TBY talks to Iván Gutiérrez, CEO of CENTRAL, on the growth and development of new technology for the parking lot construction business across the globe.
TBY What makes Mexico a unique market for parking services?
IVÁN GUTIÉRREZ When we were established in 1994, a number of large buildings were being constructed in Mexico City and people began to consider the management of parking lots. After conducting research, the construction companies brought in Central Parking from the US as a partner, thereby establishing the company’s first international operations. Following this event, Central Parking started to launch different operations around the world. In 2005, it decided to come back to the US and divested from its international subsidiaries. When Actinver offered to invest with AMB, we began as an independent company: CENTRAL. Mexico City is an important market with approximately 25 million people (including the suburbs) and over 5 million cars, which is unusual around the world. In other large cities, such as Tokyo, there are barely 5 million cars. European infrastructure is designed for cities of 5 million people who own a total of 1 million cars. Here, there are 1 million cars in just one area of the city, which is completely different. Parking equipment can require more maintenance than usual, and the computers’ capacity may be overloaded. We are facing a great challenge, and we have to be very technologically advanced.
How do you adapt technology to this environment?
The technology we use is based on the demand we experience. Mexico is a country that changes its physical currency relatively frequently. That sounds normal, but the issue is that every time the currency changes, we have to reprogram the ATMs and retrain people. We are a third-world country with a devaluation issue. We anticipated these challenges, and our equipment has to work in different conditions. There are also environmental factors. We have deserts, jungles, and humidity on the beaches, and 40°C heat in the north of the country. On top of that, we have more external installations than Europe. Our equipment is not ready for these challenges. Therefore, we have been developing innovative technology that will accomplish these tasks. We have also been working to solve a number of problems. Due to security reasons, people want to go to commercial locations where there is heavy security around the buildings. We are bringing banking technology to these parking lots, which will allow users to pay for parking time, telephone services, electricity bills, as well as recharge their cell phones. We already have 7.5 million operations per month and we aim to add a variety of services for our clients. Currently, clients have to form a line to pay for parking, and we want to make that line disappear. We are creating a card that people can use in multiple parking lots, which will facilitate the process. That is the technology we are introducing, and we believe it has the potential for worldwide application, especially in developing economies that have parking issues.
What additional services are you looking to get involved in?
We are looking to add a variety of services to our portfolio. A car in an emerging country is the first or second most important thing a person can own, and may be one of the most expensive investments. The right cities for us have a huge amount of traffic and we want to help our clients save time. If we can offer services while the customer is at work, there is value-added. CENTRAL provides services such as valet parking, parking equipment maintenance, and consulting. We have been seeking entry into new markets and are conducting test versions of services such as car washing and advertising in parking lots.
What did Actinver and AMB see in CENTRAL that made it attractive as a private equity investment?
Parking in Mexico was a highly fragmented market, with a scarcity of technology and low standards. In other words, there was an opportunity to grow. Now, technology is part of our business and CENTRAL has established high standards in service, giving confidence to its clients and users. In Mexico, there are 11,000 parking lots and 1 million parking spaces. It is a $3 billion business that provides 30,000 jobs. Today, we earn about $100 million from the market on an annual basis, with more than 150 parking lots and more than 150,000 spaces, as well as 1,500 employees. We believe we can double our size in the coming years. This growth potential is what attracts capital from investors.
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