Ivan Gadže reveals the connection between truck parts, batteries, tires, and wipers for passenger vehicles with the crisis and recession

Tokić, an authorized importer and distributor of over 230 global manufacturers of automotive parts, directly felt the lack of daily personal migrations on its business during the corona crisis, but cannot say that it was completely out of work. Given the certain threat of recession, we asked the CEO of Tokić Ivan Gadže whether he already feels a reorientation of customer interests towards auto parts instead of purchasing new vehicles and how they are coping with everything that the pandemic has brought.

What has the coronavirus pandemic done to your company’s business? How did you fare?

– It has certainly changed the way we look at daily operations, primarily for the safety of our employees, business partners, and customers. Thanks to an excellently organized supply system and long-term partnerships with our suppliers, we did not have major problems with the availability of items, and we managed to adapt to other challenges that hit the sector in an extremely short time.

How did you organize work?

– We prioritized health; employees who could continued to work from home, while for others, we ensured all conditions for health and safety at work through work organization and implementing a series of preventive measures. One of the first moves was the establishment of a crisis headquarters, where members of the management and directors of various sectors monitor changes daily and adapt business to the new circumstances. Today I know that we assessed well, openly communicating all decisions to employees and external partners, as this has proven to be of immense importance for stable operations. As a company that supplies hundreds of small businesses, as well as large customers, such as carriers and public service workshops, for whom auto parts are essential for regular operations and availability to citizens, I am proud that we enabled everyone to operate regularly through top-notch logistics organization. I cannot emphasize enough how important the relationship of trust with all business partners was here, as well as the responsible behavior, work approach, and support of our employees for management decisions.

Have you recorded higher traffic in recent days with the easing of measures?

– Traffic in recent days has approached the figures from 2019, but unfortunately not to the figures from the first part of 2020 before the crisis began. The opening of stores has certainly facilitated communication with customers and the availability of goods. Customers appreciate the expertise of our merchants and direct contact, although telephone customer support also works excellently in this regard. For example, after the opening of branches, the number of calls and contacts in our contact center returned to pre-crisis figures, which still indicates that customers have a need to come in person and discuss their needs with our expert staff.

What is the greatest interest in?

– We are aware that mobility is a very important need for people, and in this sense, we noticed that demand was directed towards goods that are necessary for both regular vehicle maintenance and extraordinary repairs. The greatest increase in demand was seen in the range of truck parts, indicating continuous activity among carriers during the crisis. Partly due to cold weather, and partly because citizens used their vehicles less regularly, battery sales have noticeably increased. Likewise, drivers did change tires as they transitioned to the summer season. Of course, the sale of disinfectants and equipment, which our customers needed for their service workshops, has significantly increased. We noticed a decline in the sale of wipers for passenger vehicles, which is again a consequence of the fact that people drove less.

Over the years, it has been shown that in recessionary times, people buy fewer new cars and more parts for the cars they have. Have you noticed any increase in the sale of auto parts?

– Our small customers have mostly stayed home in recent weeks, and thus their vehicles. The pandemic and the measures implemented resulted in a decline in traffic and demand, although we see daily how the market is waking up. We responded to customer needs with increased activity in our contact center, where we had more calls compared to the time before the crisis, increased deliveries of goods to all partners and citizens, the possibility of picking up goods without entering our stores, the opening of a web shop offering products intended for drivers, various payment methods, etc. However, the opening of stores was enthusiastically welcomed by our customers and business partners. Still, I believe that the trend of increased demand for auto parts will only be felt if the forecasts of an upcoming recession are confirmed. Our priority, which we have successfully achieved so far, has been to ensure the availability of goods in a business sense. We are ready for increased demand and will respond to market needs with a range of auto parts from 230 of the most renowned global manufacturers.

What do you expect next?

– In addition to the crisis headquarters, Tokić has also been working for some time with a post-crisis headquarters composed of experienced managers and young promising employees whose task is to develop various scenarios around business and exiting the crisis, as well as assessing the impact of the crisis itself on business development. From their reflections, several decisions have already emerged that fit or will soon be implemented in daily operations. We all need to learn to operate in the “new normal”, and as the largest sales chain of auto parts in Croatia, we have focused on ensuring the availability of goods and managing current liquidity. It is difficult at this moment to assess what the shape of that curve will be. We sincerely hope that there will not be L-shaped curves, but we are also prepared for that scenario. In the case of a W-shaped curve, I think we have learned enough as a company and as a society on how to face that scenario. It seems to us that there are fewer and fewer supporters of V and U variants, although those variants should not be excluded as they offer some possibilities.

Will losses be able to be compensated by the end of the year if there is no second wave of infection?

– At this moment, I think that few, regardless of the sector they work in, are thinking about compensating for losses, but are focused on establishing and maintaining regular operations and retaining employees. Even the largest global companies in the auto parts sector openly talk about a significant decline in traffic and adjust their business accordingly. A significant part of this is influenced by the reduction in the production and sale of new cars and the increase in investment in maintaining existing cars.

Are government measures sufficient, or do you expect further assistance?

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—- Even if we were the richest country in the world, this situation would require great sacrifices from all citizens and business entities. Here I must emphasize how important it was for the government to listen to people “on the ground” when making decisions. In our assessment, the government’s response was swift. Every decision-making in conditions of such great uncertainty is not elegant and simple. If some decisions need to be corrected, it is now easier because the first concrete decisions were not delayed. In business decision-making, there are always different views on individual decisions, but it is important that this does not slow down the decision-making process itself. From the very beginning, we actively monitored the government’s decisions, which, through its activities and decisions, primarily those related to ensuring liquidity, helped businesses overcome this crisis. We thoroughly analyzed all measures and selected those that best meet our needs, and we will continue to do so in the future. Since we operate in several European markets, I can say that in each of the countries where we operate, governments have focused on preserving liquidity, reducing or deferring tax obligations, and preserving employment. Our umbrella association FIGIEFA (the umbrella association of the auto parts industry based in Brussels) has sought a more active approach from central European institutions, as most initiatives came from national governments. A coordinated approach is important for our industry to better respond to potential challenges in terms of liquidity, supply chains, and others that cross national borders.