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Why Brayleys Cars is rebuilding for growth

Being escorted around the labyrinthine new addition to Brayleys Cars’ is rather like watching an episode of Channel 4’s Grand Designs.

The forecourt of the former Humphris site on Rose Hill, Oxford, has room for just 20 used vehicles, which no doubt proved a hurdle for some prospective buyers.

But Paul Brayley, the group’s managing director, who pondered the purchase for two years, clearly sees the potential in the site, which gives his 11-outlet network its first Mitsubishi franchise and its third Kia.

As Brayley strides first into a vehicle preparation area in the bowels of the facility and then up into the expansive workshop and up a concrete ramp to a vast former bodyshop on the first floor, his vision becomes clear.

He has invested £500,000 at the site,  bought for an undisclosed fee, which will house an additional 65 used cars in an indoor, LED-lit display area liberated by conversion of the upstairs space.

It will also accommodate a new kitchen facility and a training room for employees, to support the group’s increased emphasis on staff development and retention.

It is not the only grand design that Brayley is working on. Once refurbishment work is finished, “hopefully in the next month”, he believes the site will be on track for an annual sales target of 1,000 cars, helping the group towards a turnover of more than £120 million in 2016/17.  

That would mark a sixth year of growth for the group, which was born out of the Honda Investment Programme in 2003.

Brayley remains grateful for the start given to him by the Japanese manufacturer, which remains the group’s core franchise, with 1,160 sales last year.

He said: “If it hadn’t been for the sponsored dealer programme, I wouldn’t be here today. I may have ended up owning my own business, but it would have been on a far smaller scale, I imagine.

“If you look around the industry some of the best started out that way: Ridgeway, Glynn Hopkin, Steven Eagell.”

 

New franchises and new product

Brayleys Cars has grown rapidly, and while Brayley is content with his manufacturer partners, he is keen to be considered a good investment by Honda by expanding.

His intention is to swell the business with  his current partners: Honda (3), Kia (3), Mazda (3), Renault/Dacia (1) and Mitsubishi (1).

“I’d like to represent at least one more dealership  with all the manufacturers I currently work with,” he said.

“Would any operation not like to represent Mercedes-Benz, BMW, Porsche, Audi? Of course, but the reality is that’s not going to happen. I don’t have the means to buy a Mercedes market area costing £20m or pay £7m goodwill for a Land Rover dealership.

“I’m very happy with the brands we represent. Kia, I’m sure, will sell 100,000 units this year. They will bring four new models to market.

“[From] Honda we have had the new Civic, the new CR-V, last year we had the HR-V. With Dacia, there are new models coming too.

“Mitsubishi is going to deliver its Eclipse Cross SUV, which is exciting and then Mazda, of course. We’ll get the new CX-5 next and in March alone we delivered 22 of the new MX-5 RFs.

“I bought one for myself. It’s the most fun you can have in a car. I did, for a while, have a 911 Turbo but you could never stretch it, you couldn’t hear the engine and, because of that, it was soulless for me. In the MX-5, it felt like I was 17 again.”

The group’s acquisitions include a Kia and Mazda dual franchise site in Harpenden in 2012 – expanding the business by 25% at the time – a new Renault/Dacia site in Milton Keynes in 2014, Enfield Kia and Grays Mazda in 2015 and now the dual franchise in Oxford.

Brayley said the sites “take time to settle in”, but the group recorded 1.4% return on sales (RoS) last year as it sold 3,057 new and 3,352 used cars.

Improved RoS remains a key target, but Brayley said that would require a period where “I kept my hands in my pockets”.

Moving to a June 31 financial year-end – prompted by the shift to a new DMS – means Brayleys’ latest financial results span 18 months and the business achieved a £134.4 million turnover and £1.93 million profit before tax during the period to the end of June 2016.

However, he is proud of the group’s self-funded nature and low gearing of just 15.12% (2015/16 accounts) and has also been able to invest in freehold property in recent years to bolster Brayleys’ assets.

