at Ingleburn, NSW, ABC magazine approached a Whites Diesels parts warehouse with a special invitation many months ago to hear some exciting news.
Whites Diesels was doing good these days and we’d heard of possible expansion plans, but perhaps not on the magnitude of what we were about to learn.
With curiosity piqued, we were up for the challenge of a good old chinwag. Even more so when a very familiar smiling face greeted us at the door: Lou Riccardi, formerly of Asia Motors. What the…?
‘Hello. What’s going on here?’ we thought. Hmm, it was indeed time for a quick cuppa and chat find out the who, the what, the why and the how of this big coincidence. And once Riccardi quickly pointed out that bus and truck parts specialist Whites Diesels was the new official Daewoo Buses distributor in Australia for the Asia-Pacific region, we were keen to find out lots more.
ABC: G’day, Lou. Thanks for having us. So, Lou… Tell us a little about how we got here today.
LR: Hello, Fabian. Well, Asia Motors had been in the game since 1963, [run by] Ian and Bruce Campbell; I joined the company around 1989, and had been there about 28 years.
Due to the UBC situation [Malaysia-based UBC Commercial Vehicles, worked closely with Daewoo Bus and Hino Bus developing bus bodies specifically for Australia], where we sold more than 500 buses with UBC, since 30 June, 2017, that ended. Why so? Eighteen months prior to that date we noticed they just weren’t producing buses on time for us, they were very slow coming out. We had 47 chassis up there [Malaysia] at that stage – a lot of product.
Ultimately, they went into administration and we [Asia Motors] were very uncomfortable [with them] at that point. Around April, 2017, they officially went into liquidation, so Bruce hiked on to Malaysia to check on our stuff – but [when he got there] the factory was virtually empty, everything had been stolen.
Not only did they steal our chassis, they stole all the equipment, all the iron and sheet metal etc. – a significant loss. And that’s why Asia Motors had no choice [to go into administration].
We got legal advice at that point in time, we got the Federal Australian Government Trade and Investment Commission involved and they are still on the case – not that the principals will ever see any money, but for the principle of it.
This is all only a few years after [the ADL-owned] Custom went into administration and we had our chassis stuck in there. So it’s like we got kicked in the teeth and then we had absolutely no teeth. So hence Asia Motors went into liquidation. We had no choice, really.
Technically, whilst we believed our chassis were in Malaysia we [thought we] could still trade the way we were going. But once we knew those chassis were gone, the directors said if the commissioner can’t get any money for us before June 30, we’d put ourselves into liquidation. We didn’t want to go into another [tax] reporting season after that.
ABC: So how did the whole system function at the time?
LR: How it works with Daewoo is – and it is a big problem in the industry – if we want to produce 10 buses per month that means on a chassis point of view we’ve got to have 10 chassis ordered at the factory in Korea, 10 being built in Korea, 10 on the water going to A, B, or C, 10 arriving at A, B and C, 10 on the production line at the production plant … So that’s already five months. [Thus] you if want to produce 10 buses per month you have to have 50 in the pipeline.
That’s a massive tying up of capital. But the problem gets even worse … Once
the bodyshop finishes their 10 units and puts them on a boat, they want to be paid for them also. So we had to start paying for bodies.
We had an $8.5 million floorplan with GE, but they aren’t cheap; you’ve got to pay the interest. And as long as you are selling 10 buses you can pay for the interest and it rolls that way.
And if you skip one of those processes for any month, you lose 60 days of cashflow at the other end because you’ve got nothing to sell. There is no out. So there’s your issue.
Many years ago we used to [do] leases in escrow; many years ago we never used to be the prime contractor. The product [escrow] still exists today, but is very rarely used because now everybody wants a turnkey.
ABC: Bus people never really leave, it must often be said. Have you missed much? What are the Campbells up to then?
LR: The bus industry has never been an easy game, but it’s a great game to be in. I mean, where else can you go into an industry and you hang about with all the suppliers after a show and have a beer together? It’s very community based. So everyone has given me some nice wishes and such… Ian and Bruce are kind of still involved.”
