Jardine Cycle & Carriage Ltd.

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239 Alexandra Road
Singapore 159930
Singapore
Telephone: +65 6473 3122
Fax: +65 6475 7088
Web site: http://www.jcclgroup.com

Public Company
Incorporated:
1899 as The Cycle & Carriage Company
Employees: 100,000
Sales: $1.5 billion (2004)
Stock Exchanges: Singapore
Ticker Symbol: JCYC
NAIC: 441110 New Car Dealers; 237210 Land Subdivision; 441310 Automotive Parts and Accessories Stores; 551112 Offices of Other Holding Companies

Jardine Cycle & Carriage Ltd. (JCC) is one of Singapore's 50 largest corporations, in part because of its strategic (49.92 percent as of May 2005) stake in regional automotive powerhouse PT Astra International. In addition to its shareholding in Astra, JCC has built up direct operations in two core areas: motor vehicle distribution and retailing; and property development. The company's motor vehicle arm is one of the largest automobile retailers and distributors in Singapore, and has a strong share of the Malaysian market, through its 59 percent stake in Cycle & Carriage Bintang Bhd. In Singapore, JCC sells Mercedes-Benz, Kia, and Mitsubishi. In Malaysia, the company handles Mercedes-Benz, Peugeot, Ford, and Mazda. The company's operations extend beyond retailing and include, in the case of Mercedes-Benz, the assembly of vehicles for sale in the local market. Since the early 2000s, JCC also has begun a drive to expand its automotive business into the greater regional market, establishing a subsidiary in Thailand. JCC's property development wing is operated through its 66 percent stake in publicly listed subsidiary MCL Land. That company is one of Singapore's largest property developers, with an assets portfolio worth more than SGD 5 billion. Founded in 1899 as Cycle & Carriage, the company has been majority controlled by the Jardine Matheson group since 2002. In 2004, JCC's revenues topped $1.5 billion. The company is listed on the Singapore Stock Exchange and led by Managing Director Adam Keswick.

Late 19th-Century General Store

Jardine Cycle & Carriage was known more simply as Cycle & Carriage for most of its more than 100-year history. The company was originally founded, however, as Federal Stores, by two brothers, named Chua, in Kuala Lumpur in 1899. Federal Stores initially operated as a general store, carrying a variety of items, including spices such as nutmeg. Yet before the end of that year, the Chuas had expanded their trading interests, to include a wide variety of items, such as machine parts, writing paper, soap, and other products. The brothers also became interested in sales of bicycles, then motorcycles and automobiles. For these operations the brothers adopted the name of Cycle & Carriage. In 1918, the company registered as a limited liability company in the Federated Malay States.

By the 1920s, the company's cycle and automotive sales had become its main activity, and Singapore, then a regional center of the British colonial empire, emerged as the company's primary market. This led Cycle & Carriage to move its headquarters to Singapore in 1926. At that time, the company listed its shares on the Singapore Stock Exchange, becoming The Cycle & Carriage Company (1926) Ltd. The company's Malaysian operations in the meantime continued as Cycle & Carriage Bintang Bhd. During this time, Cycle & Carriage built up a network of branches throughout Singapore and Malaysia.

The following decades represented an extended period of turmoil for the company. Cycle & Carriage was buffeted by a global depression, and by World War II. The Malaysian business in particular suffered during the economic chaos of the period, and by 1933 had been forced to shut down all of its Malaysian branches.

The separation of Malaysia and Singapore, and the two countries' independence from colonial rule, launched a new period of growth for Cycle & Carriage. The company's Singapore and Malaysian entities remained closely linked, with the Singapore business serving as Cycle & Carriage Bintang's major shareholder.

The year 1951 marked a major milestone for both companies, when Cycle & Carriage was awarded the franchise for Mercedes-Benz for both countries. The contract led to the reestablishment of Cycle & Carriage Bintang's operations. The popularity of "import-substitution" policies in the region, in which governments required companies seeking to import their goods to set up domestic assembly and finishing plants for the final products, led Cycle & Carriage to establish its own assembly plants for its Mercedes-Benz business.

Cycle & Carriage relisted its shares as Cycle & Carriage Limited on the then-joint stock exchanges of Malaysia and Singapore in 1969. When those exchanges split into separate entities, Cycle & Carriage Bintang launched its own public offering on the new Kuala Lumpur stock exchange in 1977. Although Cycle & Carriage remained a major shareholder in the Malaysia company, it nonetheless allowed its shareholding to drop below 50 percent by 1980.

Diversified in the 1990s

By then, Cycle & Carriage had gained another important automobile concession for the Singapore market, that of Mitsubishi. The company launched sales of Mitsubishi vehicles in 1977, establishing a dealer network throughout the territory.

