Carbase is currently 27th in the ID50, but its acquisition of the former Bristol Trade Centre from national franchised dealer group Lookers will send it rocketing up the table in future editions.
The addition of the flagship site has allowed the used car retail group, which was set up by Steven Winter in 2003 at Brent Knoll, to double its sales capacity in 2016. It expects turnover to increase from £33 million in 2014 to £70m this year (which would put it in 12th place on the ID50 table).
“I don’t think it ever fit with Lookers, with them being main dealers, and we are, in all but name, a used car supermarket so this was a natural progression for us,” Carbase’s general manager Gordon Veale told ID.
Carbase had laid its foundations an hour’s drive south of Bristol, with the Brent Knoll site serving as the group’s trade clearance forecourt, while its larger Lympsham and Weston-Super-Mare dealerships display more than 200 units each of higher value vehicles.
“To a degree, taking this site protected our three other businesses from someone else moving into Bristol, which is one of our key markets, and it effectively doubles our capacity. We have 1,322 cars in group stock at the moment. It’s a big step up from where we were before.
“We needed to expand, to give us the capacity to reach our next stage, and there are benefits from being in Bristol in the number of chimney pots here.”
Veale said the Weston site is surrounded by about 40,000-50,000 people, but in greater Bristol there are half-a-million, so there’s a huge opportunity for growing sales volume and offering more choice. Its stocks already range from hatchbacks for a few hundred pounds at Brent Knoll through ex-fleet family cars and on to nearly new prestige saloons and SUVs.
Veale said Carbase already has a reputation for high-specification, high-quality used cars that are very competitive in the market. Its core business is in cars costing up to £10,000. To further that reputation, the group is participating in the RAC Approved Dealer programme, and is keen to define ‘a Carbase car’ as conforming to RAC inspections and preparation standards, with three months’ free RAC warranty, plus 12 months’ breakdown recovery and accident management services.
“Our strapline is ‘buy with confidence’. We want people to come in here and know the Carbase brand,” said Veale. “Carbase the brand should mean the customer is getting peace of mind and equally can buy with confidence.”
“Franchised dealers are not geared up for customers to drive away on the day” Gordon Veale, Carbase
Winter, who was an electrician with a passion for rally driving when he launched Carbase, is still in the business daily and the direct contact ensures any changes can be made quickly, said Veale. Winter is also responsible for sourcing enough stock, alongside the group buyer, to keep the sites busy – they currently need about 700 new cars per month, coming in as part-exchanges and from leasing company and auction sources.
Veale said: “It is a struggle for us to feed this machine, to source the amount of stock and quality of stock that we need. We’re only interested in top grade A and B stock from auctions and our lease suppliers, so we can prep them to a standard where we’re comfortable that a customer can come and look around that car, buy it and drive away.”
Between 25% and 45% of Carbase’s business is sold and handed over on the day, said Veale. It’s an area in which he sees car supermarkets winning hands down against the franchised dealer networks.
“Franchised dealers are not geared up for customers to drive away on the day. Generally, it’ll be a week, and if it’s a new car it could be three months before the customer gets it. The whole point of a used car supermarket is that you have choice on site, when you want it. People will travel to our sites, see a car they like and they’d like it now. We actively encourage that. When you’re here in the mood to buy a car, you can buy a car.”
Putting a ‘deal on the day’ process in place
Dealers need a variety of structures and processes to fulfil the deal on the day. Internal pre-delivery inspection (PDI) is vital (see ‘Service and PDI’, below), as is the provision of finance.
Veale said finance is key to the Carbase business model, as it not only provides a level of income for the group, but, more importantly, flexible, affordable finance facilitates the sale. Point-of-sale finance is taken up by about 45% of Carbase customers.
Since the introduction of FCA credit regulations, Veale said Carbase has embraced ‘Treating Customers Fairly’. It has become an appointed representative (AR) with ITC
Compliance, which ensures its processes are up to scratch, and it backs these up with its own internal audit processes. Its finance is now on uniform rates, there is no commission bias on any particular products. Motonovo is its primary lender, followed by Black Horse and a panel of others.
“Because of the regulation by the FCA, it has got to be right, and there has to be a process and timeframe for how they present information, how it is signed and by whom, whether there are vulnerable customers, etc.
“We like to think we’re ahead of the game on this in that we have external consultants plus our own compliance officer, who checks every single deal because it just has to be right by the customer. It’s not worth getting it wrong – it’s not the fines, it’s the publicity and the whole thing. Who wants the FCA digging around for days and weeks examining every deal done for the last three years?
“As general manager, I have to make sure we have a robust system, so when that audit eventually comes, if we’re doing something wrong, it’s an individual case as opposed to a process.”
Remuneration is the traditional low basic and high commission, with the add-on products all earning a flat fee, so none attracts undue emphasis.
Sales executives who aren’t doing it right are taken off the showroom floor and re-trained. And if someone isn’t doing their job right, they won’t be paid for it.
