TOKYO -- Japan's Autobacs Seven will invest in a Malaysian tire wholesaler, aiming to trim procurement costs as it cultivates its overseas business in the face of a stagnant domestic market.
The autoparts retailer will likely spend several hundred million yen for a 20% stake in Kit Loong Tayaria, making it an equity-method affiliate. The two companies are set to reach an agreement in a few days.
Tokyo-based Autobacs has opened five autoparts stores in Malaysia, starting with a franchise in 2012. But profits have been slim amid mounting procurement and other costs. The company aims to bring the operations into the black by buying tires more cheaply through Kit Loong.
Autobacs is expanding its Malaysian business rapidly, with four more stores planned this fiscal year.
The Japanese company will also consider selling brake pads and other parts through Kit Loong's retail network. With private car ownership growing, Autobacs anticipates stronger demand for high-quality, well-designed parts.