Cycle & Carriage continued seeking new automobile franchise opportunities in the 1980s. By 1989, the company had succeeded in adding two new dealership contracts. The first was the concession for Proton automobiles—the newly developed Malaysian automobile—in Singapore. At the same time, Cycle & Carriage Bintang acquired the Malaysian franchise for Mazda automobiles.

Already one of the largest automotive dealers and distributors in Singapore and Malaysia, Cycle & Carriage launched its first efforts to expand beyond these countries. The Korean automaker Hyundai, then just beginning its own drive to establish itself as an international brand, proved to be the vehicle for Cycle & Carriage's own international expansion. In 1990, the company was awarded the franchise to introduce the Hyundai brand to Australia. At the same time, Cycle & Carriage entered into the joint venture Astra Investments, which acquired the Hyundai franchise in Singapore. The company then leveraged its existing relationship with Mazda to enter the New Zealand market, establishing Sri Temasek Ltd. for that business.

Yet at the end of the 1980s and into the early 1990s, Cycle & Carriage became interested in diversifying beyond its automotive operations. In 1989, the company entered the food business, acquiring a 43 percent stake in Cold Storage (Malaysia) Berhad. With this purchase, Cycle & Carriage added a food manufacturing business, as well as the distribution of foods and other goods. Cold Storage also led the company into the operations of supermarkets and pharmacies in the Malaysian market.

Real estate became another target market for Cycle & Carriage. In 1990, the company launched its first effort at real estate development, building the Hillview Villas in Singapore. By 1992, the company had expanded its portfolio of properties, forming a new subsidiary, CCL Group Properties, to oversee its properties in Malaysia and Singapore.

The acquisition of Malayan Credit Limited (MCL) that same year, however, launched Cycle & Carriage into the big leagues among the region's real estate groups. As its name indicated, MCL had originally been formed to provide credit services. Established in 1963, MCL went public in 1967, then entered the property development market in 1969. Real estate became the company's core operation, and MCL grew to become one of the region's leading publicly listed developers of hotels and other commercial properties, as well as residential developments. Under Cycle & Carriage, MCL officially changed its name to MCL Land in 1997 as a more accurate reflection of its operations. By the mid-1990s, Cycle & Carriage had extended its shareholding in MCL Land to 60 percent, and then to 66 percent by the mid-2000s.

New Owners for a New Century

Cycle & Carriage continued seeking new automotive franchises in the 1990s. In 1995, for example, Cycle & Carriage acquired the franchise for Kia Motors for both Malaysia and Singapore, although the company dropped the Malaysian franchise in 1999. By then, the company also had gained the franchise for Audi automobiles in Australia.

Throughout this period, Cycle & Carriage had developed a relationship with Hong Kong trading giant Jardine Matheson. That company, founded in Canton, China, by William Jardine and James Matheson in 1832, had been instrumental in the development of Hong Kong into a world financial capital. Jardine Matheson itself grew into one of the largest and most powerful of Hong Kong's "hongs"—that is, extremely diversified conglomerates, with interests ranging from banking to shipping to property development, as well as interests in retail, food production, and restaurant operations. Jardine Matheson also was involved in motor vehicle dealership operations, the international expansion of which led the company to Cycle & Carriage at the beginning of the 1990s.

Company Perspectives:

Our objective is to maintain our position as a premier motor vehicle and property group by continually providing customers with the highest-quality products and services. From our humble beginnings more than 100 years ago, we have grown into a regional force comprising close to 200 subsidiaries and associates spanning the region. With a highly-focused business portfolio and dedicated workforce, we are confident of moving ahead and maintaining a strong foothold in the automotive and property markets in the region.

In 1992, Jardine Matheson bought a 16 percent stake in Cycle & Carriage, as well as a 15 percent share of Cycle & Carriage Bintang, in order to gain a foothold in the fast-growing Singapore and Malaysian markets. The link-up with Jardine Matheson provided other advantages, notably through the tie between Cold Storage and Jardine Matheson's own retail food operation in the region, Dairy Farm, which boosted Cold Storage's retail network to more than 40 stores by the end of the decade.

By the mid-1990s, Jardine Matheson had increased its stake in Cycle & Carriage to 23 percent, just shy of the mandatory takeover limit of 25 percent. The two companies continued to strengthen their bonds toward the end of the decade, and in 2000, Jardine Matheson launched an offer to increase its holding in Cycle & Carriage to more than 50 percent. That offer was allowed to lapse; nonetheless, Jardine Matheson continued building its shares in Cycle & Carriage, topping nearly 30 percent of shares. Then, in 2002, Jardine Matheson reached an agreement with Edaran Otomobil National Berhad to acquire its 21.1 percent stake in Cycle & Carriage. The deal placed Cycle & Carriage as a strategic subsidiary in the Jardine Matheson empire. This position was ratified in 2004 when the company adopted a new name, Jardine Cycle & Carriage (JCC). In that year, as well, JCC acquired full control of Cycle & Carriage Bintang.