Like most car supermarkets, there is a lot of focus on driving sales volumes through competitive pricing. Carbase uses iControl, Auto Trader’s stock management system, to monitor its stock prices on a daily basis, and typically adjusts them at least weekly. Veale said prices can go up and down in line with supply and demand, and using the system is time-consuming, but its cars have to be priced right because Carbase’s model is built on sales volume and stock needs to be sold rapidly. The average is 45 days in stock.
Of course, profitability cannot be forgotten, so in addition to the margin in the car sale, Carbase is achieving 20-25% penetration in sales of paint protection and service plans and about 35% penetration for GAP insurance.
Marketing investment is heavily focused on the classified websites, such as Auto Trader and Motors, as well as driving traffic to its own website (see ‘Preparing the customer for purchase’, below).
“We’re quite forward-thinking with our marketing strategy. We have our own marketing department, which gives a great deal of thought to the efficiency of our own website, to making it user-friendly, engaging and consumer-driven, and we have a separate advertising department, which sits alongside that, making sure the descriptions of vehicles, the specifications, are as good as can be. We’re in the process of purchasing turntables and photo booths so we can have a generic, standardised look for all our stock photographs.”
Currently, as soon as a car is bought for stock, a photograph is taken and the car is added to Carbase’s website immediately. A full set of images are added once the car has been prepared. Veale said this ensures the car is in market the moment it is in stock, minimising any downtime. “Photos are king. As soon as we have photos on there, we see interest rocket.”
Investment is also put into managing its database of more than 65,000 customers. Since the beginning of 2016, it has introduced the Carbase Car Owners Club as a CRM tool, with email and social media communications sharing offers and information to maintain contact with customers. In addition, Carbase adopts industry best practice such as contacting customers ahead of MOT and service dates and finance renewals. Each sales executive is targeted on prospecting their own customers to sustain that existing relationship.
‘We want customers to know we honour our obligations’
Veale said the significant levels of repeat custom at its Weston, Lympsham and Brent Knoll sites are testament to the quality of service Carbase offers.
“I hate the phrase, but it is a customer-centric operation. If it’s commercially possible, we will attempt to help the customer if something has gone wrong, even if they didn’t have the extended warranty. It’s more important to us to have a happy customer than a disgruntled one.
“We try to treat everyone fairly, and the main thing is we listen. When they come in, if we’re in the wrong, we’re in the wrong.
“We’re not a company that drags it out to the end, we want customers to know we honour our obligations. If a customer comes in within 30 days and under the Consumer Rights Act they’re entitled to a refund, we might offer to swap them into another car, but if they want a refund we will. Since came in, we have had one customer who demanded a refund. But considering we’re selling 700 cars a month, we don’t get many problems. Our customer aftercare team is exemplary.”
Carbase uses JudgeService to measure satisfaction. In the early days it “gave us a bloody nose”, said Veale, but he added that the feedback from it, and its participation in the RAC Approved Dealer Network, has been crucial in improving the company’s position.
Those improvements have included communication. When FCA regulation drove changes in the business’s F&I processes, Veale blogged on the Carbase website to let customers know why. The process also requires sales executives to take time to help customers understand exactly what they’re getting, such as the limitations of the free three-month RAC warranty and other benefits, while business managers at each site will speak with customers to ensure the suitability of any additional products offered have been properly assessed.
Again, Veale talks about giving customers confidence: “Customers are under no illusion what they’re signing for when they sign it.”
Preparing the customer for purchase
Veale and Winter are determined that the company should live up to its ‘buy with confidence’ strapline in the digital world too. Carbase’s website displays all stock with multiple photographs, clear details of mileage, number of owners, annual VED costs and examples of monthly payment finance.
Less usual is the additional £125 administration fee stated clearly alongside the headline price of each vehicle in stock. According to Carbase, this is to cover the provenance checks and RAC condition checks and preparation standards.
The site displays its RAC Approved membership and its JudgeService customer satisfaction score – currently 94%. It also displays a name and quality photograph for every member of staff and displays a personal email address alongside anyone in a sales role.
Carbase’s digital presence includes functions allowing prospective customers to obtain a guide valuation of their part-exchange. They can also get a free motor credit check or complete a finance quote application through Codeweavers. Under its Carbase Complete Motoring Package section, customers can clearly see the range of optional Carbase Care Packs, spanning extended RAC warranties, AutoProtect GAP insurance, GardX paint protection and the Carbase service plan.
The website also has clear calls to action, encouraging browsers to book an appointment to view the car they’re considering. These range from live chat for enquiries to a central phone line that is operated until 8pm – in line with the showroom’s opening hours.
Service & PDI
Alongside the car supermarkets, Carbase owns small service workshops, which it brands as Autocentres. Two sites at Weston, one in Bristol and one in Lympsham have 35 ramps between them and are mostly kept busy with internal work – vehicle preparation and warranty repairs – which accounts for 70% of their workshop loading.
“To feed the volume we sell, you have to be preparing a number of cars every day. One of our biggest challenges is making sure that flow- through meets the expectations and demands of the sales departments,” said Veale.
Now Carbase is marketing its own service plans, he concedes the pressure will grow.
“We’ve got to get extra capacity as it is just to feed our sales departments, but as service plan penetration grows, we’ll have to make suitable accommodation for that. At some stage we’ll have to develop a prep centre with a retail workshop as well.”