am – automotive management september 2015 preview

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AUTOMOTIVE MANAGEMENT www.am-online.com September 2015 £8.00 BUILD YOUR F&I M US C LES Grow your dealerships’ revenues with our special finance and insurance supplements / P39 HONDA HR-V / P60 Will crossover deliver on Honda’s ‘year of change’? Twenty-six categories, three new awards, one new judge, and 1,200 of the industry’s brightest and best. Entries for this year’s AM Awards are open now / P20 Boost retention with manufacturer data Find your renewal ‘sweet spot’ 2.25KG Protect your GAP performance Grow new revenue channels 1KG Fine-tune your credit processes Tone your training regime 1KG

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A selection of pages from the September 2015 issue of AM – Automotive Management magazine.

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Page 1: AM – Automotive Management September 2015 preview

AUTOMOTIVE MANAGEMENT

www.am-online.com September 2015 £8.00

BUILD YOUR F&I MUSCLES

Grow your dealerships’ revenues with our special finance and insurancesupplements / P39

H O N D A H R-V / P 6 0

Will crossover deliver on Honda’s ‘year of change’?

Twenty-six categories, three new awards, one new judge, and 1,200 of the industry’s brightest and best. Entries for this year’s AM Awards are open now / P20

● Boost retention with manufacturer data● Find your renewal ‘sweet spot’

2.25KG

FORMULA

POWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWERPOWER● Protect your GAP performance

● Grow new revenue channels

1KG

ENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERENHANCERINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCEINSURANCE

FORMULA

● Fine-tune your credit processes● Tone your training regime

1KG

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FORMULA

FCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCEFCA COMPLIANCE

Page 2: AM – Automotive Management September 2015 preview

For further details, please visit www.amdigitaldealer.co.uk

DIGITALDEALER CONFERENCE 2015

Increasingly a customer’s journey to your dealership is digital whilst strengthening your

relationship to retain their loyalty is also firmly rooted in the virtual domain. Meanwhile,

your business reputation is likely to be at the behest of online customer reviews and social

media comments and your own social media activity needs to engage and entertain.

In a world where the digital and physical is colliding and where seamless integration of the

two now defines the most successful retailers, digital permeates practically every layer of

your business and your customers’ experience.

You don’t need a conference to tell you digital rules, but you do need the insight, new

thinking and latest innovations to keep you in play and finely tune your winning strategy.

The CustomerExperience –Online and In-store

Analytics& Data

Content Strategy

Tuesday 15SeptemberSilverstone Wing,Silverstone, NN12 8TN

Drivingcustomersfrom your siteto your site

Headline sponsors: Masterclass sponsors:

29

Page 3: AM – Automotive Management September 2015 preview

The editorial teamEmail: [email protected] Website: www.am-online.comTwitter: @amchatter LinkedIn: am-online.com/linkedin

Despite sales concerns, dealers are adapting well to compliance changes

Jeremy BennettAssociate editor

Tim RoseManaging editor

Stephen BriersEditor-in-chief

WELCOME

[email protected] am-online.com/ami/am-online.com/linkedinam-online.com @amchatter facebook.com/automotivemanagementUK

he motor retail industry is having to adapt quickly to changes insisted upon by the Financial Conduct Authority. From September 1, dealers may no longer sell GAP insurance while the customer is signing the deal on their next car and the majority in our AM Poll (page 48) predict this will affect GAP sales.

Yet finance and insurance will remain an integral part of the car sales process. We have all seen how monthly-payment PCP and PCH deals have convinced more consumers they can afford a new car, or a better used car, and our PCP insight (page 39) shows finance providers are working hard with dealers and manufacturers to help dealers win repeat custom.

Despite the challenges of being under the FCA’s eyes, dealers are being pragmatic in shouldering the weight of the regulation. Feedback from major groups (page 43 and 46) suggests they prepared well for regulatory changes, while smaller dealers are also getting to grips with it, helped by support from third-party suppliers.

This issue marks the launch of this year’s AM Awards, motor retail’s spotlight on the best in the industry. You can enter until October 30, so turn to page 20 for a full list of categories and let AM recognise and celebrate your success.

O U R E X P E R T C O N T R I B U T O R S

T

AM Digital Dealer ConferenceBook tickets today at:amdigitaldealer.co.uk

Silverstone,Sept 15, 2015

am-online.com September 2015 3

Prof Jim SakerAs director of the Centre of Automotive

Management at Lough-borough University’s Business School, Saker is a key figure behind the drive for manage-ment recognition and skills in the motor retail sector.

This month (p52), he says manufacturers and dealers must act together on training and recruitment poli-cies to attract young people to the motor retail sector.

Philip NothardHe is retail and consumer valuations

editor at CAP, which he joined in 2010 after two decades working in motor retail, culminating in running dealerships for European Motor Hold-ings, Lythgoe Motor Group and Arnold Clark. In this issue (p33), he asks if PCPs are rendering the 10-year-old car worthless?

Page 4: AM – Automotive Management September 2015 preview

SERVICEPLANSSERVICEPLANS

Your news

7 News digest Marshall’s record interim results;

acquisitions for Perrys, Pentagon and John Clark; FCA begins review of staff remuneration and incentives; and dealers failing to spot faults, say one third of car owners.

Market intelligence

13 Dealer profitabilityMonthly profits show first year-on-year rise of 2015 with average dealership making £43,000 profit.

14 Is the MPV market dying? The C-segment MPV sector has plunged 25% in the year to date.

15 New car registrationsA total of 178,420 cars were regis-tered in July – up 3.2% on the same month last year – while registrations in 2015 so far have risen 6.5% to surpass 1.5 million.

27 ŠKODAWORKING HARD TO IMPROVE DEALER ATTITUDES

4 September 2015 am-online.com

18 Used cars Average monthly used car wholesale

values fell again in July after two months of increases.

AM Awards 2016

20 Entries open now Three new categories take this year’s

awards total to 26.

Analysis

27 Škoda gets back on track Despite its growth, overcomplicated

offers and sluggish reactions hurt Škoda in the eyes of its dealers last year. Brand director Alasdair Stewart says that is all behind them now.

33 Is it time for another scrappage scheme?

CAP’s Philip Nothard examines whether PCPs have rendered the 10-year-old car worthless.

In this issue September 2015

35 SERVICE PLANSTHE BENEFITS OF A DEALER’S BRAND

Insight

35 Dealer service plans aid customer retention

Dealers who offer their own service plans have a distinct advantage over those who only sell manufacturers’ products.

39 How to maximise your repeat PCP sales

Manufacturer data can help dealers spot the right time to target renewals.

43 Dealers face their fears on new GAP insurance rules

New GAP guidelines from September 1 raise concerns over profits.

46 Coping with the FCA consumer credit regime Eight months on, the dealers we spoke to seem unfazed by changes to consumer credit law.

48 AM poll A majority of dealers fear that their

sales of GAP insurance will drop after new FCA rules come into effect.

Page 5: AM – Automotive Management September 2015 preview

SERVICEPLANSSERVICEPLANS

For the latest motor retail industry news, visit am-online.comSign up to get AM news daily by email: am-online.com/newsletter

am-online.com September 2015 5

AM Awards ........................................................20

Ancaster Group ..................................................9

ASE Global .....................................................7, 13

Barnetts ..............................................................10

BCA .......................................................................18

BMW Group Financial Services ....................9

Caffyns ..................................................................9

CAP .......................................................................33

Car Care Plan ...................................................43

Citygate ................................................................46

Crewe Seat.........................................................56

Edynamix ............................................................36

Emac ....................................................................36

Endeavour Automotive ....................................9

FCA .........................................................................9

FLA .......................................................................13

Ford ........................................................................9

Glyn Hopkin........................................................10

Honda ...................................................................60

Ivendi .............................................................39, 43

John Clark Motor Group .................................9

Lookers .................................................................9

Manheim .............................................................18

Mann Island Finance ......................................40

Mapfre Abraxas................................................43

Marshall ................................................................7

Mercedes-Benz Retail Group ...............41, 43

Motors.co.uk ........................................................7

NAMA ...................................................................18

NARS ......................................................................7

Norfolk Motor Group ......................................39

Pendragon ............................................................9

Pentagon Group .................................................9

Perrys ....................................................................7

Škoda ...................................................................27

SMMT ...................................................................14

Specialist Vehicles .............................................7

Sturgess Motor Group ...................................46

Swansway Group .....................................46, 56

Sytner ...................................................................46

The Warranty Group .......................................35

Vantage Motor Group .....................................10

D E A L E R S A N D S U P P L I E R S I N T H I S I S S U E :

HONDA HR-V‘OUR MOST IMPORTANT LAUNCH THIS YEAR’

52 Jim Saker’s view from the business school

To solve motor retail’s recruitment crisis, manufacturers and dealers must work together.

