Risk management

Risk description
Demand for Bilia’s products and services is affected by fluctuations in the economy, and the Car Business is the part of the operation that is influenced most by these fluctuations. In a recession, some customers choose to postpone or refrain from buying a car. Significant factors include interest rates, the labour market, the stock market, financing opportunities and fuel prices. Reduced demand for cars may also affect the value of cars in inventory and cars sold with guaranteed residual values. Events such as political instability, military rearmament, wars, pandemics and natural disasters can also have a significant direct or indirect impact on Bilia’s market and turnover.

Opportunities and management
The Service and Fuel Businesses are less impacted by changes in the business cycle since cars require servicing, repairs and fuel regardless of the state of the economy. Sales of used cars are less affected by changes in the business cycle as customers choose a used car over a new car. However, a deep recession could also affect the Service Business and sales of used cars. Events such as war, pandemics and natural disasters are managed in line with government rules and recommendations, the aim being to continue with business as usual as far as possible.

Risk description 
Bilia’s core business consists of distribution and servicing of cars, transport vehicles and trucks in four countries. For new car sales, Bilia needs the approval from the respective general agent, as there are no special rules governing competition for new car sales in the EU. A car manufacturer/ general agent can unilaterally recall a sales authorisation and terminate the sales agreements with Bilia. BMW, Volvo, Toyota, Mercedes-Benz and Volkswagen are currently the largest manufacturers/general agents for Bilia. A recall or termination of the authorisation agreement, altered content or a shift in balance between the manufacturer/general agent and Bilia could have significant negative impact on Bilia’s operations.

Opportunities and management
Bilia is not dependent on one single manufacturer/general agent, but has several business partners, which reduces the risk compared to being dependent on just one manufacturer/general agent. Sales of used cars and the Service Business are not subject to approval from the general agents for establishment and expansion of business. Bilia is working in line with its growth strategy to find future business partners and growth opportunities. Good relations with car manufacturers/ general agents are a focus area to enable expansion and reduce the risk of sales authorisation for new cars being recalled. Bilia is constantly working to enhance and develop its customer relations with the aim of maintaining a strong position on the market.

Risk description 
Regulatory decisions that lead to changes in taxes, customs duties, charges, subsidies and restrictions on the products and services Bilia sells can influence both demand for and the valuation of cars in stock and cars sold with guaranteed residual values.Tax regulations regarding green cars have changed frequently in recent years for our countries and are expected to continue to do so in the comingyears. Bilia’s operations may be affected by public opinion and government decisions mainly in relation to climate and environmental issues.Government decisions that restrict the freedom of movement of individuals may affect Bilia’s ability to conduct business in both the Car and the Service Business.

Opportunities and management
New and/or regulatory decisions and changes in opinion may result in higher or lower demand for Bilia’s products and services. Favourable tax regulations for green cars could lead to an increase in demand for the cars that meet the set requirements. Adapting operations to changes in laws and regulations is an ongoing process, and is achieved by monitoring relevant regulatory changes and analysing possible measures. Products and services are adapted continuously based on public opinion. 

Risk description 
Bilia currently sells cars and services from facilities, but also has digital sales channels for used cars and accessories. Change initiatives are under way regarding digital business channels and business models for the sale of new cars. If all the car manufacturers/general agents that Bilia works with should move, fully or partly, to new business models or their own sales channels, this could have an adverse impact on Bilia’s business. New players, mainly for car sharing and the sale of fossil-free cars, are interested in establishing operations in our countries.

Opportunities and management
Bilia’s sales currently take place via various business models, such as traditional retailer and agent model. Bilia is monitoring the evolution of new business models and sales channels, and will adapt its business to market conditions as necessary. New business models can contribute positively to Bilia’s financial position in terms of risk and capital tied up. Bilia is constantly working to enhance and develop its customer relations with the aim of maintaining a strong position on the market. Bilia monitors the development of new players in our countries of operation and continuously evaluates potential future partners.

