Tackling the threat
of fake reviews
Online customer reviews are a key indicator of business
performance, with even negative comments, if handled properly, offering potential
benefits.
But along with the furore over ‘fake news’, review sites
have been infiltrated by bogus customers. Typically, these are a business rival
or a disgruntled ex-employee posting critical comments or from companies
engaging third parties to promote excellence.
Noting that more than 50 per cent of UK consumers either
read or post reviews, the Competition and Markets Authority warns that writing
or commissioning fake reviews can lead to civil or criminal action. Last year
the CMA took action against an online marketing company that posted fake
reviews on behalf of its clients.
“The last few months have undoubtedly shone a spotlight on
the reviews industry and drawn into question the legitimacy of online customer
reviews,” said Matt West, chief marketing officer of Feefo.
According to Feefo’s latest research, around 75 per cent of
consumers are worried about the issue, with only seven per cent saying they
completely trusted reviews. “Interestingly, despite this scepticism, the actual
opinion of other people is still held in high regard, with the majority (69%)
generally trusting the recommendations of fellow shoppers,” says West.
Despite consumer concerns, especially among those who
regularly shop online, he said businesses can put in place measures to assure
customers. These include using an independent third-party company to verify the
reviews, ensuring all reviews are published and are 100% genuine.
“Because we operate a ‘feedback by invitation only’ model,
which means we only invite customers who have directly engaged with the brand,
product or service to leave feedback, it ensures all reviews are from genuine
customers.” said West.
Neil Smith, director at used car company Imperial Cars,
blamed a business rival for a “bad experience” with a series of fake reviews
that took two months to resolve.
“The problem is never knowing how much business we may lose
because of them (fake reviews) and you can’t be too vocal about disputing them,
otherwise consumers get suspicious – a case of ‘he doth protest too much’,”
said Smith.
Extract from AM magazine June 2018
***
Is poor enquiry management losing you sales?
Manufacturers and dealers spend millions on marketing
campaigns to sell new and used cars, but how effective are they in converting
customer inquiries into sales?
CRM agency Marketing Delivery examined a sample of 63,000
inquiries and found that, on average, 64 per cent are identified as ‘lost’ –
typically because it has not been possible for the salesperson to make contact
or because a vehicle is not immediately available in stock.
Categorising the lead as ‘lost’ normally means the
dealership’s contact with the potential customer is terminated.
However, when the agency contacted those prospects by email,
an average of 40 per cent said they were still ready and able to buy a car from
the same dealership.
“It's clear that dealerships are losing significant volumes
of business as a result of deficiencies in the performance of sales staff or
shortfalls in sales processes, or both,” says managing director Jeremy Evans.
Training provider Symco points to other research indicating
an average six-hour response from initial inquiry through email, contrasting
with the 60 minutes that a prospect is prepared to wait before going to another
website.
“It’s not just a case of responding quickly, but also what
is said to engage the customer,” says the company’s founder and MD Simon
Bowkett.
He thinks part of the problem lies with recruitment and its
traditional emphasis on face-to-face skills in the days when “showroom
walk-ins” were the norm for initial customer contact.
Part of Marketing Delivery’s work through its eCRM services
is to help dealers track leads and evaluate performance by sales staff.
Further evidence of how technology is driving customer
expectations comes from Dealerweb, whose clients include Jardine, Ford Retail,
Volvo and Infiniti. Earlier this year, results of its survey of 1,000 motorists
showed:
• 49 per cent expect a response to an online
enquiry from a dealer within one hour
•
25 per cent expect a response in under 30 minutes
•
34 per cent would take their inquiry elsewhere if the dealer didn’t
respond in less than four hours
•
56 per cent of men and 44 per cent of women would be more likely to
commit to a purchase if responded to in less than one hour.
The decline in walk-in inquiries is also highlighted by a
sample of 200 dealers reporting a 21 per cent rise in inquiries in quarter
three of this year compared to 2015 – the result of a 62 per cent increase in
web-generated leads, and a mere 0.6 per cent increase in walk-ins.
The IT and digital marketing group, CDK Global, believes
that qualification plays a critical part in the inquiry chain, with contact
centres providing the first link.
“These act as a screening process, identifying calls that
are unlikely to result in a sales conversion,” says Wallis Lavery, senior
product manager – marketing and product management. “It could be an individual,
or an organisation, browsing for research purposes or just out of general
interest. The screening frees up the salesperson to focus on genuine leads.”
Extract from AM Magazine Jan 2018
***
Electric vehicles: an end to 'false dawns'?
With climate change governing ever tougher laws to combat
air pollution, backers of alternative power for vehicles believe there will be
no more ‘false dawns’ that have dogged electric car development since its
invention more than 150 years ago.
