Online car retailer OneSwoop has recently celebrated its first anniversary and says it is enjoying record sales while expanding its business portfolio, dropping hints on a series of deals and partnerships in the coming months and at the same time revamping its website.
'The future's bright', says OneSwoop operations director Andy Carroll when he spoke to AM-online editor Jeremy Bennett at the company's Hammersmith offices.
What are the origins and what was the inspiration for OneSwoop?
OneSwoop was created in 1999 by two Dutch brothers with a dealer group in the Netherlands as an online car retailer and the site went live in March last year with a pure UK focus, sourcing vehicles from 100 European dealers, but with a longterm plan to go pan-European. Financial backing comes from a few financial institutions, venture capitalists and also, BP.
The management team has a lot of automotive knowledge. Our sales manager was a dealer principal for Arnold Clark and Carland, the logistics manager came from Nissan and the dealer operations manager worked for CW Lease and Vauxhall. I was formally GM Europe's commercial vehicles sales director for 10 years.
What made you move from the security of GM Europe to an internet start-up?
GM was 'cosy and comfortable'. But I saw the chance to exploit the import opportunity, the chance to exploit the price differences between the UK and rest of Europe. But that was not the only inspiration. Importing is just one part of the offer and we weren't wholly motivated by the 'rip-off Britain' campaign.
We offer savings of up to 25% on UK on-the-road prices. The average is about 16%. But we will not source vehicles from the cheapest markets, such as Denmark where the tax is so high the cars have to be priced low by the manufacturers. We have to balance price with lead time. Manufacturers are very sensitive to righthand drive cars coming out of Denmark since they lose money on every car they sell. We can't run the risk of having unreliable supply.
We will source principally from Germany or Spain where the time from order to home delivery is around four months, build-to-order, and the manufacturers are less touchy. In the UK the wait for a build-to-order car from a franchised dealer is about three months.
You're implying manufacturers still put obstacles in your way.
There are always little niggles. Sometimes it's the individual importer and sometimes the manufacturer. They typically make the process of getting a price for the customer difficult or arbitrarily extend the delivery times, so a dealer can get a lefthand drive in eight weeks, but righthand takes 12 or 14.
Manufacturers are charging way above the acceptable supplement for righthand drive. The actual cost to them administratively is peanuts, perhaps £50 since it only takes a little manual intervention to put the order into the system. However, they will charge totally above that, around £630. There's no justification for it.
How do you react to this provocation?
The European Commission is made aware and such action is taken into account in its considerations on the future of new car retailing. Mario Monti (the Competition Commissioner) has made it clear this sort of behaviour will have a bearing on his final decision.
Do you make the EC aware of difficulties often?
Not too often. We don't want to become confrontational. We've sometimes had to talk to manufacturers' UK headoffices when one of their service centres or dealer principals dispute the warranty our cars our supplied with. The law is clear that they have a duty to honour a European warranty.
The EC has dossiers on all the manufacturers and our getting involved in individual battles is not necessary.
What's your view on the future of Block Exemption?
It needs modifying not abolishing. Abolition would not be in the best interests of th customer. Such a huge step change in the system would cause confusion and a lot of people would throw their weight around. The water's would become too mudied. The servicing and safety of the vehicle must be closely controlled and not opened up to all and sundry.
However, the industry as a whole is in a timewarp as the way it's structured has not changed for decades. We would want to see multi-brand showrooms with dealers given greater freedom of selectivity, to be able to chose where they establish a sales point. Manufacturers have too much power to limit the number and position of their dealerships, and block newcomers to the market.
Manufacturers control the market by keeping it fragmented.
Another wish is for direct sourcing from manufacturers rather than having to go through the complex supply chain that adds cost.
Those are your hopes, but what are your predictions on the changes to Block Exemption?
You can't under-estimate manufacturers' lobbying power which will limit major changes. They will fight - and probably win – the battle to protect their aftermarket business. Manufacturers make more than all their annual profits in the aftersales business. New car sales are almost a loss-leader.
I believe there will be a liberalisation on the sales side. There will be a move towards multi-franchised showrooms as manufacturers lose their dictatorial powers. The carmakers can't win a fight against something which would be of such significant benefit to consumers.
Won't this liberalisation, easing the shopping experience for the consumer damage your proposition as an online multi-franchise showroom?
The number of people shopping online will grow by between five and 12%. Multi-franchise sites will not have a significant impact on that. The simplicity and ease of internet purchasing will remain.
What do you think will happen to new car pricing in the UK?
There will be further price harmonisation, but not to the point where we won't be able still offer significant savings. Manufacturers have too much at stake to allow complete European harmonisation. They don't make money in almost every country, with the exception of Germany and the UK. They can't afford not to maintain the pricing disparity.
You have just, quietly, relaunched the OneSwoop website. What's new?
We've changed the look first of all and functionally making it more intuitive, based on the way our customer have shopped so far. The first question is. 'what car are you looking for?', then you'll be given details of what cars are available immediately and what are build-to-order. So the customer can measure up price savings against waiting time. A customer can also spec up a car based on the indicative monthly payments. We offer PCPs through First National and finance from Marks & Spencer.
Are partnerships are a key part of your business plan?
The elements of our future proposition are the relaunched site, increased brand offering and quality of our offering. The other large growth will come from our new division, OneSwoop Business. Because of the investment made in our dealers and at our offices (£500,000 on the website and its order management system) and the knowledge we have of customers' expectations we are offering our expertise to other retailers. We have been approached by a few to manage order fulfillment for them. We will be the service provider for on and offline automotive retailers.
A prime example of this is the Carbusters' website. When a customer places an order with Carbusters, OneSwoop manages it. The advantages to us come in the aggregating the supply chain, giving the dealers better terms as we drive down costs.
We are in talks with six online retailers to supply the same service. We are also in discussions with quite a few high street retailers who have a toe in the water of the auto industry and are looking at what's the right approach.
In the next six months we plan to go beyond order fullfilment to take over the customer facing areas for some of our new retail partners. We are about to go live with one of these with OneSwoop customer facing.
Does Block Exemption have anything to do with the retailers you're in talks with going no further than putting 'a toe in the water'?
It is a factor. But there are other drivers, such as customer awareness and the development of the internet.
What does the future hold for OneSwoop?
We aim to expand our offering, to cater for those who are prepared to wait longer than normal for a car to make the savings, but also for those who simply want to buy a car in a haggle-free environment and don't want to spend time going to showrooms. For that kind of customer we're looking to source cars from the UK, overcoming the weeks and months of waiting inherent with European sourcing.
(OneSwoop has announced a vehicle sourcing deal with CD Bramall. See story in See Also section).