54 ‘Time for dealers to come clean on commission’

US-style transparency on profits may reassure customers, said panellists at this year’s AM Dealer Recommended Round Table.

56 AM Awards winner: Best dealership (Crewe Seat)

Swansway took the failing Crewe Seat and in three years profits soared from £1,472 to £384,000.

Showroom

60 Honda HR-VHonda UK is pinning its hopes on a new compact crossover to bring a volume boost to its franchised dealer network.

62 Volkswagen PoloAM welcomes the in-demand super-mini, VW’s second most popular line after the Golf, to its long-term fleet.

65 Škoda OctaviaŠkoda’s recent first place in a JD Power reliability study will have a concrete effect at dealer level, says the brand.

66 Mazda 3A hiccup in booking an annual service by phone may explain the drive towards online service booking.

Coming soon

70 In October’s issue – published September 25The hottest cars heading to your showrooms from the Frankfurt Motor Show; face to face with Porsche Retail Group director Ade Smith; and a look at how changes in consumer behaviour will affect sales.

43

39

GAP COMPLIANCECONCERNS REMAIN OVER PROFITS

PCP RENEWALSHOW CARMAKER DATA CAN HELP

60

Page 6: AM – Automotive Management September 2015 preview

am-online.com September 2015 7

F O R D A I LY N E W s , V I s I T: a m - o n l i n e . c o m

T O G E T A M ’ s F R E E D A I LY N E W s L E T T E R , V I s I T: a m - o n l i n e . c o m / n e w s l e t t e r

F O L L O W A M O N T W I T T E R : @ a m c h a t t e r

NEWS DIGEST9 Missing faults

Car dealers are failing to identify faults in their cars, according to a survey of 61,000 car owners.

FcA bonus reviewThe FCA has begun a review of staff remuneration and incentives at firms offering consumer finance, such as car dealers.

10

T h E N E W s Y O u c A N ’ T A F F O R D T O h A V E M I s s E D

M A R s h A L L

Marshall’s profits rose 9.8% to £10.5m in first half of 2015half-year revenues at Marshall Motors increased 16% to £632.5 million while profit before tax rose 9.8% to £10.5m.

New car volumes rose by 5.9% like-for-like and 10.4% overall at 18,195 units, while used car volumes were up 2.7% like-for-like and 11.8% overall. Aftersales revenue was up 9% overall, and 1.7% like-for-like.

Gross margin also improved significantly, up to 44.8% from 43.2% in the same period last year. Marshall’s chief executive Daksh Gupta said the increase was partly due to “workshop efficiency and productivity improvements”.

Gupta said he was confident the company was not simply riding the wave of the prolonged period of strong growth in the new car market.

Marshall completed an IPO in April. It has £39.9m in cash reserves, which Gupta said would be used to

“invest in the business”, in particular a new Audi 17-car ‘terminal’-style showroom in Exeter and Jaguar Land Rover businesses in Cambridge and Ipswich. Those are part of the reorganisation of the JLR Suffolk market area and the relocation of the group’s existing Halesworth Land Rover and Ipswich Jaguar dealerships to a new shared site. The three sites are expected to be open for business in the second half of 2016.

Marshall is also developing a new, fully responsive website, for launch in the first quarter of 2016. It said the move was prompted by the growth in traffic from mobile devices to a point where it exceeds traffic from desktop computers.

Marshall will also roll out a tablet-based enquiry management system for showroom staff, aimed at getting them out from behind their desks and improving customer experience.

c A R h A c k I N GVictims of keyless car thefts should sue car manufacturers who kept quiet about flaws in remote locking systems and return the vehicles to dealers, Nick Freeman, the lawyer known as Mr Loophole, has said. Last year, keyless vehicle thefts accounted for 40% per cent of all cars stolen in London .

s p E c I A L I s T V E h I c L E sSpecialist Vehicles in Plymouth has been appointed as a new Subaru-approved dealer for Devon and East Cornwall.

N A R sNationwide Accident Repair Services (NARS) has agreed a deal to buy independent bodyshop chain Just Car Clinics for £13.77 million.

M O T O R s . c O . u kMotors.co.uk has launched a new monthly payment search functionality and is promoting it to consumers with a television campaign this month. The search by payment function-ality, which launched at the end of July, allows consumers to refine search results to show only cars that meet their financing needs in terms of deposit and monthly payment.

I N B R I E F

A s E G L O B A LDealer profitability firm ASE Global has bought IT company Edentity Software Solutions. Edentity will stay at its offices in Austria, but Manchester-based ASE said it will integrate its technology into ASE prod-ucts. Edentity’s systems include used vehicle manage-ment, dealer benchmarking and sales and marketing appli-cations for commercial vehicle manufacturers.

p E R R Y sperrys Motor sales has acquired Gk Group. perrys already operates 46 showrooms in 26 locations across the country and the addition of Gk Group brings the total to 53 dealerships.

Chesterfield-based GK Group runs five Ford show-rooms, one Mazda showroom, one Kia showroom and an accident repair centre in Worksop. The company employs 400 members of staff and has a

turnover of about £175 million. GK Group was owned by George and David Kenning and their families. George and David will be retiring after the sale and Paul Rogers, the GK managing director, will be joining Perrys.

George kenning said: “Perrys are a strong, highly successful, privately owned business with a reputa-tion for excellence. We are delighted that this sale offers our staff enhanced security and better oppor-tunities for the development of their future careers.”

Page 7: AM – Automotive Management September 2015 preview

NEWS DIGEST T O R E A D A M ’ s D A I LY N E W s L E T T E R , V I s I T: a m - o n l i n e . c o m / n e w s l e t t e r

wp E O p L E N E W s

M A R k h A R R I s O NMark Harrison, finance director at car dealer group Caffyns, has announced plans to retire on July 31, 2016. He will continue in his present role until then. Caffyns has begun the search for his successor.

J A M E s B R E A R L E YJames Brearley, managing director of Pendragon’s Strat-stone premium division and Chatfields truck outlets, left at the end of August after 24 years with the company.

s T u A R T c O L E M A NEndeavour Automotive has recruited Stuart Coleman as group operations director. Coleman was previously Jaguar Land Rover brand director for Jardine Motors Group.

I A N c A R L I s L EBMW Group Finan-cial Services has appointed Preston Rogers as general manager of group

brands in the UK. Rogers moves from BMW Group Financial Services South Africa and takes over from Spencer Halil, who has become director of Alphera Financial Services.

FO R DFord of Britain has reshuffled its senior management after the appointment of Andy Barratt as chairman and managing director in July.

Kevin Griffin fills the sales director position left vacant by Barratt. Lisa Brankin is director of marketing, moving from head of dealer operations and succeeding Anthony Ireson, now director of marketing communications for Ford of Europe. Paul Singleton is taking over Brankin’s role as head of dealer operations.

p E N TA G O Npentagon Group has acquired five dealerships owned by the co-operative Motor Group on Tritton Road in Lincoln.

From August 1, Pentagon took over the Citroën, Dacia, Jeep, Mazda, Renault and Vauxhall businesses on the two-acre site, taking its total number of franchise points to 30.

The showrooms, located around a mile from Lincoln city centre, have room for about 200 used vehicles. It is well positioned on a busy road close to the town’s Sainsbury’s supermarket and a popular retail park.

pentagon chairman Trevor Reeve said: “With these acquisi-tions, not only are we adding more businesses to our motor group, but we have also expanded the franchises we represent with the addition of Mazda, Renault and Dacia for the first time”.