Brayley made a freehold land purchase for the group’s Enfield Kia showroom – next to its existing Honda facility – adding to freehold property at Grays, Harpenden and St Albans.

“We’ve replenished cash by making a profit”, said Brayley. “Due to the support provided to me in the early days by manufacturers’ finance houses, we’ve never been under cash flow pressure.”

 

Restructuring staff

As well as ensuring the group’s financial security – and ensuring that it is poised for further acquisitions – there has also been a considerable restructure of senior staff and financial practices to ready the group for further expansion.

This was partly triggered by the move to the new DMS, moving from Reynolds and Reynolds’ MMI Automate to its new Power operating system in 2015.

Brayley said: “Our financial year at that point ended in December so we were two months on the new system and 10 in the old.

“I wanted to make sure that when we had the audit we had a really thorough audit over an extended period.

“To change the way you operate with everyone in your organisation is a huge task. We needed something that was suitable for a number of brands and sites, with the reporting and controls we needed as we grew, so we extended it until June.

“What also became clear was that a structure with an accounts department in our head office in St Albans wasn’t working.”

Brayley, who runs the 200-employee group alongside operations director Mark Corr, added Richard Lipscombe, who had been financial controller at Johnsons Cars, as finance director in June 2016.

He also made the role of finance controller redundant and introduced two divisional accountants based in Milton Keynes and St Albans.

Brayley’s whole team, from newly appointed franchise directors David Carter (Honda, Renault/Dacia) and John Jackson (Kia, Mazda, Mitsubishi) to aftersales director James Darby and each site’s sales and aftersales managers, now have regular contact with their accountants, said Brayley, adding: “They are available and approachable.”

 

Changing approach to people

A similar shift has begun in HR. Brayley said he realised about 18 months ago that retention among the group’s sales executives was “disappointing” at certain sites.

The group now has a dedicated HR manager, Alice Edwards, and Brayley said he was ready to support her with more resources as the group furthered its efforts to retain staff and improve its recruitment and training policies.

A more rigorous recruitment process and a structured and smooth welcome to the business to get new employees through the rocky early weeks in a new business is essential, he said.

“Our recruitment consisted of an interview and there may have been a second one. Now, the sales manager does an interview for sales people, there will always be a second one and we’ll always ask a new starter to complete a personality profile to help us understand the person, help us with knowing how to get the best out of them.

“Beyond that, the important thing is to make sure they are happy with us. Every new employee, within their first month, will receive a Brayleys ‘Road to the Sale’ training course. We then have an online module from Symco.

He said  the aim is for the sales process to become instinctive, so that staff will approach a customer in a positive, helpful and enthusiastic mindset no matter what distractions are around them.

“Two to three weeks is the essential period for a new recruit. Get them through that and you’re winning.”

One employee retention area that Brayley does not see changing soon is remuneration.

He feels the commission-led model is a reflection of manufacturers’ volume-led bonus payments and will not change until a time when each car sale yields a set margin, with no volume bonus.

However, internal promotion is a key part of Brayley’s philosophy.

Operations director Mark Corr was the “site boy”, cutting grass at the group’s first solus Honda site when the business was established. Aftersales director James Darby worked his way up from parts manager at the St Albans dealership.

Brayley said he knows the value of an “arm around the shoulder” and hopes the group’s new focus on HR will create more internal success stories.

“We have to make our staff feel valued, but beyond that the HR team should be the go-to place for those who have issues they might feel uncomfortable talking to their manager about,” said Brayley.

Planned measures to make staff feel valued include sending birthday cards to every member of staff on key birthdays, but Brayleys already holds an annual summer barbecue for employees and their relatives, which Brayley said is a great success.

The event includes activities for families, including a vinyl-wrapped car on which children can write messages.

 

Marketing the group

The same wrapped cars have proved a hit at public events and promotional visits to shopping centres. Such exposure does not guarantee leads, but does grow the profile of a business otherwise marketed by brand, said Brayley.