Poppy Welch, head of Go Ultra Low, a campaign for plug-in
vehicles backed by the Department for Transport and the Society of Motor
Manufacturers and Traders, says that business users are “taking the bull by the
horns”, with fleets accounting for 65 per cent of electric/hybrid
registrations.
“Though users are mainly influenced by cost savings – as low
as 2p a mile compared to 10p to 12p for petrol/diesel - emissions play a
significant part in energy audits and social responsibility commitments,” said
Welch.
She described the presence of ultra low emissions vehicles
in the UK parc as “roughly in line with government expectations” – up from 0.44
per cent in 2014 to just over one per cent last year - and expected the
fall-out from the VW emissions testing debacle, coupled with cancer scares over
diesel, to “encourage more people to look at alternatives”.
Leasing provider Alphabet reports “a dramatic increase in
interest” from organisations looking to include electric vehicles in their
corporate fleets. The number of EVs on its portfolio has more than doubled to
just over 3,000 since the end of 2014, beating last year’s target.
But David Bushnell, Alphabet’s product manager – mobility,
acknowledges that this is still “relatively low” at less than five per cent of
its leases and attributes this to a series of reasons, among them “quite a lot
of misinformation in the marketplace and a reluctance among decision makers to
embrace technology”.
“There’s also a need for more uniformity on (government)
incentives and greater visibility on tax,” he says. “With fleets working on
three to four year cycles, they don’t have sight of what tax levels are going
to be beyond then, so there’s nervousness about benefit-in-kind, for instance.”
He described the £200 reduction in grants for fitting home
charging points as “bizarre” at a time when the government is aiming for a
target of five per cent ULE new vehicle registrations by 2020. “With less of an
incentive for drivers to recharge at home, there’s a risk that they will just
run them as conventional vehicles.”
Extract from Fleet News, Feb 2016
*****
Fleet management: shopping around around for the best deal
Before the arrival of supermarkets, canny shoppers trawled
the high streets comparing prices for their weekly provisions. Online shopping has removed the legwork while
still providing information on best buys.
Could the equivalent now be gaining momentum in fleet
management, with technology offering potential cost savings through
‘unbundling’ compared to the one-stop-shop supplier route?
Tony Greenidge, sales and marketing director of consulting
and management company Fleet Operations, says there is a growing trend towards
the multi-bid approach, especially with LCVs. “The vehicles themselves
represent the biggest overhead and prices can range from £20 to £40 a month for
basically the same van in the same spec, so it makes sense to look at a choice
of providers rather than one.
“There’s an attitude of maintaining the status quo with
sole-supply, particularly if fleet operators have had a bad experience in the
past of choosing supplier(s) who have failed to deliver. So they could reason ‘if it ain’t broke...’
and why risk the hassle?
“But over the past 12 months there’s been a significant
shift towards multi-bid, with technology making it so much easier to obtain the
most competitive deal from a provider of funding, maintenance, accident
management, and so on.”
Maurice Elford, fleet manager of L&Q Housing
Association, said his company is preparing for a new telematics provider that will
pave the way for a “keener quote” on fleet dedicated insurance, rather than having
it wrapped within L&Q’s overall cover.
He is also looking for a reduction of around seven per cent
on fuel - the “biggest pinchpoint”, currently accounting for around 25 per cent
of operating costs – resulting from the new data that will show “more information
than speed and position to include other factors like acceleration and
braking”.
Extract from Commercial Fleet, Jan 2016
******
'Live chat' route to car buying
Potential car buyers browsing the internet at night for a
suitable model could find themselves invited to a ‘live chat’ with a dealership
sales exec.
It’s just one example of the way technology – along with
legislation intended to ‘treat customers fairly’ – has transformed car sales
over the past ten years.
In the showroom, sales brochures are being complemented by
video and touch-screen demonstrations of the product, with tablets replacing
calculators for add-on presentations like service plans and finance.
Norfolk Motor Group has added a live chat feature to its
website, connected to the mobile devices of its 13-strong sales force. “It’s proving to be an important part of the
sales process,” said MD Grant Long, “with incentives for those who can show
success by engaging with customers out of normal working hours. Someone could
be watching Match of the Day at home, for example, when they identify a
prospect looking at our site.”
Coaching expert Karl Davis compares today’s search and
selection route for consumers with speed dating and says that dealerships have
to adapt to rapid response to survive. “Scale helps, but casualties in food and
aviation are a lesson for those who are too slow to adapt to changing market
conditions.”
Davis, who worked on the manufacturer and retail side before
setting up his Coachworks consultancy, explained: “Online traffic is replacing showroom traffic
and the days when customers relied on a dealership for information are gone.
Now they visit for the best deal and maybe a test drive.”
Phil Webb, head of Honda Cars UK, said: “Customers go into
dealerships far better informed than they ever were. They know about a
particular model, its features and capabilities – some even come in with their
iPads to show exactly what they want and to satisfy themselves that it’s the
right colour in the flesh.”
