One Stop Performance Engine and Component Manufacturer For Sale

Business description

Business Description Summary:

The Company is one of Australia’s few one-stop performance engine and component manufacturers, with total in-house design and manufacturing of high performance engine camshafts, stroker crankshafts and connecting rods, predominantly for the Holden V8 market, although some other engines are also catered for. The company also manufacturers aluminium cylinder heads, block and EFI manifolds for Holden V8 replacement applications, as well as offering a complete alloy engine based on the original Holden V8 design.

Operations:

The company operates out of leased premises in inner south east Melbourne, and works a five day week from 8.30 a.m. to 5.00 p.m.

Market / Customer:

There are two distinct customers of the business:

• Retail –

These are mainly one off commissions. 50% deposit is required before commencing work, with the remainder paid on delivery.


• Trade –

The owners have made the decision to conduct this part of the business on a cash basis. There are, therefore, very few accounts and all dealings with the trade are on a “cash before delivery” basis.

This side of the business has grown to represent almost half of the total sales, but the engine building division is still the major contributor.

Marketing activity has been scaled back during recent years owing to the growth in recognition of the company within the industry. A certain amount of marketing activity is still conducted, including:

• Writing magazine articles.
• Distribution of flyers to the customer database.
• The company website, which now produces up to 50% of retail business.

The database is continually updated and represents a valuable asset.

The company, by owning its own tools and patterns for certain parts and by producing their own product which has been developed through years of experience in the engine field, has put the company in the fantastic position of independence and the ability to provide the best service to its clients.

Products / Services:

The business was established by the current owners in 1976. The two brothers were motor racing enthusiasts who modified their vehicles to participate in drag racing. Owing to the success of their vehicles, other competitors requested them
to work on their vehicles, and so the original “back yard” workshop was established and the revenue raised was used to continue development of the modifications to their own vehicles. In 1980 the decision was made to set the business up as an independent tuning and modification specialist for performance vehicles, operating in business premises as a stand alone business.

Over the ensuing years they started building performance engines based on customer supplied engines. Engines were also imported from the United States of America, rebuilt and sold to enthusiasts as performance engines.

The business has evolved into a service for enthusiasts and other people who wish to have their engines modified for better performance; the customer delivers the engine to the premises, it is rebuilt and modified with performance parts. The engine is then delivered in its modified form to the owner. During this time, the owners built extreme performance engines for street car use, as well as for drag racing, by doing a lot of the machining work in-house. The growth of this aspect of the business indicated the need to have their own parts, rather than out sourcing. At this stage substantial investments were made in machinery and equipment to enable the owners to perform the total function in house and also generated higher profit margins.

Certain parts are now produced exclusively for the business in China under strict specifications and quality control. Some parts are partially manufactured in China and finished in the company workshops. This has created a business within a business selling these parts to trade customers, as well as using them in their own engine rebuilds. The Chinese suppliers are exclusive to the business and all relationships are totally secure. The owners were instrumental in assisting the Chinese suppliers to buy the machinery to produce the parts, and were involved in the training of the Chinese Staff. All tools and casting patterns to produce the range are owned by the company. These include:

• Cylinder block
• Cylinder head
• Intake manifold
• Other

A newer development has been the provision of programming services for vehicle software. This is a very high margin business and could be grown substantially in the future. Other avenues for expanding the business to its next phase of development include:

• To offer a drive in/drive out facility. Currently engines have to be delivered to the premises.
• To offer credit facilities to the trade.
• Super charging.
• Turbo charging.
• Increasing the range of products offered to the trade.

Engines produced for street cars carry a 12 month/20,000km warranty, but no guarantee is provided for race engines.

Premises:

The business currently operates out of a 7,000 sq. ft. building in the south east of Melbourne. The usual office facilities prevail. However, the owners believe that the business could be run from more suitable premises in a less expensive rental area, particularly if the new owners intend to expand the business. A short term lease is available.

Plant/Equipment / Fittings:

The Plant and Equipment is currently valued by the owners at about $450,000. Its replacement cost is well in excess of $1,000,000. A full list of Plant and Equipment can be provided to interested parties.

Management / Staff:

The company is run by two brothers plus five full-time staff. The owners do spend some time on the machines, but the staff is fully trained to perform all aspects of the process. In order to maintain quality control and customer satisfaction, all final testing is done by the owners. Their main function in the business is sales, customer relations, administration and buying.

A generous training and handover period will be provided, if required.

Property information

Real Estate:

Lease

Lease terms:

To be negotiated

Other information

Expansion potential:

Excellent

Reasons for selling:

Retirement

Trading hours:

5 Day Week

Contact the seller