The news follows Pentagon opening a new Vauxhall dealership on the same site in the city in July.

Privately owned Pentagon’s turnover in 2014 was £440m, and it expects this to grow to about £500m in 2015.

J O h N c L A R kJohn clark Motor Group has acquired the Frank Ogg Land Rover dealership based in Elgin, scotland.

The deal supports John Clark Motor Group’s luxury brand strategy and complements its established Land Rover dealerships based in Edinburgh, Perth and Cupar, all operating under the trading name of Pentland.

The Frank Ogg business will become part of John Clark’s Jaguar Land Rover division and will be renamed Pentland Land Rover Elgin with immediate effect.

There are 18 employees based at Elgin and they will join 1,100 colleagues who are already working for John Clark across a brand portfolio of Jaguar, Land Rover, Audi, BMW, Seat, Škoda, Volkswagen, Volkswagen Commercials, Nissan, BMW Motorrad and Mini.

chairman and managing director John clark said: “This acquisi-tion represents another step in our growth strategy and sees us grow our relationship further with the Land Rover franchise in an area of Scotland that has long enjoyed a relationship with this fantastic brand.”

L O O k E R sLookers grew revenues 9% to £1.75 billion and profit before tax by 6% to £39.9 million in the first half of 2015.

It is its seventh successive year of profit improvement.Revenue was up 9% on 2014%. Andy Bruce, chief execu-

tive, said: “Both the motor and parts divisions have produced excellent results, with improved cash flow for the period, further strengthening our balance sheet.

“We are well placed to take advantage of growth pros-pects across all areas of the business, as well as consolida-tion opportunities in the sector. This gives us confidence that we can continue to grow and deliver improved results for the full year.”

Adjusted profit before tax increased 7% to £43.1m. Net debt fell to £38.2m from £51.9m.

Nigel McMinn, managing director, said PCP penetration at Lookers is at 78%, a 1ppt gain year-on-year. Lookers is also confident of its ability to retain PCP customers, approaching them with offers to move to a new car typically eight to nine months ahead of the end of a 36-month contract.

am-online.com September 2015 9

A N c A s T E RAncaster Group has bought the slough Nissan dealership from West London Motor Group.

The dealership’s 23 staff will join a team of more than 200 employees working across Ancaster’s seven other sites.

Ancaster has been with Nissan since it launched in the UK as Datsun in the 1970s and already operates Nissan franchises in Bromley, Eltham, Penge and South Croydon.

Two of Ancaster’s sites have recently undergone major rede-velopments to install Nissan’s new customer-focused retail concept and a similar redevelop-ment of the new Slough site will take place soon.

F c AThe Financial conduct Authority (FcA) has begun a thematic review of staff remuneration and incentives at firms offering consumer finance, such as car dealers.

The FCA said the review will cover a “broad range of consumer credit sectors and firms where consumer credit is secondary to their main business”.

“The purpose of our review is to understand the nature of staff incen-tives, remuneration and performance management arrangements in the consumer credit market. We will focus on the risks that can arise and how firms control and mitigate those risks. We will seek to examine good and poor practices,” said the FCA.

“Supervisory work that we have carried out on other issues suggested many consumer credit firms may be operating high-risk incentive schemes, which can often lead to poor consumer outcomes if not managed effectively.”

Between 2012 and 2014 the FCA and its predecessor, the FSA, found a number of high street banks and insurers had incentive schemes likely to drive mis-selling, and few had fully considered those risks or implemented controls to manage them. In some cases, the FCA identified possible conflicts of interest where managers were paid a bonus based on the sales made by staff they supervised.

Currently, the FCA is taking a desk-based review of firms’ incentive poli-cies, remuneration arrangements and controls, but from the fourth quarter of 2015 to early 2016 it plans to conduct on-site visits and more detailed testing on a selection of firms. The results are likely to be published in spring 2016.

Page 8: AM – Automotive Management September 2015 preview

Co-sponsors:

To book your place at the AM F&I Compliance Conference visit:

www.amfandicompliance.co.uk

Headline sponsors:

This year’s conference explores a wide range of F&I issues and the challenges dealers

face as well as gleaning views and best practice from the industry.

More than a year on since the Financial Conduct Authority (FCA) took responsibility for

consumer finance and with the majority of dealers now gaining full authorisation, this

conference focuses on the current F&I landscape and creating a sustainable and

profitable F&I business which meets the FCA’s ‘treating customers fairly’ (TCF) remit.

10 November 2015National Motorcycle Museum

Solihull, West Midlands B92 0EJ

Future-proofingyour F&Ibusiness

Associate sponsors:

Our conference will seek answers to questions such as:-

What are the best ways to ‘treat customers fairly’?

How do you create a culture which fits the FCA’sobjectives?

How are dealer colleagues and suppliers meetingthe challenge?

Does the traditional sales model need to evolve tobetter comply?

Have the FCA regulations resulted in a more openand transparent way to conduct business?

What are the best practices currently in operation atdealerships?

How are dealers combining compliance andprofitability?

Page 9: AM – Automotive Management September 2015 preview

market intelligence t h e n e w s i n d e p t h

14Are MpVs

facing extinction?the c-segment mPV sector has plunged 25% in the year to date.

15new cars

new car registrations in July rose 3.2% against the same month last year, to a total of 178,420 cars.

sponsored by

Monthly profits show first year-on-year rise of 2015average dealership made a profit of £43,000 in June, taking 12-month figure to £209,000

am-online.com September 2015 13

18Used cars

Wholesale values dip again after two months of increases, according to nama.

or the first time in 2015, UK car dealers have achieved a year-on-year improve-ment in monthly financial performance. however,

dealer new car sales are down 1.5% for the first six months of the year when compared with the same period in 2014, according to data providers Ase.

the average site made a profit of £43,000 in June. this reversed the recent decline in rolling 12-month profitability, which once more rose above the £200,000 mark to £209,000, said Ase.

the return-on-sales percentage remains under pressure given the increases in turnover, but the improvement in bottom-line profit was good to see, said Ase chairman Mike Jones: “the strong profitability in June was driven by the vehicle sales department and the recognition of quarter two registration bonuses.”

the high registration levels led to an increase of £15,000 in vehicle sales department gross profits, with only a £6,000 increase in expenses.

however, Jones did sound a note of caution: “some brands have encouraged dealers to boost their results in June by recognising the first half of their annual bonuses in June rather than waiting until the year end as in prior years.”

the trend of new vehicles being registered to hit targets and then being remarketed as used vehicles continued in June.

Jones said: “we saw a strong performance on new vehicle sales in the month, which are up 6% on June 2014. this is significantly lower than the sMMt-reported increase in registrations of 13%.

“Overall, for the first half of the year we saw a slight decline in new vehicle sales of 1.5%, compared to an overall increase in registrations of 7% reported by the sMMt.”

d e A l e r K p i s

Key ratio rolling rolling Benchmark 12 months 12 months Jun 2015 Jun 2014net profit as % sales 1.33% 1.54% 3.0%Overhead absorption 54.4% 56.5% 80%Used: new sales 0.90:1 0.87:1 1.5:1expenses as % gross 63.3% 61.6% 50%Sales per salesman 188 199 150Used vehicle stockturn (days) 55 55 45return on used car investment 75.8% 81.7% 100%Overall labour efficiency 82.3% 81.8% 100%Service gross profit % on labour 75.6% 75.8% 75%Service expenses as % gross 59.2% 57.2% 40%Hours per retail job card 1.62 1.65 2.5Parts gross profit 22.4% 22.3% 22%Parts expenses as % growth 44.4% 44.7% 40%Parts stockturn 7.65 7.79 8.0

Source: ASE

F

new cars bought on finance by consumers through dealerships Jun 2015 Change on 3 months to Change on 12 months to Change on previous year Jun 2015 previous year Jun 2015 previous yearValue of advances (£m) 1,400 +20% 3,860 +16% 14,984 +14%number of cars 84,526 +15% 234,114 +11% 931,439 +9%new cars bought on finance by businesses through dealerships number of cars 47,187 +25% 145,137 +23% 514,647 +16%

J U n e M O t O r f i n A n C e M A r K e t: n e w C A r s Source: FLA

Almost 85,000 cars were financed at showrooms during the month, a 15% rise over June 2014 and the strongest growth of the year so far.

the percentage of private new car sales financed by flA members through dealerships in the 12 months to June 2015 increased to a new high of 78.1%.

point-of-sale consumer used car finance volumes also continued to grow, increasing by 7% in June compared with June 2014, and by 9% in the 12 months to June 2015.

