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AM Awards 2005

AM Hall of Fame

Winner: Ron Sewell

ver a career spanning five decades in the motor industry, just about every vehicle manufacturer, finance house and oil company in the UK – not to mention a substantial number of dealerships and groups – has asked Ron Sewell and his team for help in a wide range of development activities which have made a major contribution to the professionalism of the trade.

Ron was responsible for initiating in the UK the Business Management systems which are so much a part of manufacturer/dealer relations today. As a young professional accountant in the 1960s, he felt strongly that he should help his clients to improve their profitability – not just conduct an audit.

One of his clients was a Standard Triumph distributor for whom he designed a set of departmental management accounts that helped to dramatically improve performance.

The manufacturer then asked Ron to provide a similar service for all distributors in the network. As a result he also launched a full supporting service of inter-company comparisons and training to ensure the network benefited from this management information.

Subsequently, a number of other vehicle manufacturers and importers asked his team to do the same for their dealer networks and what was then the Motor Agents’ Association (now RMI) for their members.

Tips from NADA

Ron started a series of ‘profit clinics’ at which 20 non-competing dealers would meet to discuss their confidential performance figures and debate new ways to improve performance.

For many years, he also produced a booklet highlighting the relevant key performance yardsticks of each activity within a dealership. For many senior executives, these became an essential management tool against which they could compare the performance of each depot in their organisation.

In 1969 Ron, and his wife Joan, led the first study tour of dealers to the NADA Convention – then the North American Dealer Association, now the National Automobile Dealer Association – in America. Many motor industry executives benefited dramatically from these tours, which also included visiting the most progressive of US dealerships.

In the late 1970s he was advocating the concept of a marketing manager in every dealership, responsible for all aspects of customer relations. Since then, he has preached the need for one integrated customer database, covering all the relationships that a customer has with every activity within the dealership.

It is a message which has only been accepted relatively recently.

Ron has written more than 24 books and reports focusing on how to improve performance. His most powerful was ‘Fly with the Geese’ which argued that the automotive retail sector was over-managed and under-led. His theme was that if the front-line people were trained and motivated, they did not need managing and would respond to being led. It was a vital message that has still not been fully accepted.

Best practice - Sewells style

As well as the books, Ron developed a series of on-the-job training aides backed by ‘best practice’ type reports, underpinned by the weekly Sewells Digest. The intention was that these sales, service, parts, and general management guides could be used for in-company training with the best practice reports becoming items for discussion at monthly management/board meetings.

Ron and Joan have also been very keen supporters of the automotive industry charity BEN, with Ron being both a Centurion and a Titan. In addition, following the death of Joan’s daughter, they raised £55,000 – almost exclusively from the motor trade – to help the Bristol MRI scanner appeal.

Ron has done his best to help his many friends in every sector of the motor industry by providing services he felt were needed in a rapidly changing environment. He was the first to challenge the concept of an integrated dealership, arguing that people would travel to buy a car, but wanted it serviced near their homes or work.

His ideas – dressed up with the title of ‘unbundling’ – are now finding favour with retailers and carmakers following the revisions made to the block exemption regulations and the growth in standalone authorised repair centres.

In essence, Ron has always done his best to say and do what should be done in the best interests of the industry. He has continued to do this by creating the Automotive Fellowship in 1994 as a club for senior executives for every sector of the industry, to build relationships, and to brainstorm the future, while also looking into leading edge technologies.

That so many senior executives with massive workloads are prepared to give priority to these meetings speaks for itself.

Ron Sewell deservedly becomes the first person to be inaugurated into the AM Hall of Fame.

Personality of the year

Winner: Peter Johnson

He’s been variously described as “one of the great unsung CEOs” working in public companies today, “a good strategic thinker” and “a thoroughly decent bloke”, but what makes Peter Johnson really stand out is his willingness to commit a substantial part of his precious time to an organisation designed to raise standards across the automotive industry.

Automotive Skills finally got its Government sector skills licence one year ago. At the time Johnson said it was an opportunity for the industry to attract “the highest calibre of recruits, in particular more graduates and more women”.

The Inchcape group chief executive could easily have sat back and allowed other retail bosses take responsibility for boosting Automotive Skills’ profile, but he didn’t. Chairman for the past 18 months, Johnson has been an ever-present at Automotive Skills events, pushing forward the aims of the organisation to the industry and the media.

He typifies the mission statement: to work with employers to improve the motor retail sector’s economic performance through the development of a high skilled and motivated workforce.

Transforming Inchcape

On top of all this, Johnson still has a global automotive services business to run: one that a few years ago was struggling to return profits. Such is his personality – typically underselling both himself and his achievements – that it’s easy to overlook his role in Inchcape’s revival.

Indeed, one analyst who regularly met Johnson before he took control of the Inchcape business professes to be “dumbfounded” by his quiet success. “But you’ve got to hand it to him – he clearly know what he is doing,” he adds.

The City agrees. Inchcape’s share price has rocketed from 220p in 1999 to more than £20 today. Global profits have grown each year by double digits, with the group expecting to top £4bn turnover this year. Transforming the business was no easy task. Inchcape owned an incongruent number of ventures across the world, from cigarettes to medical products and business machines to bottling plants. Johnson’s brief was to offload the non-automotive operations, refocusing the group on its core business.

Building on success

Inchcape now has operations in six core countries worldwide – UK, Belgium, Greece, Australia, Hong Kong and Singapore – and it is closely monitoring potential opportunities for expansion into Eastern Europe and the Far East, particularly China.