Risk description
Bilia is dependent on the ability of the Group’s business partners to develop
competitive products in line with technological advances. One example is the development of fossil-free car models to meet the EU’s objective of a carbon-neutral Europe. However, tax schemes for green cars affect the demand for car models that fulfil these objectives. Chargeable cars may have a negative effect on Bilia’s Service Business in the long term, as the need for servicing fossil-free cars is believed to be lower than for cars powered by fossil fuels

Opportunities and management
Through a broad brand portfolio, Bilias has well-established business partners with the financial resources to ensure the competitiveness and technological development of its products. Bilia’s business partners currently offer several alternative fossil-free car models and consider themselves well equipped to adapt to the EU’s CO2 emission standards for new passenger cars and light commercial vehicles, as well as the current tax regime of local authorities. Our business partners are planning to launch new fossil-free cars. Investments are being made in equipment for our workshops and in training for our mechanics. New services are being developed for the Service Business for the needs of fossil-free cars.

Risk description
Bilia is dependent on the ability of the Group’s business partners to develop competitive products that incorporate the technological advances. One example is development of fossilfree car models to meet the UN’s 17 global SDGs. The tax systems on green cars, especially in Sweden and Norway, impact the demand on car models that fulfills these requirements. Chargeable cars can have a negative effect on Bilia’s Service Business, as the need for service for fossil-free cars is believed to be lower than for cars powered by fossil fuels.

Opportunities and management
Through a broad brand portfolio, Bilia has business partners who are well- stablished with the financial resources to ensure the products' competitiveness and technological development. Bilia’s business partners currently offer several fossil-free cars and assesses to be well equipped to follow the technological development to meet the UN’s 17 global SDGs by 2030 as well as the current tax systems from the governments. The launch of new fossil-free car models is planned by our business partners. Investments in equipment in our workshops are made as well as training for our mechanics. New services are developed to meet the needs of fossil-free cars in the Service Business.

Risk description
There may be a future risk that Bilia will not be successful in recruiting or retaining key personnel and competent coworkers to the desired extent. Both management and coworkers contribute knowledge about the business and the operation, and actively participate in developing own concepts and services. Vehicle engineering competence is a scarce resource, and this may influence future growth within the Service Business negatively.

Opportunities and management
Bilia has strong results in the annual employee survey compared to other companies. Bilia focuses on maintaining and further improving the environment for our key persons and employees, so as to be an attractive employer. Bilia is actively working with schools to help make the automotive engineering profession more attractive and to help ensure a good quality of the training on offer.

Risk description
Bilia leases most of the facilities for its operations. As a tenant, Bilia may have the lease terminated at the end of the rental period, which would mean that Bilia would lose strategic business locations. Bilia may be adversely affected by climate-related risks, such as floods and landslides, when climate change occurs. If contamination should be found at any of Bilia’s facilities, there is a risk that Bilia may be held responsible for decontamination of the facility. Such decontamination may be associated with considerable costs.

Opportunities and management
Leasing facilities gives Bilia the flexibility to adjust the number of facilities as required. Bilia is working on future-proofing its operations for climate change and believes that the current risk is limited in scope. Bilia works, as an integrated part of its operation, to minimise negative impact on the environment. Processes, procedures and internal monitoring are in place to ensure compliance with laws and regulations and to minimise environmental impacts. Most of the facilities in Sweden and Norway are certified to ISO 14001 and are audited annually by an external certification body.

Risk description
As part of realising its strategic growth objectives, Bilia acquires operations. If the status of the acquired operations were to differ significantly from the situation known before the acquisition, or if integration of the operations were to fail, this could influence Bilia negatively.

Opportunities and management
Through acquisitions, Bilia can improve its operations from a strategic and financial perspective. New operations are integrated on an ongoing basis, and performance is compared to expectations during the integration period, so as to identify and act on any deviations as early as possible.