The superstore in Watford, branded Karma Cars, will be the first in a network which could eventually total 10 outlets funded by the Private and Commercial Finance Group (P&C). The company, which specialises in underwriting specialised business like imported cars and supplying customers who find it difficult to source funds, makes no secret of the fact that it is entering car retail to boost its finance penetration. Consequently, Karma will flip the traditional buying process on its head by making finance the initial focus.
“We will put finance before the car by asking the finance questions first and then showing the customer what they can afford,” says operations director Shane Robinson, a former Lex Vehicle Leasing divisional director and DaimlerChrysler head of remarketing.
Karma will be charged only with breaking even: its priority is to act as a shop window for the group, not as a significant profit centre.
Aftersales will be a key part of the “peace of mind” proposition, although Karma will not carry out its own service and repairs, preferring to allow customers free choice. Every car comes with a 100-day warranty. “We want to take complaints out of the showroom by treating customers properly if something goes wrong,” says Robinson, who describes the template model as a combination of a Richer Sounds hi-fi chain and Starbucks coffee house.
The Watford site will accommodate a 45,000 sq ft showroom with an additional 30,000 sq ft exterior space, enough to display 230 vehicles. Investment in the facilities will total around £500,000, while the former Texas site, which also includes P&C’s new contract hire company, is on an eight-year lease.
Karma expects to sell just over 2,000 cars a year on a stock profile centred largely on mainstream models like Mondeo and Vectra, aged up to five years old and sourced from ex-fleet and auctions. The average retail price is expected to be around £6,000, which equates to a basic annual turnover of £12m.
“Used car retailing is mediocre at best and we want to do a few things different,” says Robinson. “We will open one site a year until we get to five or six, then we will reassess the business.” He doesn’t rule out a 10-strong network, adding: “We will pick off the non-provincial areas like Swindon and Reading – places which will support one used car site – but not the large cities like Manchester or Liverpool.”
Sites encompassing the north and west of the M25 could be the first to follow, possibly around Cockfosters and near the A4.