Extract from AM Magazine Nov 2015
****
Car paint protection: The challenge from social media sceptics
Though paint protection falls outside Financial Conduct Authority regulation, it is
subjected to scrutiny – often critical – on motoring forums over effectiveness
and price.
Russell Young, CEO of Tribos Coatings, wants to see a
“mindshift” among dealers where the focus is less on profit and more on the
quality of the product and its application. “With no FCA protection, it’s
possible to sell anything and sometimes it’s hard to establish whether cars
have received the proper treatment, but dealers and their suppliers have to
bear in mind the influence of social media.”
Rob Earle, managing director of Gtechniq, said: “From a consumer view, there is a perception that paint
protection does not offer terribly good value, but there remains a desire to have your car looking as good
as possible.”
Alan Graham, key account
manager with Supagard, said, like all other business, paint protection should
be judged on the criteria of “treating customers fairly and with confidence in
the efficacy of the product”.
Extract from AM magazine Oct 2015
******
SsangYong breaks new ground with Tivoli
SsangYong chief executive Paul Williams describes the arrival
earlier this year of the B-segment Tivoli crossover as “a pivotal moment” for
the brand.
It’s the first new model since Korea’s oldest motor manufacturer
was rescued by India’s Mahindra industrial group and joins the bigger Korando
and Rexton SUVs and the Turismo MPV line-up.
Korando and Turismo are currently the most popular, but Williams
expects Tivoli to account for 50 per cent of sales next year, with total volume
increasing from 4,000 to 6,500. That compares with less than 200 when the
company seemed to be heading for oblivion five years ago.
“A key objective for Tivoli is to build brand awareness, with
consumers discovering what else we have to offer,” said Williams. Riding on
that is a longer term ambition for a market share of three to four per cent in
the 4x4 and crossover market. With B-segment vehicles accounting for 120,000
units, that could take Tivoli into the 4,000-plus bracket,
Williams reports that traffic through SsangYong’s revamped
website has doubled since Tivoli’s launch in May, aided by a £1m TV and digital
promotion in June and July. That will be repeated in September, along with the
launch of a diesel version. “We’re also punching above our weight with media
exposure.”
Meanwhile, there’s continuing build-up of the dealer network
since the brand was “re-started” under its new owner. It’s increased from 35 to
65 and is expected to total 75 by the end of the year.
Extract from AM magazine, Oct 2015
*******
3-way benefit of extended warranty
Extended warranties are worth selling, not just for the
revenue potential and consumer benefit, but also for dealer protection.
That’s the reasoning voiced by at least three warranty
providers. As Eric Stone, business development director of the WMS Group, put
it: “Consumers have their statutory rights, but what about the dealer? It’s all
very well to say to the customer ‘if anything goes wrong, come back and we’ll
fix it’, but if the engine packs up they could be faced with having to pay
hundreds of pounds.
“It’s like holding a bag of money on a car you’ve sold and
not being able to bank it for six months or so.”
As for the consumer benefit, Stone added: “Most people
wouldn’t dream of having no home insurance, yet houses are not being driven
over potholes for months and years on end.”
David Gerrans, managing director at Warranty Direct,
commented: “It is inexplicable that so many people should opt to purchase a
warranty for items such as boilers or small electrical appliances, yet
comparatively few adopt the same attitude towards covering their car.”
Richard Hodges, marketing manager of Warranty Wise, cited
another persuasive selling point: “The
most competitively priced cover is at point of sale because the vehicle has
undergone condition checks and a service.
“If a customer belatedly decides a warranty is maybe a good
idea after all – perhaps after a nasty repair bill – the cost is obviously
factored into this.”
Extract from AM magazine April 2015
***
Why refurb is worth the risk
Why
bother with the time and expense of refurbing scruffy used cars to retail
condition – with no guarantee of a sale to recoup the cost - when manufacturers
pile on the pressure to sell factory fresh stock?
As Steve McBrierty, CEO of car valeting company Motorclean,
noted: “When the (new) market is strong, dealers tend not to have the same
level of focus on maximising the value of used.”
But that
attitude carries the risk of ‘over-egging’ the retail mix to the point
where it’s too rich for some tastes. As Graeme Potts, managing director of the
Eden Group, explained: “There are customers looking for cars four to five
years’ old, perhaps with higher mileages to help keep the price down. We have
to address the market in its breadth.”
With eight outlets collectively selling more than 10,000
used cars a year, Eden invariably adds vehicles in its franchised portfolio and
still under manufacturer warranty to its retail stocklist. Others call for a
“commercial judgement” at the point of acquisition.
“Rather than look at a characteristic margin, there are
examples where we see one that’s a bit skinny, but accept it because the car
fits into our retail offer,” said Potts.
