Torque Precision Auto Business Plan — Executive Summary
A ten-bay accredited independent workshop: R8.00m capital, 17,463 book hours a year, R28.43m Year 5 revenue and R5.52m EBITDA.
Executive Summary
Jump to section
- Overview & contents
- i. Important Notice and Basis of Preparation
- 1. Executive Summary
- 2. Market and Opportunity
- 3. How a Workshop Actually Makes Money
- 4. Accreditation and Compliance
- 5. SWOT and Competitive Position
- 6. Operations and the Bay Build
- 7. Route to Market
- 8. Management and Governance
- 9. Financial Plan
- 10. Break-Even and Debt Service
- 11. Investment Analysis
- 12. Sensitivity and Scenario Analysis
- 13. Risk Analysis
- 14. Implementation Roadmap
- 15. Key Performance Indicators
- 16. Key Assumptions
- 17. Conclusion and Recommendation
- A. Appendix A: Consolidated Financial Summary
- B. Appendix B: Capital and Operating Schedules
- C. Appendix C: Funding and Debt Schedules
- D. Appendix D: Risk Register
- E. Appendix E: Glossary
- 1.1 The proposition
- 1.2 What an investor should take from this plan
- 1.3 Financial summary
- 1.4 Funding requirement
- 1.5 The honest position on returns
1.1 The proposition
Torque Precision Auto (Pty) Ltd is a proposed independent multi-bay motor workshop in a South African metro, accredited through the Retail Motor Industry Organisation and equipped to service and repair vehicles that are still under manufacturer warranty. The business scales from four bays to ten over five years, servicing retail customers, fleet accounts and insurance-referred mechanical work.
This plan is written for an investor rather than as a licence application. Its argument is that the Competition Commission’s automotive aftermarket guidelines created a market opening that most independent workshops are technically unable to exploit, and that the investable business is the independent workshop that can.
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Torque Precision Auto in six lines |
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The business |
An independent workshop equipped and accredited to service in-warranty vehicles, competing against franchised dealers on price and against ordinary independents on capability |
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Location |
A metro suburb with high vehicle density and industrial zoning — target catchment of at least 60 000 households within 15 minutes |
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Scale at maturity |
10 bays, 10 qualified technicians and 3 apprentices, invoicing approximately 17 463 book hours a year |
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Capital required |
R8.00 million over five years — R5.40m equity and R2.60m asset finance, with a two-year capital moratorium |
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Financial outcome |
Loss-making in Years 1 and 2; profitable from Year 3; Year 5 revenue R28.43m, EBITDA R5.52m and profit after tax R3.65m |
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The central mechanic |
The workshop sells book hours and buys clock hours. Profit is the product of bay utilisation, technician efficiency against book time, and the rate actually collected |
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R28.43m Year 5 revenue |
R5.52m Year 5 EBITDA |
66% / 27% Labour and parts gross margin |
89% Book hours sold as % of clock hours, Year 5 |
1.2 What an investor should take from this plan
Four conclusions, stated openly because diligence will surface them anyway.
▪ The market opening is real but narrower than the headlines suggest. Since 1 July 2021 a motorist may service an in-warranty vehicle at an independent provider without voiding the warranty, and manufacturers must give independents access to technical information, diagnostic codes and service records. But insured accident repair on an in-warranty vehicle must still go to a manufacturer-approved body repairer, and the guidelines are interpretive guidance rather than statute. This plan targets mechanical service and repair only.
▪ The barrier is equipment and capability, not the law. Diagnostic hardware, manufacturer data subscriptions, qualified technicians and service-book discipline are what allow an independent to touch an in-warranty vehicle. Most independents have none of these, which is why the opening has not been competed away.
▪ The business is a three-ratio machine: bay utilisation, technician efficiency against book time, and the effective labour rate after discounting. A workshop can post a strong rate and still lose money on all three. Year 5 EBITDA swings from R4.24 million to R6.82 million on the posted labour rate alone.
▪ It consumes cash for two years. Cumulative profit after tax across the five years is R3.33 million, and the enterprise recovers its start-up losses during Year 5. An investor seeking distributions before Year 4 should not fund it.
1.3 Financial summary
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R ‘000 |
Year 1 |
Year 2 |
Year 3 |
Year 4 |
Year 5 |
|---|---|---|---|---|---|
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Bays / qualified technicians |
4 / 4 |
6 / 6 |
8 / 8 |
9 / 9 |
10 / 10 |
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Bay utilisation |
46% |
63% |
73% |
78% |
81% |
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Efficiency against book time |
90% |
98% |
104% |
108% |
110% |
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Book hours invoiced |
3 245 |
7 260 |
11 904 |
14 859 |
17 463 |
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Labour revenue |
2 400 |
5 368 |
8 801 |
10 987 |
12 912 |
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Parts revenue |
2 280 |
5 476 |
9 506 |
12 305 |
14 719 |
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Sundries and consumables |
149 |
334 |
548 |
684 |
803 |
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Total revenue |
4 829 |
11 178 |
18 855 |
23 975 |
28 434 |
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Gross profit |
1 390 |
4 388 |
8 262 |
10 728 |
12 988 |
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Gross margin |
28.8% |
39.3% |
43.8% |
44.7% |
45.7% |
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Overhead |
(3 529) |
(4 764) |
(6 156) |
(6 922) |
(7 465) |
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EBITDA |
(2 139) |
(376) |
2 106 |
3 806 |
5 523 |
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Profit / (loss) after tax |
(2 860) |
(1 294) |
1 104 |
2 735 |
3 649 |
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Debt service cover |
n/a |
n/a |
2.44x |
3.73x |
5.15x |
1.4 Funding requirement
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Source |
Amount (R) |
Terms |
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Promoter and investor equity |
5 400 000 |
68% of capital deployed. Sized to fund two years of losses |
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Asset finance |
2 600 000 |
Drawn progressively against equipment at 13.75%, five years per tranche with a two-year capital moratorium |
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Total capital deployed over five years |
8 000 000 |
Asset finance is used only against equipment that secures the facility. The plan requires a two-year capital moratorium: the workshop is paying for technicians and premises well before the diary fills, and no principal falls before Year 3. This is stated as a term of the facility rather than left for the financier to discover.
1.5 The honest position on returns
This is a solid operating business rather than a high-growth one. Year 5 profit after tax of R3.65 million on revenue of R28.43 million is a 12.9 per cent net margin, achieved on R8.00 million of capital deployed over five years.
The return sits in the Year 5 earnings run rate, in a customer book with recurring service intervals, in fleet contracts, and in equipment with residual value. Independent workshops are typically valued on a multiple of sustainable earnings, with the multiple driven by the proportion of contracted fleet work and the durability of the technician team rather than by bay count. The risk an investor should weigh most heavily is people: three of the five largest sensitivities in this model — efficiency, utilisation and leakage — are management outcomes. This business is bought and sold on the quality of its workshop manager.