Geraldine Kilkelly, head of research and chief economist at the flA, said: “As we forecast at the beginning of the year, point-of-sale consumer car finance volumes have continued to grow in 2015, but at a slower rate than in 2014.”

f i n A n C e s tAt s

“Some brands encouraged dealers to boost results by recognising the first half of their annual bonuses in June”

Used vehicle retail sales rose 10% in June, with sales up 7% for the first half of the year.

“Used car retail profits remained strong, with us seeing no sign of panic-selling hitting residual values and driving down prices.

“the used car result shows the self-registered vehicles are being remarketed effectively, albeit we remain concerned over the level of nearly new stock still to be sold.”

Page 10: AM – Automotive Management September 2015 preview

MARKET INTELLIGENCE

14 September 2015 am-online.com

As the market moved into the traditionally slow month of August, dealers’ Q3 sales campaigns are geared up to tempt buyers ahead of the plate change.

Honda and Mini are particular stand-outs, with comprehensive manufacturer support across the entire model range and PcP deals below £170 a month for both.

The models Mini needs to shift are clearly visible when looking at manufacturer contributions against certain models. While £0 is given to the popular hatch and countryman models, the brand’s misstep with the coupé and roadster are being given a £1,250 and £800 push respectively. The models are unlikely to be replaced with next-generation versions.

The full list can be found at www.am-online.com/offers

Model Finance Deposit Term Monthly Final APR Offer type payment payment ends Honda Civic 1.6 I-Dtec SE Plus PCP £3,708.44 36 months £219.00 £9,095.05 5.90% 30/09/2015CR-V 2.0 I-Vtec SE 2Wd PCP £6,001.00 36 months £249.00 £10,478.56 5.90% 30/09/2015Jazz Hatchback 1.3 SE Navi PCP £3,459.90 36 months £185.00 £6,423.47 5.90% 30/09/2015HR-V 1.6 I-Dtec SE PCP £4,482.96 36 months £259.00 £10,112.65 5.90% 30/09/2015

Mini Cooper Hatch 1.6 PCP £2,995.83 48 months £225.00 £7,027.13 5.90% 30/09/2015Cooper Convertible 1.6 PCP £2,899.00 48 months £225.00 £6,557.88 2.90% 30/09/2015Cooper D fi ve-door Hatch 1.5 PCP £3,375.25 48 months £229.00 £7,324.20 6.90% 30/09/2015Cooper D Countryman 1.6 PCP £3,499.00 48 months £249.00 £7,650.84 3.90% 30/09/2015Cooper SD Paceman 2.0 PCP £4,449.00 48 months £255.00 £9,722.21 1.90% 30/09/2015Cooper S Coupé 1.6 PCP £4,199.00 48 months £209.00 £7,187.62 1.90% 30/09/2015Cooper S Roadster 1.6 PCP £3,899.00 48 months £239.00 £7,820.51 1.90% 30/09/2015Cooper D Clubman PCP £3,814.13 48 months £329.00 £10,376.50 6.90% 30/09/2015

Audi A1 1.4 Tfsi 125Ps Sport Manual PCP £2,761 36 months £199 £9,004 6.60% 30/10/2015A3 Sportback 1.6 Tdi 110Ps SE Technik Manual PCP £4,283 36 months £269 £11,532 5.70% 30/10/2015A4 Saloon 2.0 Tdi Ultra 163Ps SE Technik Manual PCP £4,851 36 months £279 £12,356 4.80% 30/10/2015A5 Sportback 2.0 Tdi 190Ps Black Edition Plus Manual PCP £6,810 36 months £379 £15,553 5.80% 30/10/2015A7 Sportback 3.0 Tdi Ultra 218Ps SE Executive S Tronic PCP £8,546 36 months £449 £18,439 5.90% 30/10/2015A6 Avant 2.0 Tdi Ultra 190Ps S Line Manual PCP £6,905 36 months £389 £16,073 5.80% 30/10/2015A8 3.0 Tdi Quattro SE Executive PCP £8,874 48 months £599 £17,672 4.90% 30/10/2015TT Coupé 2.0 Tdi Ultra 184Ps Sport Manual PCP £5,487 36 months £369 £15,751 6.50% 30/10/2015Q3 2.0 Tdi Quattro 150Ps S Line Plus 150Ps PCP £6,308 36 months £349 £19,134 6.40% 30/10/2015Q5 2.0 Tdi Quattro 190Ps S Line S Tronic PCP £6,785 36 months £459 £21,314 6.40% 30/10/2015Q7 3.0 Tdi Quattro 272Ps S Line Tiptronic PCP £9,058 36 months £599 £31,954 6.40% 30/10/2015

Kia Picanto 5dr SR7 PCP £3,278 25 months £75 £4267 0.00% 30/09/2015Rio 5dr SR7 PCP £4,079 25 months £85 £5325.25 0.00% 30/09/2015Venga SR7 PCP £4,587.3 25 months £119 £5401.75 0.00% 30/09/2015Pro_cee’d SR7 PCP £4,960 25 months £115 £6430.25 0.00% 30/09/2015Cee’d 5dr SR7 PCP £5,295.8 25 months £119 £6498.25 0.00% 30/09/2015Sportswagon 5dr SR7 PCP £5,572 25 months £135 £6838.25 0.00% 30/09/2015Carens 5dr SR7 PCP £6,220.8 25 months £189 £6838.25 0.00% 30/09/2015

Top finance offers for retail buyersFiN A Nce oFFer S For a searchable list of manufacturers’ finance offers, go to www.am-online.com/offers

The SUV segment is flourishing in 2015. For many, it is unsurprising given the number of brands that have launched new small and medium crossover SUVs. Mazda’s cX3 has just gone on sale, Honda’s Hr-V will be in showrooms by the time you read this, and real momentum has been made by the Vauxhall Mokka, renault captur and ever popular Nissan Qashqai.

According to SMMT registrations data, the B-segment SUV market, including models such as the captur and Mokka, had grown by 42% year-on-year by the start of August, with 107,423 registrations. And the c-segment SUV market, home to the Mazda cX-5 and Nissan Qashqai, had risen by 27% to 146,156 units. Together those segments account for more than 16% of the new car market in 2015.

This is great news in a still-growing market. However, the SMMT data also shows that the MPV market is in crisis, as

i S T H e M P V M A r K e T D Y i N g ?

r e g i S T r AT i o N S B Y M A r K e T S e g M e N T Y e A r -T o - D AT e

2014

0 500,000 1,000,000 1,500,000 2,000,000

2015

Source: SMMT

Business 61,283

Business 65,302

Fleet 779,547

Fleet 694,365

Private 714,479

Private 700,505

consumers migrate away from their boxy, functional load-haulers to the fashionable new crossovers. A 25% plunge in the c-segment MPV sector, home to the citroen c4 Picasso and Ford c-Max, and a 21% drop in the B-segment MPV (Nissan Note and Vauxhall Meriva, for example), plus a 19% decline in the largest MPVs in the D-segment, suggests the people carrier that revolutionised family transport since the 1980s may face extinction.