Rob Barr,
a director of the Vehicle Remarketing Association, believed commercial
judgement should rely less on age/mileage than ensuring that the cost of
re-furb “can be offset against the purchase price and the final stand-in price
still reflects good value”.
Barr said
the right balance of product was key to generating demand.”Though there are a limited
number of analytical tools in the market to assist dealers with this, these are
relatively new and it is an area which will undoubtedly grow in years to come.”
He added
that the case for refurbishment was largely dictated by the consumer, who –
influenced by manufacturers’ approved used car schemes - now expects vehicles, irrespective
of age, to be prepared to retail standards. “Obvious damage is not acceptable
and will often turn the consumer away from not just the car, but the dealership
itself.”
Mark
Llewellyn, managing director of the Revive! network of franchised Smart
technicians, recalled the time when dealers put off minor repairs until the car
had been sold. “The attitude was ‘why waste money when it may not sell?’, but
that’s no longer acceptable. It puts the salesman on the back foot, with the
customer asking himself ‘what else is wrong that I haven’t spotted?’”
With
Smart work now a routine part of the used car prep procedure, Llewellyn said
his company was looking for extended collaboration with dealers. “Customers who
have suffered minor damage would be encouraged to return to the dealer. It not
only adds value to the Smart proposition, but aids customer retention.”
In broad
terms, Neil Marcus, marketing director of Selsia’s 90-strong network of
Accident Centres, says that Smart repairs would be appropriate for a lower
value, non-prestige marque with over 70,000 miles on the clock. Higher value
cars up to three years’ old with a mileage up to 50K would be more deserving of
bodyshop attention.
“If we’re
talking about light accident and cosmetic bodywork damage on, say, two to three
panels, Selsia has a same-day service costing on average around £300 plus VAT,”
said Marcus. “Volume discounts are available to dealers using our promotional
code.”
Dealers
can go online and highlight bodywork damage on the schematics relating to the
make, model and style of any vehicle that generates an instant estimate. “With this
information, they can make an immediate judgement on the (part-exchange) they
can allow to the customer and its retail value,” said Marcus.
Peter
Istead, MD of Lifestyle Europe, said it was imperative to run used and new car
businesses as separate departments. “A manager looking after both runs the risk
of dropping the ball on used to focus on new,” he commented.
Selling
around 6,000 used cars a year through nine sites, 70 per cent of Lifestyle’s
stock is part-exchange, 10 to 15 per cent sourced through auction and the remainder
pre-reg. PXs undergo a 55-point appraisal, with body and mechanical work typically
costing £350, plus valeting. “We don’t look at this in terms of what value it
adds to the car; it’s what the customer expects, but it would be reasonable to
say it’s worth £200 to £230 more,” said Istead.
Most
unwanted vehicles are disposed of through Manheim’s physical and digital
auctions. “With space at a premium, you can’t afford to have unsold stock
sitting around,” said Istead.
Sometimes, a car that looks destined for trade disposal at a
knock-down price can bring unexpected reward.
Stephen Brighton, managing director of Hepworth Honda, cited
a part-exchange Jaguar S-Type with a book value of £2,000. But after a listing
on the Dealer Exchange website, it fetched £3,500.
Brighton acknowledged the pressure on UK dealers to move new
metal as the market in the rest of Europe remained weak. But he echoed Potts’
view on the importance of featuring older stock; in Hepworth’s case typically
Jazz and Civic in the £4K to £6K bracket. “We look at what is popular new and
reason that it will retain popularity in three to four years’ time.”
Around one third of Hepworth’s 700 used cars a year from its
three sites are trade disposals. “We tend not to use auctions because of the
fees, but are active on websites such as
Dealer Exchange,” said Brighton.
“We reckon to spend up to £400 on repairs, expecting to
recoup two thirds on the sale. Anything above £500 when you’re looking for a reasonable
margin doesn’t leave much room for manoeuvre.”
Extract from AM magazine Dec 2014
***
Protection flaw prompts change in warranty code
Industry efforts to improve consumer confidence in used car warranties, supported by government regulation, seemed to be working after the collapse of Warranty Holdings a decade ago. But then in quick succession came two more failures: Online motor trader Autoquake in 2011, followed a year later by breakdown insurance firm Motorcare Elite. Even cars still under manufacturer warranty came in for some bad publicity when Saab went into receivership two years ago.
Autoquake’s collapse after six years of trading was especially damaging because it exposed a gap in funds that were supposed to be ring-fenced. A portion of revenue set aside to cover non-insured warranty claims was seized by administrators, leaving more than 400 claimants potentially out of pocket and generating a stream of grievances on internet motoring forums from other policyholders.
In the event, Car Care Plan, which managed the claims, agreed to cover the amount in the fund at the time Autoquake went under – around £350,000.