“How many dealer groups have we seen come and go?”, he said. “The name over the door is Honda or Mazda or Kia.”

Elsewhere, Brayleys’ marketing budget is focused heavily on digital.

On the day AM visited, Brayley held up a  bill for £26,000 that covered one month’s marketing spend on: 63,000 marketing emails; website content; pay-per-click (PPC) management and campaigns; Facebook campaigns; social media; flyers; posters; GAP sales, leaflets etc; but not a plate-change promotion event run by Rhino Events.

The results justify the means. When AM visited, with three trading days left in March, Brayleys had achieved 110% of its 164-vehicle target from Honda; 112% of the 258 target from Kia and 110% of its 164 Renault target.

Brayleys also recently brought photography in-house, promoting a young parts assistant to group photographer.

Brayley said he made the change after learning of his weekend hobby of travelling to London’s West End to photograph supercars.

“We’d been paying the manufacturers who assigned a company to come and take pictures, but you have a two-hour slot, it’s raining, you can’t move the cars around quick enough and they’ve gone without taking images of all the cars.

“We now have our own photographer, and the advantage of that is that this is someone who knows the sites inside out.

“He’s very busy, but he’s very organised and he’s fulfilling his passion.”

 

Making ‘marginal gains’

Brayley said there is no added focus on used cars in 2017, despite the predicted downturn in new car sales, with each site operating with six weeks’ future stock (equating to a stock turn of 8.7).

Aftersales remains a focus and one area where Brayley is aiming to make “marginal gains”. He recently decided to scrap a £35 flat rate at the business’s five MOT centres, which has paid dividends.

The flat rate was brought in to help establish the newly created Mazda dealership in Harpenden in 2012, but an assessment revealed it attracted little new custom.

In April, Brayleys decided to increase the rate to £54.85.

Brayley said: “This year we will do over 8,000 MOTs. At least 75% of those will be at the full price. That’s £120,000 on the bottom line.

“This month is the first full month that the price change came into effect and we’re just as busy.”

Brayley acknowledged that the business’s growth meant it had become harder to keep an eye on the smaller things, such as MOT pricing, but he said the new business structure is allowing him to step back and look twice at certain areas.

Other benefits have been equally welcome, he said: “I managed to take two weeks’ holiday in the middle of March. When I came back and checked the 20-day forecast, I was delighted to see it well ahead of budget.

“I think that’s something that should offer confidence to manufacturers, because it’s not just about Paul Brayley anymore. Brayleys Cars is a well structured business that works.”

 

From working on Thatcher’s car to shaking the PM’s hand

From rebuilding one prime minister’s Jaguar as a “lazy” young technician, to visiting 10 Downing Street as a dealership boss, Paul Brayley has experienced the full scope of the automotive business.

Brayley’s career in automotive retail started when he left school at 16 to start work as an apprentice technician with Bristol Street Motors in Colindale, Greater London.

“I can remember the engineers getting me, sticking a broom through my overalls and hanging me up on an engine rig and leaving me there,” he said.

He later took a job with the Metropolitan Police and found himself working on Rover SD1 police cars and replacing the gearbox of then-prime minister Margaret Thatcher’s three-tonne, armour-plated Jaguar.

However, after admitting that his main skill was positioning his back board to nod off unseen underneath the car he was working on, he moved into sales with Lex Brooklands.

In Brayley’s 30-year career he has had  roles of salesman, sales manager, regional general manager and franchise  director, including spells with Evans Halshaw and Citroen UK.

It was while running Citroen’s Berkeley Square showroom that he got the chance to meet the prime minister and the Queen face-to-face after winning a Motability award.

Brayley said: “Our managing director was French, so wasn’t that keen on meeting the prime minister, so I went along to Number 10. The next year, I was at a garden party meeting the Queen.

“That is the beauty of our industry. I came out of school with no qualifications, but a desire to work with cars.

“I think, unlike any other sector, you can really progress with the right level of drive, determination and a good work ethic.”

 



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