AM Online

Trouble? What trouble?

The key to making a success of the troubled MG Rover franchise? Aggressive new car pricing, strong focus on used cars and good aftersales retention. RC Edmondson, a two-site Rover retailer based in Ipswich, Suffolk, is proof the marque can be profitable, even while national new car sales are falling.

But the group believes MG Rover and its senior management team have suffered unfair criticism from some quarters of the British press. This “one-sided argument” riles Edmondson MD James Davey.

“MGR has faced negativity from the start – ever since John Towers took over. And the media has short memories regarding the risks that he took on. It’s been an incredible job to turn the company around and the deals done with SAIC and Tata will help safeguard a future for the business,” he says.

“I think the product development work done by MGR since independence is excellent, particularly in view of the restricted budget. MG saloons in particular have been good for us.”

Edmondson is enjoying a strong year to date, thanks to those aggressive price offers, although the group has some concerns over September. Its biggest problem has been retaining and winning fleet business after MGR withdrew support a couple of years ago, but that looks set to improve after Rover revived its fleet strategy earlier this year.

Aftersales is vital. MGR’s free three-year servicing deals helps to retain customers, even if the dealer is paid warranty rates, while Edmondson’s add-on services like air-conditioning servicing and tyres brings in additional revenue. Tyres have been a particular success, especially since fast-fit firm Formula One Autocentres opened next to the Ipswich site. “It brought more customers to the area and our competitive prices meant our sales went up,” says Davey.

He takes a similar approach to the used car business, offering cars at competitive prices and with a competitive level of customer service – something that has been made possible by the group’s innovative approach to staff training and development. Edmondson, which achieved Investors in People in June, has been appointing quite a few new staff in recent months as it prepares for future expansion, but unlike at many dealers they are not thrown in at the deep end.

New starters will not attempt to sell a car for at least two months, and even then it will be a controlled build-up, starting with test drives. During this time they are building product knowledge – which is tested in spot quizzes – and shadowing sales staff. It’s a major time and financial commitment from the management team, but it’s one that pays off in terms of sales, repeat sales and staff loyalty.

Even when an employee does leave the business they often come back and Davey is usually happy to welcome them. “They tell other members of staff that this is a good company to work for compared to our rivals, which further improves loyalty,” he adds.

Edmondson became a dedicated MG Rover retailer in 2001. It also sells Tata vehicles as part of its franchise contract and is the carmaker’s most successful UK dealer. Formed in 1952 by Reg Edmondson as a Ford agricultural dealer, the business quickly moved into cars and expanded with Ford, flirted with Nissan and Renault, before taking on Rover. In 1999, the group had six sites and three Express factors.

An opportunity to expand further with Ford followed but the investment costs split the board, leading to a de-merger between the Ford and Rover businesses. The Ford operation became EMG; the two Rover dealerships remained Edmondson.

Since 2001, Davey has been working to a turnaround strategy which saw Edmondson downsize its premises, swapping one with Marshall Vauxhall. Loss-making divisions like the bodyshop were sold and the group moved into profit (2003: £500,000) after three years of losses above £1m. This year it will continue to improve profits, and predicts return on sales above 1%.

Future plans include acquiring one or two more franchises (which could be put into the existing Ipswich and Woodbridge showrooms) to reduce the reliance on MG Rover, although further expansion with the carmaker is not ruled out.

Talks are already in progress.

If you are not a registered user your comment will go to AM for approval before publishing. To avoid this requirement please register or login.

Comment as guest


Login  /  Register

Comments

No comments have been made yet.