Nissan Juke B-SUV up 9.8% with 23,858

registrations*

Nissan Note B-MPVdown 28.7% with 10,560 registrations*

Nissan Qashqai c-SUV up 23.8% with 38,290 registrations*

registrations*

*all registration figures are year-to-date, compared with the same period in 2014

Page 11: AM – Automotive Management September 2015 preview

16 September 2015 am-online.com

10-year market trends available: www.am-online.com/amin e w c a r r e g i s t r at i o n s

r i s e r s & f a l l e r ssmart has been pushing the value of its new forfour through the summer, with a £149 monthly payment personal contract hire deal over 48 months. the results are evident, as the brand entered the top 10 risers at seventh place in June and has already beaten Mini into sixth. the 1,239-unit rise will be welcomed by the brand’s dealer network, which has added 25 sites. come september, smart will have topped its 2014 registrations.

among the fallers, Honda is fighting its way out of the table and will steadily reduce its deficit with the new Hr-V (see page 60 for its launch report).

BRAND YTD (%)1 Jeep 217.162 SsangYong 114.183 Infiniti 108.964 Mitsubishi 106.275 Lotus 75.196 Smart 42.117 Porsche 39.018 Mini 37.829 Abarth 36.8010 MG 35.54

BRAND YTD (%)10 Honda -5.319 Fiat -5.958 Bentley -8.827 Suzuki -10.236 Alfa Romeo -11.555 Chrysler -89.174 Chevrolet -99.753 Mia -100.002 Perodua -100.001 Proton -100.00

July Year-to-dateMarque 2015 % market 2014 % market % 2015 % market 2014 % market % share share change share share change

Ford 24,115 13.52 23,647 13.68 1.98 201,265 12.94 197,201 13.51 2.06Vauxhall 16,899 9.47 18,756 10.85 -9.90 159,333 10.24 160,365 10.98 -0.64Volkswagen 15,503 8.69 14,017 8.11 10.60 135,567 8.72 124,683 8.54 8.73Audi 13,004 7.29 12,032 6.96 8.08 99,013 6.37 95,793 6.56 3.36Mercedes-Benz 10,127 5.68 8,404 4.86 20.50 84,930 5.46 72,270 4.95 17.52Nissan 9,912 5.56 10,455 6.05 -5.19 93,335 6.00 81,384 5.57 14.68BMW 9,385 5.26 9,955 5.76 -5.73 89,748 5.77 85,077 5.83 5.49Peugeot 7,077 3.97 6,845 3.96 3.39 64,414 4.14 64,273 4.40 0.22Škoda 6,576 3.69 7,588 4.39 -13.34 46,044 2.96 46,764 3.20 -1.54Toyota 6,251 3.50 5,791 3.35 7.94 60,196 3.87 56,855 3.89 5.88Hyundai 6,168 3.46 5,302 3.07 16.33 52,911 3.40 48,034 3.29 10.15Kia 5,857 3.28 6,011 3.48 -2.56 48,105 3.09 46,860 3.21 2.66Renault 5,499 3.08 4,088 2.36 34.52 42,339 2.72 36,152 2.48 17.11Citroën 5,496 3.08 5,179 3.00 6.12 50,979 3.28 49,269 3.37 3.47Fiat 4,693 2.63 4,863 2.81 -3.50 37,369 2.40 39,733 2.72 -5.95Honda 3,547 1.99 3,030 1.75 17.06 31,200 2.01 32,949 2.26 -5.31Seat 3,190 1.79 4,149 2.40 -23.11 30,517 1.96 31,491 2.16 -3.09Mini 3,123 1.75 3,571 2.07 -12.55 34,427 2.21 24,979 1.71 37.82Volvo 3,016 1.69 3,010 1.74 0.20 24,172 1.55 22,860 1.57 5.74Mazda 3,008 1.69 2,426 1.40 23.99 26,556 1.71 22,313 1.53 19.02Land Rover 2,822 1.58 3,722 2.15 -24.18 38,986 2.51 33,741 2.31 15.54Jaguar 2,388 1.34 1,352 0.78 76.63 12,270 0.79 11,178 0.77 9.77Suzuki 2,045 1.15 2,254 1.30 -9.27 19,732 1.27 21,980 1.51 -10.23Mitsubishi 1,622 0.91 1,181 0.68 37.34 14,812 0.95 7,181 0.49 106.27Porsche 1,177 0.66 661 0.38 78.06 7,369 0.47 5,301 0.36 39.01Dacia 1,040 0.58 1,404 0.81 -25.93 15,503 1.00 14,380 0.98 7.81Lexus 828 0.46 731 0.42 13.27 7,757 0.50 6,362 0.44 21.93DS 782 0.44 0 0.00 0.00 1,576 0.10 0 0.00 0.00Jeep 691 0.39 278 0.16 148.56 6,045 0.39 1,906 0.13 217.16Smart 661 0.37 415 0.24 59.28 4,181 0.27 2,942 0.20 42.11SsangYong 397 0.22 80 0.05 396.25 1,752 0.11 818 0.06 114.18Alfa Romeo 306 0.17 342 0.20 -10.53 2,918 0.19 3,299 0.23 -11.55MG 237 0.13 203 0.12 16.75 1,907 0.12 1,407 0.10 35.54Subaru 167 0.09 165 0.10 1.21 1,834 0.12 1,474 0.10 24.42Abarth 160 0.09 116 0.07 37.93 1,238 0.08 905 0.06 36.80Infiniti 137 0.08 131 0.08 4.58 746 0.05 357 0.02 108.96Bentley 116 0.07 120 0.07 -3.33 848 0.05 930 0.06 -8.82Maserati 105 0.06 161 0.09 -34.78 883 0.06 725 0.05 21.79Aston Martin 69 0.04 50 0.03 38.00 565 0.04 532 0.04 6.20Lotus 39 0.02 34 0.02 14.71 226 0.01 129 0.01 75.19Chevrolet 3 0.00 2 0.00 50.00 7 0.00 2,761 0.19 -99.75Chrysler 2 0.00 126 0.07 -98.41 131 0.01 1,210 0.08 -89.17Mia 0 0.00 0 0.00 0.00 0 0.00 5 0.00 -100.00Perodua 0 0.00 3 0.00 -100.00 0 0.00 25 0.00 -100.00Proton 0 0.00 0 0.00 0.00 0 0.00 1 0.00 -100.00Saab 0 0.00 0 0.00 0.00 0 0.00 1 0.00 -100.00Other British 58 0.03 77 0.04 -24.68 437 0.03 509 0.03 -14.15Other imports 122 0.07 180 0.10 -32.22 1,166 0.07 808 0.06 44.31Total 178,420 172,907 3.19 1,555,309 1,460,172 6.52

10

6

MARkeT INTeLLIGeNCe sponsored by

Page 12: AM – Automotive Management September 2015 preview

20 September 2015 am-online.com

he countdown has begun to UK motor retail’s annual highlight. The AM Awards 2016 will take place on February 11, 2016, but the event is now open for entries at am-awards.co.uk

Aren’t you proud of your business and its achievements in motor retail? Of course you are, so shouldn’t you enter the AM Awards 2016 and let AM recognise and celebrate your successes?

The AM Awards 2016 seeks to acknowledge the high

achievers – companies and individuals – in 26 categories. Three of them are new and relate to van retailing, service reception and environmental initiatives.

The judges, who now include industry veteran and previous winner, former Perrys Motor Sales chief executive Ray Sommerville (pictured above), plus the auditors BDO and the AM team look forward to reading your entries and to welcoming you at the ICC in Birmingham.

So, are you in it to win it?

AM Awards 2016 – Thursday, February 11, The ICC, Birmingham.

AM AWARDS 2016

Categories sponsored by

Car Care PlanAn AmTrust Financial Company

TodayEnter your application now

October 30 Entry deadline

November 6 to January 8 Auditing by BDO

Early FebruaryShortlist announced

February 11AM Awards takes place in Birmingham

TAWARDS TIMELINE

NOW OPEN FOR ENTRIES AT:

AM-AWARDS.CO.UK

Page 13: AM – Automotive Management September 2015 preview

am-online.com September 2015 21

Digital awarDsBest Dealer Website a website is increasingly the first place customers will look when researching their next vehicle purchase and a strong online profile is vital for any dealer to prosper.

Your website is a crucial marketing tool that should bring in a significant proportion of your leads and is increasingly a means to build and maintain relationships with customers.