In the UK, success is built on establishing scale relationships with carmakers. Inchcape’s policy is to have 5-10% of its key franchise partners’ market share: those partners are primarily premium carmakers like Toyota/Lexus, BMW, Ferrari and Mercedes-Benz but also Ford and VW.

Johnson has ensured the group is focused on automotive services, not just car sales. Consequently, it has an expanding fleet services division, a successful logistics operation, and interests in refurbishment, remarketing and e-commerce.

So, Peter Johnson – responsible for reviving Inchcape’s fortunes and for helping Automotive Skills tackle the big issues on recruitment and training, and now AM Personality of the year.

Retailer of the year

Winner: Listers of Coventry

Listers of Coventry has doubled in size over the past four years – it was expecting to hit £399m turnover last year – but this rapid growth has not come at the expense of profits or returns on capital employed.

Nor at the expense of customer service. The group has a dedicated call centre to ensure all customers are contacted to evaluate their experience, with the results bundled into a report for each site. A large part of dealer bonuses are attributed to the CSI results – its mission statement is: “Happy customers return; dissatisfied customers do not.”

Listers carefully analyses its competitors in the new car market and aftersales sector for best practice tips, but also recognises that its own franchised dealerships are competing against each other for business – in Coventry, for instance, it has nine showrooms.

Staff retention is a key focus: Listers invests £1m a year on training and recruitment. New staff undergo a week’s residential induction process, while all employees who go through its 7,500sq ft development centre in Stratford upon Avon are tracked. Retention of new sales staff after six months’ service last year exceeded 87%, compared with 63% a year-and-a-half earlier.

Management processes

Commenting on Listers’ win in the AM Awards, Nigel Rickards, Listers commercial director, says: “It comes as a total surprise but we are delighted to win. It’s unfortunate that my managing director is unable to be here tonight because he is on holiday but I can say that he will be absolutely delighted with this achievement.

“The group has made huge efforts in order to make sure we manage our relationships with manufacturers and customers, and I believe it is a tremendous privilege to be recognised by AM.”

Asked whether other retailers could learn from Listers’ tightly managed processes, Rickard says: “Without wanting to blow our own trumpet, we just concentrate on what we do best.

All our focus is on the customer – everything we do is focused on making sure we deliver the best possible service to our customers, to look after their needs, and make sure that they will come back again and again.”

Carmaker of the year

Winner: Lexus GB

New Lexus GB managing director Steve Settle has a tough act to follow. His predecessor Karl Schlicht’s final 12 months oversaw a period during which sales rose 5.46% and the carmaker rated top by consumers and retailers in a number of high profile surveys.

In last year’s JD Power report, Lexus was ranked No 1 carmaker by consumers, with individual wins in the consumer service satisfaction and dealer aftersales services categories.

And it replicated that success in both the Sewells Information & Research and RMI dealer attitude surveys, topping the Sewells study for an unprecedented third consecutive year. Schlicht put the success down to the company’s close relationships with its retail network, something that Settle intends to continue.

Leading by example

“If we can lead by example and allow our dealers to be profitable during the tougher days; if we can be honest with them about the future and walk the talk, then our dealer network will provide outstanding customer service,” Schlicht told AM last year. “We provide the high quality vehicles, our retail centres deliver the rest.”

The sales increase last year came in the face of little new product to attract showroom traffic and still no diesel option. The critically acclaimed RX300 and SC430 are nearing four years old, the IS and GS ranges are even older and due for replacement soon (the IS 200 will make its world debut at Geneva next week, as will Lexus’s first oil-burner). The hybrid RX400h – the first real performance petrol/electric sports utility vehicle – goes on sale this year.

Separate network pays off

So it’s testament to Lexus and its retailers that consumers continue to fill the showroom. Much of that comes down to the network continuity since Toyota took the decision to create a separate retail network for its premium Lexus division – a decision that is clearly is paying off.

There have been few changes to the network, and few additions: Lexus’s policy is for retailers to absorb more volume through their existing sites rather than appoint more businesses.

Stuart McCullough, director of Lexus Europe, says: “Our UK network, at 48 centres, is around a third the size of our competitors. We deliberately limit ourselves so our retailers have greater focus. It means they are profitable enough to offer the level of services that we want.”

McCullough is keen for retailers, currently averaging 190 new cars each, to increase sales per site to around 360 – taking UK sales from 10,000 last year to 18,000. But each business needs sufficient staff to handle the growing volumes.

“Dealers need to have the time and space to deliver what the customer wants – they can’t be rushing around in the high volume business without the staff to meet those requirements,” McCullough says.

Steve Settle intends to make an immediate impression, outlining plans for Lexus to raise sales by 20% this year to 12,000 units. That will be largely incremental business on the back of the new GS, due in April, and the RX400h, on sale in summer.

If he hits his targets, expect Lexus to remain at the top of the dealer attitude charts again this year.

Large retail group

Winner: Listers of Coventry

Listers of Coventry is a model of consistency. Every year it improves turnover and profits on a seemingly unremitting arc, and every year it produces respectable return on capital employed.

Established in 1979 by Terry Lister as a Volkswagen and Audi franchise in Coventry, and this year celebrating its quarter century, the group has grown to 35 sites representing 10 franchises.

