AA plc (lon:aa)
AA - Something From The Past?

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Title: AA - Something From The Past?
Company: AA - AA plc
Share Price Then: 184.5p
Author: Ian Smith
Date: Tue 22 Aug 2017
Comments: Is the AA a business whose time has passed?

As a members association it all made sense, but now as a plc it is sitting on debt of £2.7bn on a turnover of £960m, so you have to ask has private equity sucked all the value out of the business?

As a business they along with Green Flag and the RAC are probably quite safe as the major players, but they are dependent upon a critical mass of customers to cover the cost of their patrols.

I can't really see how they can gain significant market share in the breakdown business as there really isn't anything new to usefully offer.

With many families feeling the pinch will we start to see people taking a chance on not breaking down where they must have immediate assistance?

The have been brave in the insurance sector by taking on their own underwriter and by using the extra information they have about a member may genuinely have a competitive advantage. Equally getting this wrong would be very easy.

Car Genie initially looked exciting, but the reality seems to be less so, and the advertising phrase "It automatically lets us know about certain types of crashes, so we can be on hand to help" is worrying.

As AA cover doesn't include crash recovery you are paying the AA a fee so that in the event of an accident the AA can come and charge you for recovery!

Then we have mending boilers, how does that fit?

So there is a real danger of the AA being seen an exploitative brand rather than a trusted one.
Read Count: 54/1025

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