Best Use of Social Media How you promote your business and the effectiveness of your online marketing strategy via social media is the new shop window – with observers able to praise and criticise almost instantly.

it used to be said that a consumer would tell 10 people of a negative shopping experience, but now they can tell hundreds. However, do it

well and you will be rewarded with loyal followers. some of them will be customers, and others could well be in future.Sponsored by: Marketing Delivery

Best Use of Television and/or Video television advertising is not a new weapon in the dealers’ marketing armoury, but advances in the data available via digital television networks is game-changing in its ability to target specific campaigns to specific consumers and track exposure to advertisements and response rates.

Dealers’ use of video to highlight sales and aftersales activity has grown exponentially in a short time. the availability of handheld devices means all dealers, regardless of size or brand, can now make, send and track videos in their sales and aftersales departments.

this category seeks to acknowledge the importance these related tools play in dealer marketing and customer trust-building and to acknowledge best practice and innovation.

Best Manufacturer Digital InnovationConsumers expect dealers to be as adept at using the latest technologies as any other mainstream retailer. a website is just one of the ways in which a dealer can embrace digital technology – smartphone apps, ezines, video streaming and live chat are increasingly common in the industry.

this award acknowledges the important work being done by brands to support the dealer network using innovative ideas and the latest and emerging technologies in all areas of digital media.

The 2016 caTegorieS

f o r M o r e I n f o r M a T I o n o n T h e a M a W a r D S 2 0 1 6 , V I S I T: w w w . a m - a w a r d s . c o . u k

Deadline for award entries: October 30, 2015

Page 14: AM – Automotive Management September 2015 preview

22 September 2015 am-online.com

Used Car of the Yearthis category considers used cars aged six months to three years. it takes into account the quality of cars, how well they have retained their residual value, the strength of manufacturers’ used car programmes and level of engagement from retailers, and use of remarketing. Sponsored By: Car Care Plan

new Car of the Yearinnovation, quality and a money-maker for dealers are the watchwords for the AM New Car

of the Year. Finalists will all have been launched during 2015. they will have made an immediate impact on the market by moving on the segment, while dealers will be able to exceed targets without discounting. Quality will be exceptional, driving performance will impress and the car will be designed for maximum appeal.Sponsored By: Supagard

franchise of the Yearin no other sector is the link between manufacturer and retail as important and, at times, as sensitive.

this award seeks to recognise the brand that in the past 12 months has best fulfilled on promises made by the manufacturer partner. Do the dealer and manufacturer have a mutually beneficial relationship, does the manufacturer understand and work with the retailer’s business plans? are there clear and effective lines of communication to enable long-term dealer confidence?

■ The manufacturer awards are voted for by AM readers via online voting. Voting will take place in January.

MaNuFaCturer awarDs

eXCelleNCe iN BusiNessBest Training and Development Programmetraining and development are crucial to continually improve any motor retailer’s staff.

in addition to the basic training required for a trade, occupation or profession, there is a need to continue training beyond initial qualifications to maintain, improve and update skills throughout your employees’ working life.

neW for 2016Best environmental Initiativeenvironmental concerns continue to grow in importance and will increasingly be at the forefront of customers’ minds, instilled by apocalyptic warnings from environmentalists and increasing media coverage of the growing appetite among uK and european legislators to insist the ‘green’ agenda is taken seriously. How businesses tackle the environmental issue will impact on their long-term success and profitability, not to mention their obligations in the face of growing legislation.

Best Sales Team (new or Used Cars)this award acknowledges the power of individuals working towards an acknowledged goal in a new and/or used car sales department in the past 12 months.

that goal could be a broad one to improve business generated long-term in the showroom or on focused targets in a burst of activity, selling vehicles and associated ‘added value’ products such as finance, service plans, warranties, etc. audited by: BDO.

excellence in aftersalesservice and repair is one of the most profitable parts of the motor industry and it’s also one of the most competitive – with franchised workshops slugging it out with independents for business.

Only those companies that offer value for money and high levels of customer service will succeed. this category is open to franchised workshops and independent authorised repairers, either individual site or complete network. audited by: BDO.

excellence in Customer Service Customer service is one of the most important issues facing dealers. Happy customers will be loyal to the business and they will tell others about their positive experience – the best form of marketing.

this award will recognise the most successful attempts to improve customer service from any dealer group or dealership. audited by: BDO.Sponsored By: EMaC

neW for 2016 Best Service reception Teameasily neglected kingpins of the business, service reception teams play a crucial role in aftersales and therefore in the success of a dealer’s business.

this award will recognise the team that demonstrates innovation in process, continuous improvement, staff development and interaction with customers. Customer satisfaction is essential, including ‘going the extra mile’ to ensure repeat business.

BDo auditorswe are looking forward to this year’s awards process. this will be our third year of involvement and we are pleased to bring our experience of more than 25 years working with motor retailers to support AM in its recognition of the stars of the uK motor industry. each year we have been impressed by the quality of the entries from dealers all over the uK. we look forward to auditing this year’s entries and listening to the innovative

ideas and success stories in the industry.

aM awarDs 2016

“friday was an incredible day, the phone rang off the hook

such was the volume of congratulations, best wishes and kind words from all over the country. It was quite humbling”Marcus Joy, managing director of humphries and Parks, the 2015 most improved company of the year

Page 15: AM – Automotive Management September 2015 preview

RetaileR awaRdsBest Used Car PerformanceUsed cars are more profitable than new cars and form a competitive part of the market fought over by franchised dealers, car super-markets and independents. this award is open to any company or group (franchised or inde-pendent) that sells used cars. audited by BdO.Sponsored by: Autoclenz

Best Fleet Operation a fleet focus is providing many dealers with improved profits. this category focuses on a business that provides excellent customer service to the fleet market, from fleet finance options to dedicated fleet sales operations and service departments used to dealing with the issues fleet operators and leasing providers face. audited by: BdO.

New FOr 2016Best Van DealerHow does your business keep the UK working? How does it meet the needs of businesses of all sizes with vans that are fit for purpose,

minimise impact on the environment, limit taxation and ensure the safety of drivers and other road users? this category recognises the performance of each individual, team and department in a dealership, rewarding, where appropriate, sales, marketing, new and used van sales, the workshop and administration. audited by: BdO.

Most Improved Dealershipevery business can go through a rough patch – what is key is how the business reacts. this award recognises those centres that have put in place a recovery strategy that has borne remarkable results. audited by: BdO.

Best Dealershipthis category is open to single-site owner- operators and to best-performing dealerships within a larger group network – both single-franchised and multi-franchised showrooms. it will recognise the performance of each indi-vidual, team and department in a dealership, rewarding, where appropriate, sales, marketing,

new and used car sales, the workshop and administration. audited by: BdO.Sponsored By: The Warranty Group

Best retail Group (up to & including 10 sites)the motor retail industry is made up primarily of smaller, regional groups. this category is designed to recognise and honour those companies.

entrants will be able to show how they meet the AM awards’ criteria of quality, innovation and service and how they have tracked their performance improvement over the past five years.

a copy of the most recent full company accounts will be required. audited by: BdO.Sponsored By: Jewelultra Diamondbrite

Best retail Group (more than 10 sites)this award recognises the unique complications and complexities that come from co-ordinating a large retail group. a copy of the most recent full company accounts will be required. audited by: BdO.Sponsored By: Mapfre Abraxas

Headline awaRdsDealer Principal/General Manager of the Year the award will recognise an individual who combines the needs of the business with the demands of managing a dealership team and customer expectations.