The business includes two commercial vehicle sites (Volkswagen), two standalone bodyshops, two PDI centres and Honda motorcycle franchise, as well as car franchises for VW, Audi, Honda, ChryslerJeep, Seat, Subaru, Toyota, Lexus and Mercedes-Benz. Long-term relationships with carmakers, consistency employment, training and customer satisfaction and re-investment of profits drive this group’s strategy.

Much of Listers’ growth has come over the past four years – a period in which the group doubled in size – taking turnover to just below £400m, and a place inside the AM100 top 30.

Setting tough, but achievable plans, and assessing the facilities, equipment, people and financial resources necessary to hit its targets have enabled Listers to increase profits during this rapid expansion (it’s a listed Sunday Times Fast Track 100 company).

Five-year plan

Performance is tracked at board level each month and year-to-date against the plans and against the previous year. Each department also holds daily, weekly and monthly meetings to gauge its performance against the strategy.

In 1999 Listers embarked on a five-year plan to create its own marketing department. Its goals were to cut costs, reduce the burden on dealer principals, exploit new media like the internet, embrace product placement at events, improve internal, manufacturer and customer communications and streamline processes. From a team of one in 1999, this operation now has 19 staff and many of the objectives are being achieved.

In a further drive to cut ad spend and pursue marketing activities which have little or no cost implications, Listers set its marketing managers a competition to create non-traditional methods to promote its franchises. Prizes were awarded at Listers’ awards ceremony last December, an opportunity to recognise staff achievements.

Introduce a friend

From new car sales to aftersales and F&I to training and recruitment, Listers has an established process. And it’s no surprise the group was highly commended in the AM Awards recruitment category (see page 59). As well as the usual job ads in local press, internally and online, Listers operates an ‘introduce a friend scheme’ where staff can earn up to £650 for recommending family or friends who join the group. It will also recruit whenever the candidate is right, even if that means over-staffing in the short-term.

AM Awards assessor Carter & Carter comments: “This company is very entrepreneurial with a strong focus on results delivery, while ensuring customer satisfaction is a key driving factor for all staff within the operations.”

In 2001 Listers was placed third in the Automotive Management large retail group category. This year it’s a worthy winner in the AM Awards.

Small retail group

Winner: Hodgson Automotive

Hodgson Automotive boss Kevin Walter has worked for big plcs, smaller regional groups and car manufacturers during his career. But his eye was on a bigger prize: to run his own retail business.

With funding from former Bates owner Edward Belcher, who promised Walter a slice of the profits were the group ever sold (it was, to Inchcape in 2001), he acquired a 90% stake in Hodgson, five months after joining the group as managing director in February 2003. Former owner Melvyn Hodgson retains 10%.

The Audi dedicated business has three showrooms and one used car centre in the Essex to north Hertfordshire region with more than 150 employees. Turnover was forecast to hit £55m last year with operating profits of £885,000.

Walter bases his business philosophy on MARS – to be the Most Admired, Respected and Successful Audi partner in the UK – on a belief that within the franchised sector the only USP is people and process. As he says: “If the team feels involved in setting the objectives and making the rules, there is a good chance that they’ll make a valued contribution and stick to the rules.”

Strong team culture

Regular communication to all members of the team helps to reinforce the Hodgson values. A glance down Walter’s CV reveals people performance, motivational and team building skills as well as time management and presentation course. Does this have any positive impact, or is it as one rival retail boss suggested, a load of “mumbo-jumbo”?

Carter & Carter’s assessor’s summary provides the best answer: “Hodgson has one of the strongest team cultures that we have seen in a long time. The people in the business are genuine and place the customer first. The MD and all the managers place an enormous amount of focus ensuring they employ the best people who are aligned to the culture of the business. It works.”

New car sales rose 53% last year and used were up 58%, while margins on each are among the top 25% in the Audi network.

Thirty-five per cent of Hodgson’s enquiries come via the internet, and the company is used to the sight of customers coming to the showroom waving a cut-price paper quote.

“We sit them down, go through the specifications, ask them lots of qualifying questions in order to put them in the right car and they end up buying a model that costs more than their internet quote,” says Walter.

“People don’t want to buy online they want the personal relationship. We get higher retained margin on each new car sale, but it takes a lot of training to get it right.”

A five-year plan

Hodgson is looking to add its fourth Audi showroom, in Colchester, later this year and has clear business objectives for growth. Its five-year business plan, established in 2003, sets out a strategy for £70m turnover and profits of £1.75m, a 2.5% margin.

And Walter is already thinking past that point, considering further growth that might involve different franchises. What’s certain, however, is that any expansion will be funded through the balance sheet, not by attracting other investors – a lesson learnt from Edward Belcher and Bates.

Volume Dealership

Winner: Derek Sims

Three years ago Derek Sims was fronting his own head hunting company, finding staff for other peoples’ businesses. Then Toyota GB called.

The carmaker was keen for the former Sytner director to take control of a poor performing dealership in Northampton, a densely populated area of key importance. Sims accepted the challenge, purchasing the business in January 2003.

He set about recruiting an experienced management team that would focus and implement new processes across all departments, exploiting his head hunting skills to good effect, and worked on novel ways to motivate his staff force, such as weekend breaks, watches and TVs for hitting targets.

Rapid turnaround in fortunes

The turnaround was rapid: in 2003 Derek Sims posted a near £222,000 profit on turnover of £13.5m, compared with the £203,000 loss a year earlier on £7.5 turnover. The improvement was wholesale – new car sales more than doubled to 517 units and used cars tripled to 527 units, while service hours sold and parts turnover also saw encouraging increases. Much of the business was conquest, with around 75-80% of its part exchanges from non-Toyota marques.