But the episode had another knock-on effect. Autoquake and CCP were subscribers to the SMMT’s code of practice on warranties and Autoquake’s policy handbook stated that, as part of this code, non-insured claims were protected.
It prompted the Society’s Motor Codes subsidiary to withdraw the code and replace it with another, introduced last June. It joins other codes covering new car sales and repair as part of the industry’s initiative for self-regulation and embraces both non-insured products and those subject to Financial Conduct Authority (FCA) regulation.
However, instead of the original assurance of protection for non-insured cover, the revised code states: “Should the retailer of a non-insured product cease to trade, it is possible that the product will no longer be valid.”
But, in an attempt to bolster credibility, it also says that subscribers “will take reasonable steps”, supported by a yearly review, to ensure that its retail partners are credit worthy. These amendments will also be featured in updated policy documents.
AM magazine Oct 2014
***
Service advisers the 'kingpins' of aftersales
The quality of manufacturer-backed technician training and
diagnostic equipment is largely taken as ‘a given’ in a franchised dealer’s
service, maintenance and repair (SMR) business.
So where is the potential weak spot? Step forward all those
on the service desk. You have been singled out as arguably the most important
component in aftersales. Get something wrong and there’s a risk of the workshop
not achieving a satisfactory fix on a customer’s car - and that could have a
knock-on effect on trust, loyalty, CS performance and ultimately dealer profit.
Mazda’s aftersales director David Wilson-Green said: “In the
constant search for improvement, the focus tends to be on people rather than
process. When customers walk into service reception the first person they meet
is expected to be good at admin and sales, with technical knowledge and the
ability to listen, question and empathise. And their pay doesn’t always reflect
these skills.”
Malcolm Miller, managing director of training and
development provider RTS, agreed, describing service advisers as “kingpins”,
but added: “It’s not just a question of
pay, but recruitment. Having a former technician on the desk can carry the risk
of the customer being blinded with techno fog.
“While advisers need some technical knowledge, a genuine
desire to help people scores higher and their main strengths should be in
customer handling, building trust and confidence. Trust builds loyalty and
loyalty builds profits.”
Extract from AM magazine Aug 2014
***
Used ‘Book’ values overtaken by daily updates
What have team sports like football and rugby got in common
with used car sales? Quite a lot, according to information specialist Tim
Marriott, who looked at how data tracking is used to monitor team and
individual player performance during a game and compared it with statistics
generated by every used vehicle advertised online.
“Just as a player’s fatigue levels can be monitored by
measuring total distance covered, average sprint distance and top speeds, so
the online consumer is leaving a trail of data about what vehicles they are
looking at - every competitor’s stock list, price changes and days in stock can
be tracked in real-time, said Marriott, senior product manager with data
analytics company Deltapoint.
Using information from parent company Autotrader –
including analysis of more than 3m
advert hits - Deltapoint’s
i-Control stock management system identifies what’s hot and what’s not in the
used car market with a star rating linked to postcodes, along with daily
updates of trade and retail values.
As well as pulling in Autotrader’s website search activity,
it also incorporates information from BCA’s fleet and lease databank.
BCA meanwhile offers Dealer Pro to help dealerships manage
vehicle appraisals, reflecting the cross partnerships of system providers.
“While the fundamentals of purchasing have not changed,
information is now much more transparent and dynamic,” said Marriott. It’s yet
another example of the way the internet has revolutionised trading, and
Marriott pointed to the effect this has had on traditional printed sources,
commenting: “Dealerships now have to manage a car throughout its sale life with
daily information rather than monthly books.”
Even ‘Black Book’ publisher CAP acknowledges this, issuing a
warning earlier this year that its April edition had been “rapidly overtaken by
a dipping market trend”.
It’s to overcome the problem of ‘catch-up’ that CAP, along
with its main book rival Glass’s, offers the option of a ‘real- time' valuation
service.
With sites in Surrey, Sussex and Kent representing eight
franchises, Lifestyle Europe has dispensed with paper valuation, opting for
systems ranging from CAP linked to ADP’s Drive dealer management system to
i-Control. “Website clicks on our stocklist where there is no follow-up usually
indicates that the price is too high or the spec is wrong,” said group sales
director Paul Murrells.
Each site is responsible for its own stock, reporting weekly
to head office on sales. “Prices tend to
be influenced first by the local market, then regional, then national, chipping
down until there’s a sale, with a stock turn of once a month.”
Murrells stressed the importance of “keeping over-age
vehicles under control”, with auction or trade disposal after 90 days. Part
exchanges with “low desirability” tended to be traded on from the outset.
Daren Wiseman, valuation services manager at Manheim
Auctions, said that irrespective of data-driven systems or a more manual
approach, the days of relying on “gut instinct” alone were long gone.
“Most dealers review
their stock – and that of their local competitors – on a daily basis to ensure
they are priced competitively and focused on the most desirable spec.