Digital Initiative of the Yearthis award is given to the best initiative of 2015. the four winners from the digital categories – best dealer website, best use of tV and/or video, best social media campaign and manu-facturer digital initiative – go head-to-head to decide the winner. Sponsored By: Auto Trader

Manufacturer of the Year when deciding the finalists, the judges look at the product offering, but not exclusively. not only must the models on the forecourt be right

for the customers now in terms of practicality, cost, style and the environment, but the manu-facturer must be making a clear statement of intent on the development of new models and supporting technologies, matched by a track record of delivering on promises.

retailer of the Year this award is given to the best retailer in the UK. Five winners from the retail categories – the two retail group categories, fleet operation, dealership and used car perfor-mance – go head-to-head to decide the winner. Quality, service, profitability, innovation and a robust business plan are essential. Sponsored By: Black Horse

Business Leader of the Year this award is presented to the person who has had the biggest impact on the motor industry

during the previous 12 months. their contribution will have made a significant, positive impact to the way companies do business or to the way the industry is portrayed to the public. the recipient is decided by AM editor-in-chief stephen Briers, in consultation with the AM awards’ judges.Sponsored By: Premia Solutions

AM Hall of Fameeach year, the ‘aM Hall of Fame’ recognises someone who has made an outstanding contri-bution to the automotive industry.

not only will they have led a hugely successful business, but they will also have raised profes-sionalism in the industry and helped improve its image. without them, the motor industry would be a poorer place.

the inductee is decided by AM editor-in-chief stephen Briers, in consultation with the AM awards’ judges.

am-online.com September 2015 25

aM awaRds 2016

“Being awarded four AM awards has really made us proud. we’re passionate about improving our customer journey and it’s clear that those efforts are paying off.

receiving recognition for our work is inspiring”Lee Manning, digital marketing manager for multi-award winning Perrys Motor Sales

Page 16: AM – Automotive Management September 2015 preview

The failing business that performed an amazing turnaround

AM AwArds 2015 winner’s profile Best deAlership: Crewe seAt (sw

By Jeremy Bennetthe odds looked stacked against staff at Crewe Seat as soon as it was bought by the family-owned dealer group Swans-way. It is in a cul-de-sac, offering a niche brand, with no visible forecourt from the

main road and on an industrial estate with a break-fast cereal manufacturer to the front and a meat pie factory behind it.

Depending on which way the wind was blowing, you needed a strong stomach to visit the site – and determination to succeed if you were willing to work there, since at the time of purchase it was a failing business, “haemorrhaging” money.

Crewe Seat is one of 19 Swansway dealerships and is the only site with the Spanish brand’s fran-chise. It was known as LC Charles and bought from the Charles Group, along with Volkswagen and Audi sites, in 2003.

The dealership is led by dealer principal Andrew Barnes, who has been with the group for five years. Service manager Sam Booth joined Crewe Seat 10 years ago, the dealership accountant has been with Swansway 11 years and sales manager Luc Wool-combe for four, after starting as a sales executive.

This leadership team, with a combined ‘Swansway experience’ of 30 years has led a remarkable turnaround in fortunes.

Turnover has increased 143% in three years, from £9.6 million to £23.3m in 2014. Operating profit in the same period has gone from £1,500 to £384,000 (a 25,500% increase). The average Seat dealer is said to make £40,000 a year.

The number of new units sold is up from 396 (£853 margin per unit) to 588 (£1,025), used from 396 (£806 margin) to 588 (£884) and service hours

T

56 september 2015 am-online.com

“while money’s important, the driver for me is being the best in every part of the business”

In three years, turnover increased 141% and operating profits soared from £1,472 to £384,000. How was it done?

sold from 8,308 to 9,556. Growth in sales has not led to customer service standards being sacrificed as CSI scores in sales have improved (91.1% to 93%) and in aftersales from 93.5% to 103.9%.

Crewe Seat spent much of 2014 at the top of Seat’s ‘S Power’ league, its balanced scorecard measure biased towards customer satisfaction ratings, and it is at number one now.

Once a failing business, in continuous discussions around disposing of the site, 18 months ago Swan-sway invested nearly half-a-million pounds in a showroom expansion.

essential steps in the turnaroundBarnes takes up the story: “It was haemorrhaging money dramatically. New units weren’t good, the showroom was half the size it is now, we weren’t selling that many used cars, and there was no passing footfall unless someone wanted to visit the Mornflake factory opposite. The aftersales busi-ness was running relatively efficiently, but it wasn’t making enough to prop up the sales department.”

His first task was to improve the bottom line by

increasing sales and his focus was on the staff. Aged 62 , he has been in the industry for 40 years (he worked for Swansway chairman Michael Smyth in 1986 when he ran RRG Group).

“While money’s important, the driver for me is being the best in every part of the business. Swans-way has a Volkswagen centre in Crewe and I want to outperform them and I want my team to feel the same drive,” he said. The starting point was building a team with the same ambition.

Before joining Swansway, Barnes had run a used car business and he said he became engrossed in this side of the business after his arrival at Crewe.

“We weren’t selling many because we were being greedy,” he said. “I would buy a Leon, put it on the forecourt with a nominal margin, sell some finance and an add-on or two, knowing it would sell, and I would go and pick another one off the shelf and repeat the process.”

He then found a niche model in the Seat brand, the Leon Cupra and the K1. Crewe bought what they could find and the phone “didn’t stop ringing”, with buyers willing to pay the “stretched” margin.

Barnes buys six- to 12-month-old cars from the Seat used car programme and will spend £100 on a multi-point check and £160 on a service and make minor body repairs. “With cars this old this level of attention probably isn’t necessary, but we set our stall by these standards, ensuring the cars on the lot are as good as they can be,” he said.

As soon as Barnes has bought a used car, details are posted on the business’s website. “I’ll buy 12-15 cars tomorrow and if they’re not on our website by tomorrow night, I’ll be disappointed.”

Without passing trade, the dealership has to use every opportunity to reach customers. A profes-

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t (swAnswAy GArAGes)

am-online.com september 2015 57

Ian Simpson, sales and marketing director UK -

motor division, The Warranty Group (right), presents the award to Andrew Barnes,

dealer principal, Crewe Seat (Swansway Garages)

A W A r d S S p o n S o r

While new and used car sales are strong, these remain tricky times for dealers. Among the issues are a raft of regulatory changes and the chal-lenge of maximising the potential of online sales, to name just two.

However, at The Warranty Group, we are continually impressed by the way in which the best dealerships handle these challenges, often turning potential problems into new business opportunities. We find that progres-sive, imaginative dealers that adopt a structured approach to building their business almost invariably see the best results. This is especially true in our specialist areas such as warran-ties, service plans and GAP.

Here, it is essential to ensure the right structure is put in place – that staff are properly trained and incentiv-ised, that management provides the right kind of support, that efficient administrative systems are adopted and high-quality marketing resources created. However, a similarly thorough approach leads to success in almost any area of dealer endeavour – and this is what characterises the very best dealers.

That is why it is a pleasure to congratulate Swansway Garage/Crewe SEAT on receiving the AM Dealership of the Year Award. They embody much of this thinking and are a credit to our industry.

the wArrAnty Group CoMMent

sional photographer visits twice a week, providing website pictures taken in the same spot at the dealership, so image quality and content is consistent.

There is a strict 60-day stocking policy. The aim is to sell at no later than 40 days, with price and marketing changes at 30 days.“

With space for 40 used cars and selling about 45-50 a month with a commitment to preparation, he admits it’s a treadmill. “It’s challenging, but success breeds success.” The margin is about 8%. There is a volume bonus from Seat, but this isn’t used in any deals.

As for new car sales, with Swansway holding a single franchise for the brand, Crewe Seat is a small part of the group. Barnes made himself known to Seat in Milton Keynes from day one.

WHAT THe AM AWArdS JUdGeS SAId

“We’re constantly talking to Milton Keynes and as a significant buyer from its used car programme, our voice will be heard.”

He is confident in building a positive relationship with new Seat UK brand director Richard Harrison and is impressed with new Seat product.

Beyond the same ethos that underpins the sales process, of “smile, make eye contact, explain the options and build customer rapport”, service plan sales are key.

Penetration has dropped slightly from a high of about 60% due to Seat’s competitive offers, which also don’t ensure owners come back to Crewe as they can opt for servicing at any brand dealer. But Barnes says buyers get regular contact from Crewe – and invites to the Saturday morning car wash club.

Crewe Seat is one of 19 centres operated by Swansway. Its location is not ideal – the small site has no visible forecourt to those that venture down the cul-de-sac it’s situated in. Seat is also, by Swansway’s admission, a “niche brand” and the group has only one franchise.

