Harwood mixes ownership of a successful racing stable with ownership of a successful dealer group, a testing balancing act that requires finely honed business skills and strong management.
In fact, Harwood confesses to not being particularly interested in cars. He took on the business after his father died having already established Coombelands stables in 1965. That’s now a 400-acre, 100-horse operation, one that has produced a string of winners including Young Generation, Kalaglow and Dancing Brave.
But he does love business. “Horses are my first love, but I’m totally focused on the dealer group now. I’m a horse man and a business man – it’s my management team that are the car men,” he says.
Handing over the Coombelands reins to daughter Amanda, Harwood initiated a growth spurt at the West Sussex-based retail group, which included a number of acquisitions and a shift from volume franchises to premium. Joined by chief executive Glyn Woodage, he offloaded Renault and Fiat – “there’s no viability in volume sales in this area” – to focus on the Bentley and Land Rover showrooms in Pulborough, and Jaguar in Chichester.
“When Glyn joined in 1992 the business was going nowhere,” says Harwood. “And I was going nowhere in horse racing. My daughter took over the stables and I went back to work.”
At that point the group turned over £15m; this year it will hit £175m. And it’s a profitable business, despite the tough trading environment faced by all retailers this year. Margins will be just below 2%, slightly behind the forecast 2.25% and almost a full percentage point behind 2004’s 2.8%.
The dip is largely due to the purchase this year of Testwood’s Audi dealerships, bodyshop and MAN/ERF franchise in Southampton, and Tester’s Land Rover site in Edenbridge. Harwoods was also hit by the MG Rover collapse, although its exposure was softened after handing the carmaker its notice three months earlier.
“It still cost us £100,000 but it would’ve been a lot more if we hadn’t already given notice,” adds Harwood.
He had kept the Rover franchise during the brand reshuffle purely because he had good relations with the local Rover field rep. While under BMW ownership, a substantial amount of money was invested in refurbishing the showroom – then BMW sold the carmaker to the Phoenix consortium. “It was a very bad experience – BMW didn’t look after us,” says Harwood.
#AM_ART_SPLIT# The Rover showroom is being refranchised as Harwoods’ third Audi site, due to open shortly. The group now has eight dealerships with the emphasis firmly on VW Group brands and Premier Automotive Group. It’s a strong mix of franchises that are well suited to the West Sussex/Hampshire region. Harwood also owns two truck centres and three bodyshops.
He has no plans for further expansion. “We are now in a period of consolidation after the recent growth. We have 50% gearing and we don’t want to get stretched further. Now it’s about getting the cashflow right. I suspect we are looking at a tough year in 2006 – if we achieve 1.5% it will be a satisfactory performance,” he says.
Harwoods’ flagship Bentley showroom in Pulborough
With a business role based on “planning, accounts, spending the money, developing the business and acquisitions”, day-to-day management is down to the senior team: chief executive Glyn Woodage; Audi brand director Ed Oakley, who joined with the Testwood business; marketing director Martin White; finance director Paul Suter; and parts director Phil Sargent.
Harwood puts a lot of attention on KPIs and is currently changing the way his accounts are set up to mirror the carmakers’ composites. “That way we can look at how our individual operations compare to national averages,” he says.
“We have good franchises – niche brands are saving the bacon of a lot of groups at the moment. And we have new product coming next year which will bring people into the showroom.”
So what’s his secret to success? “You need the right franchises, the right management team, hard work and a bit of luck.” Next year he’ll be tasking his team to improve customer communication, and plans to develop a system to enable staff to handle enquiries first time everytime. His own challenge is to ensure costs are controlled, and he admits to “saying a little prayer” to help the business on its way.
“We have close relations with the carmakers. We are treated well and it’s a pleasure to work with them,” Harwood says.
“There are many complaints about showroom standards. They are costly but are probably necessary. The waste is in the specialist furnishings, which is a load of nonsense. We could save half the cost and have better furnishings if we did it ourselves.”
Despite the challenges ahead, 66-year-old Harwood has no plans to sell. He often attends AM events to pick up new tips and says having a business is “a great thing”.
“This is a family concern – I’m building it to hand on to successors. Harwoods is not for sale and never will be,” he adds.
#AM_ART_SPLIT# ‘I’m happy to earn a living’
Guy Harwood believes the Government and European legislators need to better understand how business works if they are to achieve their goal of improving customer service standards.
“The Government can screw manufacturers with competition but if they don’t look after manufacturers and retailers, there won’t be any showrooms – is that what they want?” he asks. “If manufacturers go broke what will that achieve? If the Government doesn’t strike a balance between competition and looking after business, customers will end up with less service.
Either showrooms will disappear or staff will disappear and they will only be able to buy cars on the internet where there’s no customer service.”
Harwood dismisses suggestions that rules changes under Block exemption and Location Clause will give dealers greater influence, despite consolidation creating fewer, much larger groups.
“Manufacturers will never let dealers dominate the industry – if dealers think they can, they are barking up the wrong tree,” he says. “Manufacturers put all the investment into research and development for cars. We are the franchise and we are only as good as the cars they produce. And why would we want to control the industry; we only need to control our own business.
“We talk a lot about manufacturer pressure – some of it is unreasonable, some of it is reasonable. It must be in the interest of the manufacturers to get the relationship right and lots of discussions take place via the dealer councils,” he continues.
“I’m just grateful to earn a living that the franchise gives me.”
Rising star: Harwoods turnover 2000-2005
Since entering the AM100 in 2000, Harwoods has steadily increased turnover, while ensuring returns stayed around 2%. This year has seen the biggest rise after Harwoods purchased dealerships from Testwoods and Testers. In 1992, turnover was just £15m.