“The flexibility to make a tweak to pricing and marketing
can be all the difference between a profit and loss.”
Deltapoint monitored price changes on 2.5m vehicles in the
£8 to £9K range and found that 10 per cent were reduced by £500 and five per
cent by £1,000. “That’s like knocking £25,000 off a £250,000 house because it’s
not selling, but small, incremental movements can make a difference in consumer
perception of good value for money,” said Marriott. “Even a reduction of, say,
£67 could prompt a move in best value from 10th to fourth.”
Location, along with spec, also had a part to play, with
Marriot citing a recent example of i-Control’s star rating: A 13 plate 1 Series
BMW with basic spec rated 1.5 in Edinburgh, but 4.3 in Glasgow.
Guy Thomas, BCA’s head of product development, also referred
to location when pointing to Dealer Pro’s ability to identify cars in one
dealership that may be of interest to another within the same group. “There is
the option to ‘buy’ these rather than sending them to auction – what is wrong
for one geographical location may be perfect stock for another.”
Thomas said the dealer could even retain the vehicle on the
forecourt, while consigning it to an ‘offsite’ sale at BCA.
Philip Nothard, CAP’s retail and consumer editor, said in
pre-internet days dealers felt fairly safe in working to a 45-60 day review of
stock, but now there was “more of a grey area”, especially with
difficult-to-sell cars. “Instead of sending them to auction, perhaps they
should consider whether it’s in the right location in their network, or on the
right website. Even a move on the forecourt with a ‘special offer’ sticker can
make a difference.”
Murrells said
Lifestyle’s presence on a series of websites, from Autotrader to eBay,
generated more “out of territory” sales. “Being near Gatwick, it’s not unusual
for us to pick up prospective customers from as far afield as Scotland,
Northern Ireland and Cornwall.”
Nothard pointed to the downside of this over more localised
custom, explaining: “They are influenced by price and price alone and are
unlikely to return.”
Chris Green, who sold
his Sky Ford business in Hertfordshire last year to Hartwell, said that even
allowing for reconditioning and marketing costs, margins on used compared with
new can be four to seven times larger, and viewed disposal outside the franchised
network “as a last resort”. He added: “There aren’t many cars that just refuse
to sell, and even if that means you make a small loss, there is still money to
be made on finance, service plans and extended warranty.”
Paul Murrells said some vehicles “can tick all the right
boxes and still stick, but generally the better the spec, the better the price,
especially with 20K mileage or less”.
For Green “there are those lovely cars – good condition, one
owner, full service history – where it’s maybe worth paying over book value to
secure a new car sale”. Like the mix of franchised and non-franchised stock, he
said dealers should consider “a permutation of punches” to maximise
opportunities.
Nothard said that although factors like manufacturer
incentives and dealer standards affected the ratio of franchised to
non-franchised stock, “dealers can’t afford to have an empty space on the
forecourt or website because it can mean a lost profit of, say, £1,200 on every
stock turn”.
Murrells said Lifestyle’s biggest challenge was obtaining
good quality stock. “Best source is part exchange, but customers are now
holding onto their cars for longer, typically four to five years.”
Nothard said that, depending on market conditions, dealers
were now more selective on buying at auction. “Whereas at one time it may have
been one in five, it’s more likely to be one in 20.”
Though acknowledging the benefits of new technology, Green
said: “At the end of the day, there are traditional values – offering quality
checked cars where the ‘history is no mystery’ to give customers peace of
mind.”
Murrells said: “It’s wise not to become too reliant on
systems; you have to combine this with experience,” with Wiseman describing it
as “a healthy dose of industry knowledge”.
Accurate weather forecasting may come in handy, too, with
Nothard recalling: “A lot of dealers were caught out by SUV demand during the
winter of 12-13, with these models attracting premium prices. So this time
round, they bought early in expectation of a repeat....”
Automotive Management June 2014
***
'Backstop' option for parts sales
In an ideal franchised world, dealers would regard parts mainly for use in their own service bays and bodyshops.
But if they can’t reverse the loss of out-of-warranty cars to independent garages for maintenance and repair, at least they have a backstop option – selling parts to those garages.
Ridgeway Group has three BMW outlets in its brand portfolio that turn over a combined £10m year in parts, most of it generated by trade sales. At Hook, where 70 per cent of its £5m revenue comes from external customers, parts manager Toby Cartell said: “A local independent will typically spend £10,000 to £15,000 a month with us. It’s almost the opposite of the traditional practice when most parts were for internal need and the dealer had a small retail presence.
“As much as VMs want to see cars kept within their networks, they realise it’s not happening and this creates an opportunity for dealers to engage in wholesale, encouraged by manufacturer bonuses.”