The business has turned itself around. This has been brought about in sales through a change of mindset to pre-selling, with the majority of used cars sold before they arrive on site and all cars advertised online before their arrival.

In aftersales it has been achieved via a focus on retaining older vehicles through service plans and a customer contact centre relieving

pressure on service advisers.In one of the most competitive awards cate-

gories, investment in staff, an inclusive management style, a clear focus on routes to market and the importance of customer service have meant this dealership leads the field.

Turn to page 20 for the launch of this year’s AM Awards – Thursday, Feb 11, ICC, Birmingham.

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60 September 2015 am-online.com

HR-V marks a year of change for Honda UK

“HR-V is our most important launch this

year because it is completely fresh, a new

market for us, a new design”

Leon Brannan, Honda UK

Honda UK is pinning its hopes on a new compact crossover to bring a volume boost to its franchised dealer network

customers into the brand, that will be a huge travesty. Now is our chance to grow.

“HR-V is our most important launch this year because it is completely fresh, a new market for us, a new design. So we have potential, and the message to our dealers is to seize the opportunity and do not sell this car just to your own customers.

“Of course we’ll have a flurry of orders, but we can’t just rely on that. It would be a travesty to the Civic if we did. Our number one priority is to protect the Swindon factory building the Civic.”

2015 is a year of change for Honda UK. It has ceased importing the low volume CR-Z, Insight and Accord models, which has left it with just a three-car range until now.

In dealers’ favour, the CR-V and Civic have just been refreshed and a new Jazz is imminent, once the HR-V has reached showrooms.

Brannan said the small crossover segment in the UK is growing by 11% this year and HR-V must win a share of the spoils. The target is primarily the retail buyer, as 70% of Honda UK’s annual sales are in this market, and Brannan said it is very careful about the fleet business it does, in order to not sacrifice profitability.

By Tim Roseonda has revived the name it used on its first small SUV and hopes the compact crossover that bears it now will fill the gap the original HR-V left in its range and add 15,000 annual registrations.

That will depend, of course, on how successful Honda and its dealers will be in tempting new consumers into the HR-V, in both the private and fleet sectors.

Leon Brannan, Honda UK’s head of car division, said: “The opportunity or challenge is conquest. We’ve seen many times different brands bringing great products into the range and suffering huge cannibalisation.

“If we don’t seize the opportunity of this car in bringing new

H

SHOWROOm t H e c a r s d r i v i n g y o U r B U s i n e s s

62 65 66volkswagen Polo

AM welcomes the in-demand supermini, VW’s second most popular line after the Golf, to its long-term test fleet.

Škoda octaviaSkoda’s recent first place in a JD Power reliability study will have a concrete effect at dealer level, says the brand.

Mazda3A hiccup in booking an annual service by phone may explain the drive towards online service booking.

F i r s t d r i v e : H o n d a H r - v

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am-online.com September 2015 61

sPeciFicationPrice £17,995-£24,945Engine 1.5-litre petrol: 128bhp 1.6-litre diesel: 118bhpPerformance 0-62mph 10-11.4secs, top speed 116-119mph Transmission 6sp man, CVT autoEfficiency 50.4-70.6mpg, 104-130g/kmRV 3yr/30k TBARivals Nissan Qashqai, Toyota RAV4, Hyundai SantaFe

aUtocarthe Hr-v is well-equipped, comfortable and practical, and while it won’t have the nissan Qashqai worrying about its crossover crown just yet, it does show plenty of potential in a crowded market. in styling terms alone, Honda has done enough to separate itself from the pack.

tHe teLegraPHQuite likeable urban runaround, but should have had a 4x4 option to maintain credibility. Pricey but economical, comfortable and spacious. a bit bland to drive, though, and there was some evidence of poor assembly. Petrol is noisy and gutless, go for the diesel.

carwowthe Hr-v’s far from the cheapest car in its class, but it does come with decent levels of standard equipment including climate control, auto lights and cruise control. auto-matic emergency braking is also fitted as standard across the range, which not only makes the car very safe, but should make it cheaper to insure.

Honda plans to seize the opportunity of the Hr-v in bringing new customers into the brand

The HR-V will launch this month with a major media campaign, including TV and radio, a national roadshow covering events and a four-week national Honda test drive campaign beginning in the last two weeks of the plate-change month.

Brannan said Honda UK is targeting 5,000 to 6,000 sales for the compact SUV in Honda UK’s current financial year, but deliveries to the UK from Honda’s assembly plant in mexico may be restricted by its need to serve larger markets.

So while its dealers may feel under pressure to market to new customers, success could see Honda UK put its own management under pressure to lobby the factory for more allocation.

This car is pretty spacious inside – boot space is 453 litres – and larger than typical B-segment SUVs such as the Nissan Juke and Vauxhall mokka, so Honda wants the HR-V to compete with the Nissan Qashqai, mazda CX-5 and Hyundai Tucson in the C-SUV segment. As such, Honda has priced the crossover from £17,995, undercutting the cheapest Qashqai. For that money, the buyer gets a rather noisy 128bhp 1.5-litre petrol-engined model in S trim,

Honda wants the spacious Hr-v to compete with the nissan Qashqai, Mazda cX-5 and Hyundai tucson

Honda is targeting 5,000 to 6,000 sales for the compact sUv this year

wHat yoUr cUstoMers wiLL read aBoUt tHe

Honda Hr-v

whose equipment highlights include front and rear parking sensors, DAB radio, Bluetooth, climate control, cruise control and Honda’s ‘magic seats’ folding system.

It also means Honda can market HR-V with a £149 per month payment after a 30% deposit to tempt the young singles and pre-family couples it wants to capture.

However, the majority of buyers are expected to want an SE grade HR-V. For an additional £1,750, this adds the ‘Connect’ infotainment system with 7in screen and web browsing, dual-zone climate control, larger alloys, leather steering wheel and front foglamps. It also comes with a driver assistance safety pack as standard, which includes warning systems for forward collisions, lane departure, cross traffic and speed monitoring.

For a further £3,450 above SE, the third trim level, EX, brings premium features such as panoramic roof, rear-view camera, leather interior, LED headlamps and keyless entry and start.

The HR-V’s second powertrain option, a 118bhp 1.6-litre turbodiesel already used in the Civic, is the more refined choice and will tempt an estimated 55% of buyers, despite its £1,750 premium over the petrol.

Brannan said Honda UK has no plan to introduce either the 1.8-litre petrol or the hybrid powertrains being offered in some other markets. Equally, he will not bring in the 4WD HR-V offered on Europe’s mainland, as in FWD the range already covers 85% of UK demand.

Customers wishing for automatic transmission can opt for a CVT gearbox with the 1.5-litre petrol unit. This will cater for the existing Honda customer base, but is unlikely to win favour with many of the conquest prospects.

F o r M o r e r e v i e w s v i s i t: w w w . a m - o n l i n e . c o m / r o a d t e s t s

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70 September 2015 am-online.com

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A D V E R T I S E R S ’ I N D E X

ASE .................................................................19

Autoclenz ......................................................59

Autoglym .......................................................55

Barclaycard Loans .....................................6

British Car Auctions ........................58 / 68

Business Training & Consultancy .........69

Call It Automotive.......................................37

Car Care Plan ..............................................63

Chris Eastwood Automotive ...................68

Dealer Management Services ...............44

Edynamix Global ........................................34

Gforces ..........................................................26

Infomedia ......................................................72

Institute Of The Motor Industry .............32

iVendi ..........................................................8/62

Karcher ........................................................59

Lawdata .........................................................58

Lloyds Banking Group ..............................12

Loughborough University ........................53

Manheim Retail Services ...............2/17/23

Mapfre Abraxas ..............................38/40/47

Nextgear Capital ........................................30

Premia Solutions .................................45 /67

Pro-Driver ....................................................37

Provisional Marmalade .....................50-51

Really Good Domains ................................11

Secure Trust Bank T/A Moneyway .......42

Smart Insurance Services ......................24

Steele-Dixon & Associates ....................68

Symco Training ...........................................48

Tracker Network Systems ......................41

Trader Publishing ......................................64

Trusted Dealers ..........................................10

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