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'Specialists' seizing sales opportunities

People always look for patterns, especially when retail activity seems sporadic.

Talking to dealers it is difficult to find many who are enjoying success with both new and used. Those that are having some success tend to be dealers where separate specialists manage each side of the business.

Many dealers have an overall general sales manager who has a strong grounding in either new or used. But specialists are generally able to make the most of any opportunity no matter how limited.

There are different skills involved in marketing new and used cars. Manufacturers tend to exert control on the new side whereas for used cars there is often much more scope for dealers to use their own marketing strategies. This is usually the best way of differentiating their offer from the competition.

For many dealerships the idea of two specialists may seem like an expensive luxury - but that could be too short sighted. Perhaps taking the initial risk on two sales managers could lead to the policy funding itself.

This leads to a second issue - the current and future prospects for the smaller dealer overall.

These people are being hit from every direction. Take, for example, the Competition Commission new car prices inquiry and the recent edict from Trade and Industry Secretary Stephen Byers. It seems the major beneficiaries from his order will be the large operators with the buying power to take advantage of the possible discounts.

The greater the number of cars you buy from a manufacturer the bigger the discount, which puts the big groups in the driving seat on price.

This applies equally on used cars where the big sites also have the buying power to get what they want at a large discount. They win because they can retail cars at close to the money smaller competitors are paying to buy theirs.

I recently witnessed a large car supermarket buy a basket of late-plate cars at £500 per unit less than the price an average trade man could buy single units. In that situation you are really on to a winner, with negligible recon costs and no worries about a warranty. The resulting sticker prices were lower than the single unit price being offered in the trade.

With a trend inexorably leading to the domination of the market by a few, the Competition Commission can only have accelerated this process. Couple this to the fact that customer loyalty is a thing of the past, what have the smaller dealers got to offer over their bigger competition

Aside from the personal touch, very little, it seems. So we might expect to see the smaller dealers developing their aftersales activities in order to diversify and supplement revenues. But even here there is stiff competition from volume players in the independent aftermarket.

It seems there is nothing to halt this swing in the balance of power and it may well be that before long the owner driver operation is just a fond trade memory.

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