Last year saw further improvements: £18m turnover and £453,000 profits. And of equal importance, customer satisfaction has risen from 64 points to 76.5 over that two-year period. Business targets across the board have been over-achieved by two years.

So what’s the secret to Sims’ success? One look at his AM Awards entry form is telling – “I believe my management team and staff deserve merit for the spectacular improvement in performance,” he says.

Full marks on people management

It’s no surprise the business also took the AM Awards recruitment title – investment in people is a major priority, with head count rising from 28 staff to 49 in two years. Each department employs one member of staff above actual requirements to ensure adequate cover for holidays, sickness and peaks in trading.

Anonymous employee surveys are carried out by third party assessors to ensure high levels of satisfaction in addition to regular appraisals, while a monthly cross-departmental working party looks at ways to improve business practices.

Awards assessor Carter & Carter could find no fault on people management, giving the company full marks, and that was further illustrated in the mystery shopping with Derek Sims’ staff achieving impressive scores of 94.4% on sales skills and 82.4% on service reservation skills.

Success measured against KPIs

Sims measures his success against other Toyota retailers, using 12 key performance indicators. He plans to continue growing the business, reduce debtors, maintain good stock turn and further raise new and used car sales.

Talks are in progress for a second site, while increasing focus will be put on pro-active marketing to tap other sources of business this year – including a telesales department.

Sims confidently predicts that the Northampton dealership will be one of Toyota’s most profitable outlets in the UK.

Small/niche dealership

Winner: Marshall Jaguar of Cambridge

Marshall Jaguar of Cambridge is one of many examples that demonstrates why the privately owned Marshall Group continues to grow. It leads from the front: from 2000-2004, new car units increased by 182%, new car gross profit by 171% and new car net profit by 233%. Used car performance over the same period is even more impressive: volume up by 196%, gross profit by 565% and net profit by 973%.

During that time service turnover rose by 168% and NP by 172%. Dealer principal Robert Ward says: “Average is a measurement used not as a benchmark but rather as a reminder where not to be.”

Using Jaguar’s key business management indicators, Marshall Jaguar reports sales expenses 14.9% below national average, used retained GP 149% greater than the network average, new retained GP at 453% higher than national average and used stock turnover 24 days versus the average of 70 days.

An incredible performance – but not at customers’ expense: the dealership pioneered a new generation of CRM packages to reach these heights and, in common with other professional retailers, it targets individual employees and departments with customer-related objectives.

The Marshall Way

Ward says that by concentrating on “true customer experiences”, simplified by innovative IT solutions, a consistent level of service can be provided. Marshall Jaguar uses CRM as a compliment to service rather than a substitute for it. All customer transactions are noted and generated through CRM and successful management of KPI results enables pulse-like responses to the local environment, which leads to greater competitive advantage.

In effect, Marshall’s strong financial performance is a result of focus throughout the business – “The Marshall Way”.

As part of the structured sales process, daily, weekly, monthly and yearly reviews of the core elements of the business enable everyone in the dealership to contribute to and be part of the success of the business – to understand what is expected and to try to exceed this expectation.

Reputation attracts top-calibre employees, and high staff retention levels reflect a top calibre company. In the last three years there has been just one replacement in personnel at the Jaguar dealership, and that was due to maternity leave.

The recruitment policy requires two interviews and a McQuaid personality test, the latter to establish team player credentials and customer focus. Bi-annual appraisal and performance management reviews are the norm and investment is made in training and development.

Recognition at HQ level

On employee satisfaction, Ward says: “The open-door philosophy and flat management structure ensure that any issues do not become problems. Misunderstandings can be minimised as the awareness of all is heightened.”

Marshall’s principal strands are clear: financial performance, customer satisfaction and employee satisfaction. These qualities have been recognised at group HQ level (Marshall Motor Group dealership of the year 2003 and 2004), at carmaker level (Jaguar’s most profitable dealership in 2003), and now by AM Awards judges.

Used car retailer

Winner: Available Car

Available Car scoops the AM Used Car Retailer of the Year award for the second consecutive year.

This is certainly some achievement considering that the business, which operates an £11m, 10-acre site in Castle Donington, is now only in its third year yet has experienced consistent growth in turnover and net profits since day one.

Further testament to its success is the repeat custom now being achieved, which, along with a highly successful referral programme, highlights how well it is perceived by both existing and new customers.

Operated by the family-owned Graham Bell Group, Available Car stocks more than 1,500 vehicles on a pricing profile from £3,000 to £23,000. A mixture of brands and product ages attracts a wide range of customers, from first time buyers to company car drivers.

Non-pressured sales approach

The business operates a referral voucher system which is designed to encourage existing clients to recommend Available Car to friends and family.

This is proving a great success, and according to Carter & Carter’s audit it is now resulting in more than 55% of sales. Nevertheless, any motor retailer needs to attract new custom and Available Car markets and promotes itself through a number of channels, including media advertising and direct mail.

Carter & Carter found it is particularly strong at e-commerce – its website is now the seventh most-visited motor retailer site in the UK. This incorporates online contact and part-exchange valuation pages together with comments from satisfied customers.

Available Car prides itself on a non-pressurised approach with customers, to the extent that it has replaced sales people with teams of “helpers.” Visitors are left alone to view the stock until they request the assistance of a helper who is able to provide more detailed information.

These employees will subsequently refer the visitor to a customer service manager in order to examine vehicle finance options and make their purchase decision.

