Vehicle distribution giant Inchcape is restructuring its Singapore operations, a move that will result in one of the biggest downsizing exercises the local motor industry has ever witnessed.
The Straits Times understands that some 120 employees across Toyota agent Borneo Motors and Suzuki agent Champion Motors will be retrenched within the next several weeks.
The cohort represents 12 per cent to 14 per cent of Inchcape's headcount here.
A number of senior positions will also be affected.
Mr Koh Ching Hong, Inchcape's chief executive for South Asia and managing director of Borneo Motors, will leave his post by the end of next month. The 57-year-old, who has been at the helm for nine years, could not be reached for comment.
Inchcape is likely to do away with a chief executive for South Asia, but a new managing director for Borneo Motors is likely to be appointed. In the interim, Mr George Ashford, Inchcape's chief executive of Asia, will oversee Mr Koh's roles.
The news has taken the industry by surprise, as it comes at a time when Inchcape is having record sales and high profitability in Singapore.
"It may be part of a group-wide strategy to become leaner in anticipation of a global economic slowdown and tougher business conditions," an executive from a rival group said.
According to its interim financial statement, the London-headquartered distribution giant said that its after-tax profit for the six months to end-June rose by 7.8 per cent to hit £165 million (S$293 million). That came on the back of an 11.2 per cent rise in revenue to £3.8 billion.
Its trading margin for South Asia - of which Singapore is the main market - rose by one percentage point to hit 10.4 per cent, the best among all its other segments.
Despite its relatively small size, South Asia contributed £33.4 million in trading profit - the third largest after Britain and Australasia. Inchcape had declared an interim dividend of 7p per share, up from 6.8p in the previous corresponding period.
Looking ahead, directors singled out the strength of its South Asian and emerging markets. "Inchcape is well positioned to drive long- term growth," they noted.
The Straits Times understands that the restructuring will also involve moving finance and IT functions out of Singapore.
Mr David Leong, managing director of human resource firm PeopleWorldwide Consulting, said the news is not completely unexpected as companies and businesses are "not positive" about next year.
However, Mr Leong noted that most firms would cut the bottom and middle layers. That Inchcape is also cutting the top "suggests that they're right-sizing".
"At the end of the day, they're looking at the wage component," he said. "They want a lighter vessel in a more turbulent sea."
Mr Leong said a company's move to cut headcount despite a strong financial performance is likely to affect remaining staff.
"Morale will definitely be impacted," he said. "Retention won't be high."
The Straits Times understands that Inchcape will be trimming staff in other markets too, but Singapore is bearing the brunt of the exercise.
Inchcape plc was unable to respond to queries by press time.