He added: “The key to wholesaling is to gain a real understanding of a customer’s requirements, almost to the point of being in their workshop. It’s about good communication – and a critical aspect of that is having the right people on the phones – and delivery.
“It’s no good talking about bundling, discounts and so on if you haven’t got the infrastructure to deliver what you promise when the customer needs it.”
Infrastructure is an issue picked up by industry consultant Karl Davis. He pointed to the stiff competition from “well-resourced” independents like Euro Car Parts and Andrew Page, who between them operate through more than 200 branches. “From a logistical point of view, they score in heavily congested areas. Selling parts for every brand, they can do multi drop-offs. Single brand is more of a problem; a couple of miles can take 45 minutes for one drop-off.”
Davis, managing director of Coachworks Consulting, said that franchised outlets had an advantage in that they could supply a wider range of stock for their specific brand, including ‘captive’ parts, electronic control units, for instance. “These tend to be less price sensitive than, say, a headlamp lens where you may get the same production line product, with one being up to three times more expensive than the other.”
For most customers, though, delivery scored over price. “There are circumstances where you can’t anticipate parts requirements, vehicle health checks and MoTs, for instance, where ease of sourcing and speed of delivery is of the essence,” said Davis.
Another consultant, Toby Proctor from Trend Tracker, said: “It makes sense to have a trade parts division because you have the stock anyway, and having (internal) aftersales to support the business is less of a given now. But margins aren’t terrific and that needs to be weighed against the overheads – the cost of employing the man in the van.
“Dealers also need to ascertain whether there are enough independents in their locality with whom they can build a relationship – technical support is a significant part of this.”
Proctor pointed to Pendragon’s Quickco and Lookers’ FPS as examples of how franchised groups could rival the major independent parts distributors and how the VMs – notably Volkswagen Group’s TPS network , operating through selected VW franchised outlets – were also a force to be reckoned with.
“TPS was a smart move to compete against the likes of Euro Car Parts, albeit in a more specialised sector of the parts business,” said Proctor.
Ideal world versus real world prompted Graeme Potts, CEO of the Eden Group, to comment: “I won’t hide the fact that it’s our preference to service as many of our own vehicles as we can. But to retain customers further into the vehicle age range, we have to be seen as a repository of great value, not just on price but on the whole service proposition because the difference between franchised networks and good quality independents is now so narrow as to be scarcely perceptible.
“There are substantial opportunities for parts wholesaling, third party fleet business, for example, so clearly we want to supply this need and our largest client base is independent service repair and bodyshop.”
With 10 dealerships, most of which are which are Vauxhall/Chevrolet, serving the Thames Valley, South Coast and South Devon, Eden has 20 vans and four scooters to deliver parts both to its own workshops and trade customers. The liveried scooters are deployed at Reading, Bournemouth and Exeter to counter traffic congestion within a five-mile radius. “Our infrastructure allows following day, or even same-day, delivery to locations as far apart as Exeter and Camberley,” said Potts.
Eden’s overall parts operation generates £12m a year, with Potts reporting that although margins vary from branch to branch, “it’s fair to say we are on the right side of the 20 per cent industry return.”
That’s a generous percentage compared with new car sales, but as Toby Cartell points out, the wholesaling aspect of it is not always that clear cut. “If you have dealers representing the same brand in a limited geographical area, all competing for business to maintain their VM bonuses, it creates a bit of a viper’s nest. Discounting is tempting, so margin erosion is always a danger.
“Another challenge is 30 to 45-day credit exposure and you need sizeable group resources behind you to cover that. In my 10 years in the business, I’ve known around half a dozen independent garages to go under without warning.”
A further recurring them is the complexity of the parts range, with Ben Conn, parts depot director at the Swansway Group, commenting: “A car can have 15 different types of ECU for one model year.”
Allied with this is provenance. Brian Spratt, chief executive of the Independent Automotive Aftermarket Association, said: “The logo on the box is a presumption of quality, but one VM sells some parts in plain boxes with just the part number and another sells an oil that’s not approved for use on its own vehicles. It’s an unregulated market with everyone flogging bits to one another at silly prices.”
He said the situation was not helped with the Block Exemption change in the definition of ‘matching quality’ from the standard of parts fitted on the production line to those fitted by the VMs’ franchised networks. “We want to see a more rigorous quality inspection regime,” he added, while Toby Proctor pointed out a further complication - vehicle recalls where a build part had to be replaced.
It’s an issue that OE producers are trying to address with the setting up of the Original Equipment Suppliers Aftermarket Association. Its chairman Nigel Morgan, who is managing director of Schaeffler, explained: “VMs and original equipment suppliers have to look at their programmes and what they are selling.
“It’s not necessarily OE, they could have second-line product. That doesn’t make it poorer quality, but our message to the aftermarket is that where parts are marketed as ‘OE quality’ there needs to evidence to back that up.”