ABC: So Whites does parts – and now chassis? How did that relationship evolve? And why?
LR: So, around that 30th date we had a conversation; we [Campbells and I] were concerned about our customers. Whites Diesels were actually buying parts for them, as they were one of our customers. If you had a mixed fleet, Whites had a contract for those fleets and they were buying parts from us if that fleet had Daewoos etc.
We approached Whites Diesels and explained our situation and what we had done and why. We explained we had more than 500 vehicles out there that need support: “Would you be interested in taking over?” as Asia Motors had a whole heap of parts left over for the buses. Whites gave it some thought then decided they would do it. We wrote up an MOU for that to happen and they asked “What’s happening with the Daewoo franchise?”
Well, none of our competitors were going to come and take it over, so when Whites asked us to put a business proposal together outlining pricing structures and business process etc, we did so. Whites was interested, put up an MOU to us for the parts and distribution and it went from there. The dollar value for us was liveable. We just wanted to see that the brand progressed and continued on.
ABC: And they wanted you guys still involved? You are with Whites now?
LR: There were a couple of things we needed to do and Whites said they’d only pursue it if I agreed to come across and Ian (technical and engineering) and Bruce (doing all the ADRs submission and compliance issues) got contracted on a retainer for at least two years.
We created a new company called Whites Commercial Vehicles with a new Eagle logo and we’ve transferred all the ADRs over to the new company and renewed our dealer licence; a lot of the background things have been done.
DB Oceania Pty Ltd – was what this company was originally going to be called.
ABC: Many people are impressed with such a move for what is mostly known as a parts company. Do they have backing?
LR: Behind Whites Diesels is a major investor called TeamInvest Private, the majority shareholder, which has about $1 billion in investments behind them. And that’s one of the reasons I came back because of the security and backing this all has.
The other reason Whites Commercial Vehicles fits so hand in glove with the Whites Diesels side is they’ve already got seven outlets around Australia for parts and service and back-up – that’s something we never really had before.
In all fairness to Whites, they were getting 100 per cent of the dead market – because if you are not adding to the car park, at the end of the day you’ve got a dead market. It’s a 10-year gig and then all your time and investment you’ve put into supplying those parts, people know you because of those parts, it becomes useless … So adding to the carpark is what the end goal is for us.
ABC: So both Whites entities will co-exist? Any cannibalisation?
LR: The structures are pretty easy; Whites Commercials and Whites Diesels will be selling Daewoo parts, but there won’t be any price difference. The price will be the same, no disparity. The infrastructure is already there. I’ve got a sales team already set up in Victoria, Queensland, Newcastle; I’ve got a sales team here [Sydney].
And here we are full circle. Over the last five years we’ve had some good times and we’ve also had some really rough times, but hopefully we can all kick some more goals moving forward.
ABC: Exciting times ahead for the new Whites Commercial Vehicles. So tell us, just chassis or CBUs, too?
LR: The Daewoo body is, unfortunately, left-hand drive, but they will build right-hand drive for me … as long as I give them an order for 5,000 buses [laughs], so it’s all about volume.
Daewoo produces anywhere from 16,000 – 26,000 buses per year, and you know how big the Australian market is, so…
The philosophy behind Whites Commercial Vehicles is that we will build with anybody at this point of time. But we are looking at a number of options to have a CBU unit – because we can’t just be sitting there when [customers] say ‘we need to have a bus’. We need to have someone as our prime body supplier. If a customer wants another we will arrange, but yes we are looking at two overseas companies at the moment [Asian], but it’s not Chinese.
ABC: And finally, what new stuff? You can’t escape that one [haha]!
LR: We have a CBU unit available to us from Daewoo, which is a Toyota Coaster/Mitsubishi Rosa-sized vehicle [Unnamed as yet for the Australian market]. The advantage of this is the air-conditioning is on the roof, whereas on a Coaster/Rosa it is under floor. That runs a Cummins engine with an Allison transmission, so it’s very well spec’d and appointed. It comes with ASR and EBS and all the creature comforts.