By then, JCC had itself become a strategic investor, when in 2000 it purchased a 31 percent stake in Indonesia's PT Astra International, the country's leading automotive group and one of Indonesia's largest conglomerates. The Astra holding became the third leg of JCC's three-prong strategy. Into the mid-2000s, JCC continued to acquire shares in Astra, and by 2005 had succeeded in boosting its stake to 49.92 percent.

In the meantime, JCC continued to expand its portfolio of automobile dealerships. In 2002, the group acquired the franchise for Peugeot vehicles in Malaysia and Singapore. The company also transferred its exclusive Mercedes-Benz franchise in Malaysia to a new joint venture with DaimlerChrysler set up in 2003. At the same time, JCC's property arm also maintained its strong growth, with an assets portfolio worth more than SGD 5 billion. At the end of 2004, MCL Land announced a partnership with Sunrise Bhd. to develop the 480-acre Seremban Forest Heights site in Malaysia. After more than 100 years, JCC remained one of Singapore and Malaysia's major corporations.

Principal Subsidiaries

CCL Group Properties Sdn. Bhd. (79%); Cycle & Carriage (Thailand) Ltd.; Cycle & Carriage Automotive Pte Ltd.; Cycle & Carriage Automotive Services Pty. Ltd. (Australia); Cycle & Carriage Bintang Berhad (Malaysia; 59%); Cycle & Carriage Industries Pte Limited; Cycle & Carriage Kia Pte Ltd.; Cycle & Carriage Mitsu (Thailand) Ltd.; MCL Land Limited (66%); PT Astra International Tbk (49.92%); PT Tunas Ridean Tbk (38%).

Principal Competitors

Singapore Technologies Private Ltd.; Borneo Motors Singapore Private Ltd.; Inchcape Motors Private Ltd.; DaimlerChrysler South East Asia Private Ltd.; Champion Motors 1975 Private Ltd.; Tan Chong and Sons Motor Company Singapore Private Ltd.; Malayan Motors; Motor Image Enterprises Private Ltd.; SMRT Road Holdings Ltd.

Key Dates:

1899:
The Chua brothers establish Federal Stores, which become the general merchandiser Cycle & Carriage, in Kuala Lumpur.
1926:
The company moves to Singapore and goes public as The Cycle & Carriage Company Ltd.
1951:
The company acquires the automotive franchise for Mercedes Benz in Singapore and Malaysia.
1977:
The Malaysian operations are listed on the Kuala Lumpur Stock Exchange as Cycle & Carriage Bintang; the Mitsubishi franchise in Singapore is acquired.
1989:
Franchises for Proton in Singapore and Mazda in Malaysia are acquired; the company acquires Cold Storage (Malaysia) and enters food production, distribution, and retailing.
1990:
The Hyundai franchise in Australia is acquired; the company enters the property development market.
1992:
The company acquires Malayan Credit Limited (renamed as MCL Land in 1997); Jardine Matheson acquires a 16 percent stake in the company.
2000:
The company acquires 30 percent of Astra International in Indonesia.
2002:
Jardine Matheson raises its shareholding to more than 50 percent.
2004:
The company changes its name to Jardine Cycle & Carriage.
2005:
The company increases its stake in Astra International to 49.92 percent.

Further Reading

"Cycle & Carriage Bintang Hopes to Chart Further Growth Ahead," Bernama , May 12, 2004.

"Cycle & Carriage Eyes 10–15 Percent Market Share in 2.0cc Segment," Bernama The Malaysian National News Agency , September 18, 2004.

Donnan, Shawn, "Astra Rides to 22% Increase in Profits," Financial Times , March 22, 2005, p. 26.

"Jardine Sets Cycle & Carriage Deal," Asian Wall Street Journal , July 16, 2002.

"JC&C to Acquire Additional 12.3 Percent Stake in CCB for RM 41.59 Million," Bernama , May 7, 2004.

Kwok, Ben, "Car Dealer Unit Surges 64pc," South China Morning Post , February 25, 2004.

Pilus, Razali, "Sunrise Bhd and MCL Land Ltd to Jointly Develop Seremban Forest Heights," Bernama , July 12, 2004.

Shameen, Assif, "Driving into Southeast Asia," Asiaweek , June 14, 1996.

—M.L. Cohen



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