Non-negotiable prices

In line with its no-pressure policy, the business recognises that some customers are made uncomfortable by the motor industry’s traditional process of haggling over the screen price.

As a result, the prices are deliberately kept low and screen prices are non-negotiable, while the company operates own-brand finance with a strong take-up rate.

All cars are prepared to a high standard, and the hand-over team complete final checks and will not release a vehicle with any known faults. Unless of retail quality, cars taken in part-exchange are traded out as a matter of company policy to prevent lower standard vehicles creeping into stock.

The company’s philosophy of “Happy Ship…Happy Customers” is a sign of Available Car’s recognition of the importance of having a dedicated, well-rewarded team in order to maintain high levels of customer satisfaction.

Training is provided in-house, while employees are rewarded by profit related pay for the company’s performance rather than individual sales success. Staff retention has increased to 92%.

Used car programme

Winner: Vauxhall Network Q

Vauxhall’s approved used car scheme, Network Q, currently has a 92% participation rate with Vauxhall retailers – 450 sites nationwide.

Ultimately, it is the buying public who decides whether the scheme is working or not, and there’s plenty of customer endorsement. The 1,000,000 sales mark was past in September, 2002, and sales have increased almost year-on-year. Last year was the most successful to date, with 140,405 cars passing through the Network Q books.

It’s difficult to improve on something which is both excellent and successful. Network Q, launched in 44 regions in 1990 and handling 12,000 cars in its first 12 months, has had continuous years of improvement.

But the AM Awards judges confirmed that the scheme has managed the improbable: further improvement, reflected by retailer support and customer satisfaction.

The clear No 1

Put simply, Network Q is a class act, the clear No 1 brand in manufacturer used car retailing. Its recipe for continued success? Vauxhall listens to its used car retailers. A Retailer Specialist Committee meets monthly with the Network Q team at Vauxhall to feedback ideas and issues with the aim of helping to develop initiatives within the programme.

The committee comprises 13 members, a combination of retailers and Network Q employees. Its role is to agree the strategic direction of the programme and measure the scheme’s performance against its objectives.

Another dealer initiative on which Network Q relies is its Q-dos Standards Assessment programme.

Q-dos audits are carried out every four months by Network Q field managers to assess retailers against the scheme’s standards. This has proved a tremendous success, not only in terms of helping retailers focus on weak areas, but also in recognising and rewarding high achievement. The top achiever in each district wins a day at the Goodwood motor circuit.

It also pays close attention to consumer buying patterns. The Network Q teams was quick to embrace the opportunities offered by the internet and has developed a quick and painless process for vehicle searches at www.networkq.co.uk. This allows potential buyers to specify required make, model, trim price and the distance they are willing to travel from home to make the purchase, listing all available cars within seconds.

Cutting edge marketing

Initiatives being adopted by other carmakers are long established Q norms. A key driver to success remains its 114-point check, 12-month unlimited mileage guarantee (including brake, battery and clutch cover), 12-month AA assistance, 30-day exchange promise and an MoT guarantee in which the retailer offers up to £750 worth of repairs in the case of an MoT failure.

Cutting edge marketing over more than a decade has ensured Network Q is the public’s best known used car brand. In the eyes of many in the industry Vauxhall’s programme remains the one against which others are measured: hard-nosed retailers get a return for their commitment and investment in the form of increased sales and profit.

Trade parts programme

Winner: Vauxhall Trade Club

A consistent parts programme winner in previous Autotrade Awards, and long considered the trade benchmark, Vauxhall’s Trade Club is planning to raise the number of independent motor traders using the programme in 2005 by 10%.

Currently around 21,000 members from different independent sites use Trade Club each month. The aftersales division at the vehicle manufacturer’s Luton headquarters is looking to encourage up to 2,000 more existing members to use the parts marketing programme on a regular basis.

And with a UK vehicle parc exceeding 4.5m Vauxhall cars and vans, the manufacturer is confident there is still substantial scope to extend Club penetration.

Aggressive direct marketing

Total membership stands at about 58,000, but aggressive direct marketing at national and local level, plus improved database management at dealer level, are keys to increasing sales and club membership this year.

Vauxhall launched its Trade Club in 1991, ahead of any of its rivals. Initially it sold brake pads, discs and shoes, but it now covers more than 50 product groups, including cambelt kits, filters, lubricants, lamps, rotating electrics and batteries. Most categories are boosted by regular discounts or buy-one-get-one free promotions.

Participants receive a thick handbook with net prices, which means trade customers can instantly look up any component price.

Despite initial fears that Vauxhall was aiming for all-makes business, the scheme can be credited with raising – and continuing to raise – the awareness of the value of using OE parts, with the benefits of competitive prices backed with a manufacturer’s warranty.

It’s a tried and trusted combination which meets the approval of independent garages, and one which continues to impress the AM panel of judges.

Its strong product offer is continually expanded as new Vauxhall passenger cars and light commercials come on stream which, together with initiatives such as a consigned stock scheme, means Club members are able to maintain the momentum of improved customer service.

Consistent themes and services

The internet has also helped business: the bulk of members have sections of their websites dedicated to the Trade Club. The more sophisticated of these enables garages to check stock availability and order and pay online.

Consistent themes are emergency next-day delivery, 48-hour delivery for standard orders, overseas ordering, 12-month guarantee offered on all Vauxhall parts, mail order service, Trade Club discounts and satellite links giving access to nationwide parts stock. And a quick poll of Vauxhall enthusiast and DIY websites reveals scores of recommendations (presumably at the expense of factors) to franchised Club members who have online catalogues for retail customers.

