Snap-on understands the mechanics of the automotive repair business. The company is a leading manufacturer and distributor of high-quality hand tools, as well as auto diagnostic equipment and "under-car" shop implements, such as hydraulic lifts and tire changers. Snap-on has built a business serving mechanics, car makers, and government and industrial organizations. Other products -- with brand names such as Snap-on, Blackhawk, Lindström, ShopKey, and Sun -- include collision repair equipment, management software, roll cabinets, tool chests, wheel balancers, and wrenches. Snap-on operates finance subsidiaries in international markets where it has franchises.
Snap-on's business was slowed by the economic downturn and the subsequent tightened credit market, but the company has been bouncing back. Since 2009, the tools company has found success by jockeying for growth opportunities. To this end, Snap-on has boosted its manufacturing capacity in China and Eastern Europe. To give it more control over its financing activities, the company's Snap-on Credit unit bought out joint-venture partner CIT Group for more than $8 million in 2009. The partnership had been in place for a decade.
The tools maker also reorganized its business in recent years to more easily make operations and investment decisions and assess performance. The move focused on realigning its business segments to cater to customer groups. As part of the effort, Snap-on reworked its division management and created four business segments: Commercial & Industrial Group, Snap-on Tools Group, Repair Systems & Information Group, and Financial Services.
The Commercial & Industrial Group (CIG) serves industrial and commercial customers primarily through direct and distributor channels. The Snap-on Tools Group caters to automotive service technicians through the mobile tool distribution channel. The Repair Systems & Information Group concentrates on such customers as independent repair shops and OEM dealership service and repair shops. The activities of Snap-on's wholly owned finance subsidiaries comprise the Financial Services unit.
Generating 39% of its business, the company's Snap-on Tools Group is working to develop new programs and products that will increase franchisee profitability and expand its market.
Snap-on's CIG, which accounts for 38% of revenue, is investing in emerging markets, such as China, India, and Eastern Europe, while it concentrates on increasing market share in key industrial markets by acquiring new customers and partnering more with existing customers. To boost its CIG segment and expand its manufacturing to low-cost regions, Snap-on in 2010 acquired the remaining 40% share in Zhejiang Wanda Tools Co. it didn't already own for $7.8 million; the deal follows its 2008 purchase of 60% of the Asian manufacturing operation for more than $15 million.
The newly named Repair Systems & Information Group segment brings in 31% of sales with hopes of future growth. In one of its larger acquisitions in recent years, Snap-on bought the automotive parts and services information systems business of Voyager Learning Center (then ProQuest) for about $527 million. The purchase expanded Snap-on's information group business unit.
Accounting for a growing portion of the company's revenue, Snap-on's finance operations brings in 4% of revenue, up from 2% in 2010. It serves two primary customers: the buyers of its tools and services and its franchisees. The toolmaker offers loans and vehicle leases to franchisees, as well as financing to customers who wish to purchase tools, equipment, or diagnostic products.
While Snap-on generated 59% of its 2011 sales in the US, acquisitions (more than 20 since 1992) have moved the tools peddler beyond its US-based network that serves mechanics. It now sells through a variety of channels in about 130 countries. Europe, with 25% of revenue, and other regions represent the balance of Snap-on's sales.
The company's largest geographic markets include the US, Argentina, Brazil, Australia, Canada, China, Denmark, France, Germany, India, Italy, Japan, Mexico, the Netherlands, Norway, Spain, Sweden, and the UK. Snap-on reaches its customers through several channels: franchisee, company-direct, distributor, and Internet.
Snap-on originated the mobile-van tool distribution channel in the automotive repair market. Snap-on's US van salespeople are primarily franchisees who buy tools at a discount, then sell them to mechanics at a price they determine. The company publishes Fuel, a lifestyle magazine that's free and hand-delivered by dealers to technicians.
Harris Associates owns a more than 9% stake in Snap-on. – less
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