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Dunn goes Nationwide with target of 150 Autocentres

Tom Dunn, managing director of Nationwide Autocentres, is back heading a third of the business he worked to develop.

Mr Dunn helped Lucas found the technical repair and MoT network which was bought by Lex Service. Under the new management, as operations director, he oversaw the growth from 50 to 137 centres.

A year ago Mr Dunn left to become marketing director of Unipart but kept a close watch on developments at Lex Autocentres.

He felt a new policy – led by executives at RAC motoring services, now part of Lex – was flawed. Lex decided to sell 41 of the smaller Autocentres and Mr Dunn, with backing from NBGI Private Equity, last month acquired the centres, which are being rebranded Nationwide Autocentres. The purchase price was not revealed.

Mr Dunn heads the management team which includes former Lex managers David Staniland and Roy Mitchell who are regional directors.

“The Autocentres were designed to service all-makes cars from three years old to 15, focusing on MoT, servicing and technical repairs,” he said. “The RAC proposition was different. They wanted more of a fast-fit type network with tyres and exhausts but this didn't suit the business.

“Companies that mix fast-fit with the technical side often fail, for example Charlie Browns. Not even Tom Farmer achieved this mix with Kwik-Fit.

“Lex made their decision to sell these sites based on size/location and potential to expand. They sold the small outlets – the ones they saw no future in – but the decision wasn't based on performance. We have acquired some first class performers.”

Mr Dunn reverted the Autocentres back to their core business. “We are in a niche area, which is purely technically-based repairs,” he said.

“But we have to think of the future, so we will bolt on additional products such as aircon, LPG conversions, security equipment and satellite navigation. They are all growth areas of the technical market.”

Mr Dunn has brought back many ideas from the US, where, he says, technology is “around 10 years ahead of the UK”. He added: “But we are 10 years ahead of America in terms of quality standards and customer care.”

Nationwide has ambitious expansion plans. It is targeting around 150 outlets within three years, though Mr Dunn has not ruled out expanding to a 1,000-strong network.

“If the fast-fit networks like Kwik-Fit can have 1,000 outlets, there is no reason why the technical repair centres cannot,” he said.

Expansion will come through acquisition. “Greenfield sites have their advantages, but I'm convinced that the acquisition route is the way to go – it's earning enhancing from day one and keeps costs down,” said Mr Dunn.

“Long-term we may look at mainland Europe, but there's enough to go at in the UK at the moment.”

The £10m turnover group will undergo a period of consolidation and cost realignment this year in order to return the level of profits required for expansion. “I've no great desire to grow sales massively this year or open any more outlets, though we are looking at some opportunities,” said Mr Dunn.

“We have been able to take some costs out of the business. For example, we only have eight administrators at head office to oversee 41 branches.”

He also changed the opening/closing times. “We open later and close earlier, which gives us more productivity for each hour worked. As the business builds up we will open longer, but only if it is in line with our productivity targets.”

The acquisition and subsequent rebranding to Nationwide has received a surprising response from customers. Each centre carries out exit polls, which reveal that 97% of customers enjoyed the visit and would use the company again.

But the poll also showed that “a large proportion” of customers believed they were using Lucas Autocentres.

“Many customers still see the business as Lucas, even though it has changed hands twice,” said Mr Dunn. “It goes to show that it is the people, the managers and the quality of service that makes the business, not the sign over the door.”

He kept on most of the Lex personnel. “We majored on the fact that only the name had changed – the people are the same.”

Nationwide enjoys “good relationships” with contract hire companies and PHH fleet services, and remains a preferred supplier to Lex Vehicle Leasing.

Mr Dunn, though, is careful not to take too much business from the fleet side.

“Fleet business tends to be high cost, low margin work that is difficult to manage,” he said. “It is crucial to the future of the company, but it must be capped off at a certain percentage and not allowed to take over the business.”

Although business is dominated by retail customers with 3-15 year-old cars, Nationwide also offers servicing on newer cars to manufacturer standards. “We follow recommended schedules and use OE parts to fulfil warranty requirements.”

Some carmakers remain reluctant to share technical information with independents, despite being required to by EU law, though Nationwide has not suffered many stalling tactics.

Mr Dunn said: “We need to do a re-education job to inform customers that we, as an independent, can do these types of jobs.

“We are having some success, but it is slow – main dealers have done a good job convincing new car buyers that they have to go to a dealership for servicing and repairs.”

He believes Block Exemption removal is “long overdue”, and expects the European Commission to get rid of it. “We will have massive opportunities if this unfair rule is removed – the underdogs will get a better share of business.”

Mr Dunn believes quality is crucial to success. He accused many companies of “banging on about it, but few achieve it”.

“Lex recognised that quality must come above commercial if the business is to be a success – we lived and breathed it,” he said.

“As an industry we need to shout louder about what we have done to clean up the trade. The industry has worked hard to put itself in shape and while we are nowhere near where we need to be, there are far worst standards in other areas of business.”

He is a firm advocate for some form of regulation in the servicing and repair sector.

“When you are repairing a car, someone is going to drive it at 70mph or more – yet the repairer has not been regulated. Anyone can set up a garage – you don't need any qualifications or experience,” he said.

“Yet, while the motor industry is an easy target for the Government and legislators, they refuse to do anything about regulating companies to stop anyone setting up a garage.

“The Government is responsible for allowing the rogues to continue operating.”

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