Recent industry studies show that independent garages purchase almost 40% of their total parts from franchised dealers – a 5% rise in one year. Franchised dealers are becoming increasingly serious threats to the independent aftermarket parts supply channel – and the biggest threat of them all is the originator, Vauxhall Trade Club.

Factor/distributor

Winner: Brooklyn Direct

In 1999 Brooklyn Motors’ parts businesses were fragmented across each franchise dealership and it processed just 7,500 orders per year. Five years on and the business, now named Brooklyn Direct after a relaunch in 2001, processes more than 70,000 orders every year, employs 63 staff and runs 16 vans.

This is quite an accomplishment for a side of the business that many dealers don’t see as a growth area. The real change started in October 2002 with the opening of centralised warehousing in a purpose-built facility for the Ford business. Since then, warehousing has doubled to incorporate other franchises and more than 15,000 stock lines are now available providing greater stock availability for customers.

“Historically, parts was a problem. Stock management, marginal pricing and unpredictable customer demands made it one of Brooklyn’s least profitable business units,” says parts director, John Leeden.

“Service to the customer was slow and the product range limited to single franchise stocks. The business was scaled down but still lost money. A new approach was needed – instead of each parts department working against each other, they needed to work as one.”

Block exemption catalyst for change

The revisions to block exemption in 2001 were the major catalyst for change. Brooklyn saw it as a business opportunity and looked to entirely re-engineer its parts business to accommodate the changing marketplace. The result is now a fully flexible, highly profitable and customer focused business.

The company developed a dedicated customer call centre (initially Ford, Skoda and Citroen, followed by Mazda and Toyota). Specialist advisers handle orders and inquiries for the specific customer group, the belief being that by understanding their customer’s business they can deliver a better service.

The final element of the business, its factor service, was developed in response to Brooklyn’s multi franchise element. Customers are now able to have access to workshop consumable supplies, in addition to branded manufacturer parts and accessories.

Greater penetration and improved margins

“Brooklyn Direct started with a clean sheet and we asked ‘what do our customers really want and need?’ Independent motor traders, franchised dealers, bodyshops and retail customers need different services and different product lines.

The goal was to restructure the route to market for the whole parts business to enable it to serve each discreet customer group in the most appropriate way,” says Leeden. “The business was born to provide choice and service for customers and significant profitability for Brooklyn via greater market penetration, reduced costs and improved margins.”

It recently initiated a management development programme in partnership with North East Worcester College, and has a Parts Apprenticeship programme with Bristol College.

On top of this it has links with local schools and colleges to promote the motor industry, in terms of management technical and administrative roles, as a career choice for young people.

Bodyshop of the year Winner: Blue Bell

A BMW approved bodyshop since 1991, Blue Bell invested in a new two-acre site in 2001, which was three times the size of the previous outlet at 24,000 sq ft.

This was a big step, some might say even a gamble, given the difficult business climate in a shrinking industry, but the company saw the bodyshop as a growth area with huge potential. This was in contrast to its service business, which was on a downward curve due to longer service intervals and technological advances.

The challenge that faced Blue Bell was to massively grow the business in order to fill the new site quickly and to break into profit as soon as possible despite the large increase in operating costs.

Its growth strategy has been to appeal to the vehicle owners rather than their insurance companies.

Marketing to retail customers

“Our key message is – it’s your body – you decide who takes care of it,” says Robert Buckley, bodyshop and service director of Blue Bell.

“We wanted to make vehicle owners aware of their right to choose a repairer and not to be pushed around by their insurance companies. If we could get the customers to come directly to us we would be in a much better position when it came to negotiating rates with insurers.”

With a marketing budget of £25,000 a year, the company has put time, money and energy into developing its own marketing material including a radio campaign on a Manchester station. It was estimated that the campaign reached 500,000 potential new customers.

Blue Bell also targeted local magazines and newspapers – and even placed an advertisement in the Commonwealth Games brochure.

Although Blue Bell is synonymous with BMW, the bodyshop operates as a separate limited company and in the last year established relationships with two Land Rover retailers along with a Jaguar and an Aston Martin dealer. These agreements cover both retail and warranty work and account for a large proportion of the company’s business growth.

Subcontracts and approvals

The company has been assessed and accredited as an approved Jaguar and Land Rover bodyshop and is one of only a handful of bodyshops in the UK designated a Jaguar category A repairer – meaning it is authorised to carry out structural repairs on the all new aluminium XJ range.

“Our five-year plan is to establish ourselves as a regional repairer of high technology prestige vehicles. We are approaching the business from a new angle and breaking away from the stranglehold of poorly paid insurance contract work,” says Buckley.

In October 2004 the company signed an agreement with Knights BMW of Newcastle for all its body repair work to be sub-contracted – believed to be the first time that one BMW dealer has sub-contracted to another.

“We expect this deal to accelerate our progress towards our goal of repairing prestige vehicles only and are confident that we will be able to switch off our remaining insurance contract work by 2005,” adds Buckley.

The assessors were impressed with Blue Bell’s financial performance, due partly to the strategy of targeting prestige carmaker approvals.

Authorised repairer

Winner: Richmond Motors Group

One of the largest independents in the UK, Richmond Motors Group has five sites in the West Midlands, three of which (Birmingham, Redditch and Stourbridge) are dedicated to accident repairs.