Morgan added: “If no one makes a stand, the market falls to the lowest common denominator. In our attempts to demystify this whole subject, we hope that people can make an informed choice and, at the same time, realise that the price difference between OE and non OE is often not that great.” It’s a point echoed by Toby Cartell, who said: “VMs are trying to re-educate independent garages that their parts may not be as expensive as they thought.”
According to one auto business report, vehicle manufacturers’ attempts to boost parts sales with cheaper, second-tier products for older cars may have damaged brand value.
The report from Impetus Automotive is intended to “highlight the benefits and opportunities of maximising the core brand through a review of current parts usage and making price adjustments”.
Operations director Andy Mills said: “Our research showed that what began as a strategy to reverse declining parts sales might actually accelerate the process – and damage brand identity at the same time.”
Automotive Management Dec 2013
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Management training: Conflict over 'one size fits all'
Does this sound familiar? Line manager Joe will be absent for a couple of days. The timing could have been better, but there’s no choice – he’s needed for some brand training, along with counterparts from other dealerships which have the same franchise. Assignment completed, the dealers can tick another box on the franchise agreement.
It’s what one HR manager describes as “the sheepdip exercise – training is carried out, but is it appropriate for that particular individual?”
Another likens it to a “one size fits all” approach, with an assumption that dealer and manufacturer training templates are correctly aligned.
But there can be a perceived mismatch between provision and need and this is just one of a series of challenges facing motor retail in its attempts to improve the calibre of management skills and leadership.
AM magazine May 2013 (see archive for rest of story).
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Auctions and remarketing: Smartphone boost for online dealing
If internet shopping can topple high street chains like HMV and Jessops, it’s tempting to ask motor dealers looking to replenish or dispose of stock: Why go to an auction hall? All the processes – from vehicle condition reports to the bidding itself – are now possible not just through a desktop PC; online business is being downsized to palm-of-the-hand kit.
Auction giants BCA and Manheim, along with SMA Vehicle Remarketing, are poised to launch their hand-held services, while Eastbourne Car Auctions activated its version at the end of last year.
But auction providers believe there will a continuing need for the ‘physical’ advantages of halls. And ironically it’s communication tools like smartphones that will help to ensure their survival.
Jon Mitchell, managing director of Eastbourne Car Auctions, said latest technology offers traders a ‘belt and braces’ benefit, complementing rather than supplanting, halls. Mitchell, whose company has a joint venture role with the recently launched online remarketing company Carcom, explained: “Typically, you will see buyers at auctions equipped with smartphones and iPads looking at a vehicle and comparing it with a condition report on screen. Perhaps the report highlights some minor damage they haven’t noticed. ‘OK,’ they’re saying, ‘let’s have a closer look at that,’ while they’re flipping between Glass’s and CAP for a valuation. Plus, you get buyers who give a vehicle the once over and then sit in the canteen because they don’t want others to see they are bidding.”
Commented Tony Gannon, communications director of BCA: “Auctions are not just about selling, but the logistics of vehicle movement, storage and prep. A dealer gets the trade-in on Saturday and wants it gone on Monday. Online bidders still want the reassurance of seeing other bidders in the auction hall.”
Gerry Lynch, chief executive of Carcom, added: “Like any other business, there is always a need to get out of the office and make human contact. And auction halls give you the opportunity for some tyre kicking, especially with older vehicles.”
AM magazine Feb 2013 (see archive for rest of story).
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‘Storytime’ tip for oils and lubes
Service advisers should ‘tell a story’ when it comes to selling oil. Not in a fictional sense, but as a means of increasing a car owner’s awareness of the value of a particular brand.
As Castrol’s Nigel Head explained: “Rather than just hand the customer the service invoice and ask for method of payment, it’s important to explain what’s been done – especially when it comes to an oil change. So the conversation (at a BMW dealership)should be along lines ‘we’ve drained off your old oil, replaced the filter and re-filled with Castrol Professional, the only oil recommended by BMW...’.”
Head, Castrol Professional OEM and franchised workshop marketing manager, added: “From a marketing point of view, oil is in the low interest category. There’s a vacuum of knowledge, so the temptation is to go for lowest price. Hence the need to build a story round the product’s refinements. Other oils may meet manufacturers’ spec, but there are degrees of tolerance. Castrol Professional is endorsed by no fewer than 10 car manufacturers.”
AM magazine
see archive for rest of story
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essed in a black cloak and top hat and with a wave of his magician’s wand, Tony Ball revealed the Mini to the motoring world on Aug 26, 1959, with the theme ‘wizardry on wheels’. But it was not just the car, emerging from a giant top hat, that astonished the audience at BMC’s factory in Longbridge, Birmingham. To demonstrate just how much could be packed into such a small space, Ball also conjured up three men, two women (one of whom was his wife with their infant son), two dogs and an assortment of luggage.