Speaking at the launch of the first Karma Cars used vehicle supermarket (first revealed in AM July 16, 2004), operations director Shane Robinson explains how his business aims to distinguish itself from used car trade competitors.
“We want to attract people who normally fear the traditional car buying process,” he says. “When a customer arrives my sales staff will give them our Karma Way guide, then we leave them to it. They can look around, help themselves to a coffee, check our stock on the computer terminals, then approach us when they’ve seen a car they’d like to know more about.”
Used car retailing is something of a departure for its parent company, AIM-listed Private and Commercial Finance Group (PCFG). However the management believes retail is a great opportunity to sell its F&I products – chief executive Tony Nelson plans to open two additional sites in the south early next year.
Consequently, finance options are introduced early in the sales process, and all customers are offered aftercare packages including three standards of extended warranty, GAP insurance and payment protection cover.
Target customers are aged 20 to 40 and looking to buy a car on finance, with as little as £350 deposit required. Those who do not find a suitable car at Karma Cars still receive a finance certificate for PCFG’s products, which Nelson hopes will bring additional business if they purchase a car elsewhere.
The first Karma Cars is located off Junction 5 of the M1 in Watford, on the 1.2-acre site of a former Asda home delivery depot, which had been empty for almost two years. PCFG imagined the local authority would be keen to see it revived, yet delays and obstacles during the planning process meant the opening, originally planned to have been in January, wasn’t possible until late September.
PCFG has the site on an eight-year lease, and has invested about £275,000 on refurbishments to create a comfortable sales environment. While expected to sell 2,000 units annually, and drive a 10% increase in PCFG’s finance transactions, the business is initially being charged with breaking even and serving as a business model for further growth.
The 45,000sq ft building houses up to 150 cars, with a further 80 on a forecourt. Stock is typically volume product, a maximum of five years old and £3,000 to £15,000 in value, and all vehicles have a 100-day “bumper-to-bumper” warranty, seven days free insurance for over 25s, a 30-day exchange policy and a full tank of fuel.
“We have to think about repeat custom and how we can establish ourselves in a market where anybody can sell cars,” says Robinson. He adds that the branding was particularly important – consumer clinics showed the Karma name was accepted by most people.