These are equipped with modern repair and paint technology that includes remote video imaging and internet based communications to meet the requirements of insurance, owner/operator and fleet management organisations.

Along with repair processes designed to keep driver disruption and vehicle downtime to a minimum, the emphasis at Richmond is increasing efficiency for the benefit of the customer.

Consequently the main emphasis throughout 2003 and 2004 has been to focus on the update of efficiencies through improved IT which have lead to improved turnaround in the repair division.

These include the introduction of the Shopwatch Advance Management System along with the AudaEnterprise internet based programme.

To improve customer service further, the service division introduced a night shift for its car and commercial vehicle customers, which was, according to the company, extremely well received and has increased turnover per month by over 25%.

Supportive approach

But much of the company’s achievement has been accredited to a supportive approach to staff management – it was accredited as an Investor in Excellence in 2003. “We have some very talented staff. We invest heavily in training and development, which has a causal effect on the quality of the end product,” says Ray Bradnock, Richmond Motors Group managing director and son of chairman and founder Roy Bradnock.

“We operate an open door policy. All of our members of staff are encouraged to air their views, both formally and informally. Our managers and directors are available for meetings with employees on a daily basis and also go on regular ‘walkabouts’ for informal chats.”

Bradnock also uses quality improvement teams to ensure every member of staff shares his commitment to offering a first class service. We have a vision statement, designed to drive our employees to endeavour for the very best.”

Quality management

Investment in people is working. Richmond was the first motoring organisation to receive an IS 9001 in quality management systems, meaning it can meet customer requirements and enhance customer satisfaction. Its repair sites have also been designed to ensure a comfortable and motivational working environment.

Employee satisfaction has been improved further with the introduction of a Recognition and Reward scheme that promotes those who go that extra mile. Staff can nominate work colleagues, be judged by work colleagues, with team and individuals financially rewarded.

Richmond Motors also became an LDV Vans service dealer in 2004 and took on the manufacturer’s all-makes Vanfit parts programme which covers 80% of the light commercial vehicle parc for parts, service and repair. The company is looking to further develop the light commercial vehicle maintenance business and expand its overnight service offering.

Carmaker fast-fit scheme

Winner: Ford Rapid Fit

Ford might not have invented the fast-fit concept, but Rapid Fit’s in-built flexibility and tight management controls give it a speed and focus that rivals struggle to match.

Last year’s winner in this category, Rapid Fit was launched in 1993. The aim was to provide Ford dealers with a business model for competing in the fast-fit market. The concept was designed to complement the existing Ford Service authorised repairer centres and provide repairers with the broadest possible customer proposition, with all makes catered for.

The introduction of the revised block exemption regulation in 2003, and the new franchised dealer Authorised Repairer contracts, caused Ford to examine the positioning of its respective repair brands. It decided that merging Ford Service and Ford Rapid Fit would risk dilution of both and cause confusion among customers and repairers. Instead, Ford brand teams now work closely together to ensure that best practice is share. At the same time all Rapid Fit centres signed up to new agreements to reinforce the commitment to quality, and remove a few poorer performing centres.

Clearly defined objectives

Since 1999 the network has grown from 231 centres to 270. Sales have risen 48% over the same period, while volumes last year were up 9% on 2003, despite a saturated market, aggressive competition, improved vehicle quality reducing repairs and extended service intervals.

So how has Rapid Fit achieved this? Objectives are clearly defined each year and focus on four main areas: optimising market representation, centre capacity and repair offering; increasing customer traffic and volume; growing network sales and profitability; and maintaining high customer handling standards and continuously improving customer service.

“From the central plan, regional, zone and individual centre plans are developed by the team in conjunction with regional Ford management and the individual Rapid Fit centre,” says Rob Hutchinson, Rapid Fit manager.

Monitoring the business plan

These objectives form the basis of a sales and marketing plan for each outlet that overlays the marketing activity in each product segment.

The progress of the business plan is monitored continuously throughout the year at local and national level, with market information from competitors, the media, suppliers and other contacts fed in at every stage.

Recruitment also plays an important part in keeping Rapid Fit centres up-to-date. “Managers all come from a fast-fit or dealer background. Centre staff are recruited by the individual repairers, but under full guidance and supervision of the Rapid Fit team,” says Hutchinson. “This includes active participation in advertising, interview, selection and induction. Advice is also provided on re-numeration packages.”

Financial performance is monitored using a database called SPARS. Each dealer provides monthly data, including total sales, sales by major repair category, repair volumes, customer volumes and average invoice value. SPARS generates national and local performance indicators, including dealer profitability, which is fed into business reviews and tracked during the year.

E-commerce

Winner: Foray Motor Group

Foray Motor Group’s winning entry centres on an innovative online facility which has enabled the company to achieve strong new business, nationally and internationally, for its parts sales department.

Fordpartsuk.com is open to any retail, trade or car club customer and gives access to a host of genuine Ford parts from current stock and obsolete ranges which Salisbury-based Foray Motor Group can supply at savings against the manufacturer’s retail price and deliver anywhere in the world.

For customers who are short of time, the easy-to-use website has the obvious advantage of offering the convenience of shopping from home or work and being accessible 24 hours a day, seven days a week.

Clearance centre database

The website is a completely new venture for Foray Motor Group’s parts operation and, according to group parts marketing manager Elaine Clark, almost 100% of the product sales it has achieved has been incremental to the group’s standard aftermarket sales. It was set up by a former employee who had emigrated to Canada but decided he wished to continue working in a Ford parts sales environment.

Initially he was commissioned to create and develop the website and was paid a commission-based reward in relation to sales. However, the increased volumes now generated mean he has since been given full-time employment by Foray Motor Group.

As well as advertising certain popular parts, the website incorporates a secure order form on which customers give details of their vehicle and the parts required. Once the enquiry has been received, FordPartsUK checks the 56,000 components listed on its national clearance centre database, which Foray has amassed using obsolete stock cleared from the Ford dealer network’s own parts departments.

The next step involves issuing a prompt response to the customer, giving details of the price and delivery arrangements should they wish to proceed with the purchase. Obsolete parts held at the clearance centre are offered to Ford owners at a 25% discount against normal retail price, an offer which has gained the website free publicity in a number of classic car magazines.

Orders from 30 countries

One attraction of operating an online sales channel is its ability to attract customers from outside the UK, and Foray Motor Group has achieved strong progress in this direction.

Thanks to listings on a variety of internet search engines, orders have so far been received from more than 30 countries outside the UK, from the USA to Japan, with payment received via online credit and debit card transactions through Foray’s secure server. For national and international orders, items are usually sent for a charge via UPS for delivery directly to the customer’s address, however Foray operates its own van fleet for free deliveries within 100 miles of its Salisbury base.

Having a client base which includes a number of Ford enthusiasts clubs has brought the additional benefit of generating referrals to fellow enthusiasts. As a result, FordPartsUK is already experiencing increasing levels of repeat business and its number of new customers is growing steadily.

Marketing

Winner: Kia Motors (UK)

Kia didn’t rely on the fact it was the UK’s fastest growing car company to carry sales of its new supermini, the Picanto. It commissioned a cute, funny and hip range of ads that not only successfully introduced a new car to a new segment, but also started a strategic repositioning of the entire brand in the minds (and hearts) of UK consumers.

Range and sales expand

The manufacturer has had a short but eventful history in the UK since first appearing on our price lists in 1991. The Pride, for two years the only model, was a popular, reliable no-frills hatchback and stayed on sale until 2000. Meanwhile, the range expanded and sales built steadily, apart from 1998 when a rocky Korean economy took Kia close to bankruptcy. Hyundai stepped in and sales recovered from a mere 2,900 units to more than 6,000 in 1999, and then past the 10,000 barrier in 2000.

Fourteen new cars were launched between 1999 and 2003, and sales surged past 20,000 units, 71% up on the previous year. The range was by now quite comprehensive, encompassing saloons, hatchbacks and 4x4s. The only product missing was a supermini.

The Picanto went on sale on May 25, 2004, the 60th anniversary of the founding of Kia Motors.

Some time before that, Kia’s UK managing director Paul Williams sat down with long-time advertising collaborator Mustoe. They sketched out a campaign that could also serve as a foundation to market the rest of the range, the starting point being Williams’ concept of ‘Smart Value’.

Consumer needs assessed

“A lot of people are prepared to look beyond the brand,” he says. “Consumers love the no-frills airlines like Easyjet and Ryanair because they save them money they can spend on what they really want to spend it on. We’re offering them exactly what they want and none of the things that cost more but don’t really matter to them.”

The team started to build a proposition based on consumers assessing their needs, and then comparing them to what the available cars in the market had to offer.

“Should one of those requirements be an established brand, we want them to make an assessment as to how much they are paying for that,” the company says.

“By asking consumers to ‘do the math’ they should arrive at a conclusion that Kia offers ‘Smart Value’ by offering the essential ingredients of what their vehicle really needs to do for them, but in an affordable way.”

Having refined the proposition, the next step was to create an emotional pull. The team decided on animation which also differentiated the advertising from the ubiquitous car ‘lifestyle’ ads, and created a recognisable theme to carry through to subsequent advertising. Mustoe dreamed up a cast of seven colourful characters that would appeal to each of its prime targets. Cartoonist Pete Fowler, who has worked on ads for Levis and Nintendo, was called on to bring the characters to life.

The Picanto launch TV ad was directed towards women in their 20s and 30s. “Think about it,” says the female voiceover. “Do you spend £6,000 on a small car with three doors, or £500 less on a gorgeous small car with five doors?”

Training

Winner: Nationwide Autocentres

Nationwide Autocentres was formed in 2001 by a management buy-in of 41 failing Lex Autocentres. A number of measures were taken immediately to put the business back on track, including changing the basic proposition from fast-fit to servicing, MoT and technical repairs.

Another of the first initiatives the new management took was to re-open its Academy of Learning and, four years later, there are 225 Nationwide Autocentres servicing more than 15,000 cars a week, and making £5m profit.

This is not entirely cause and effect – managing director Tom Dunn and his team made a few other good decisions along the way. But during lean times, training, like marketing, is seen as an easily trimmed cost. Not many companies would think of opening a training centre while fighting to save the business.

Post-graduate degree level

Originally situated at a Birmingham Autocentre the Academy moved to a larger venue in 2001 and then to purpose built premises at company headquarters in Solihull in July 2003.

In September 2004 the Academy received accreditation as an IMI Quality Assured Awards (QAA) approved centre, and now offers courses from an NVQ Level 2 in technical training to Level 5 (post-graduate degree equivalent) in management.

The Academy’s motto is “We can only contribute to your learning – we cannot do it for you. In partnership together we will all succeed.”

The centre’s learning strategy recognises that adults learn best by experience – not that all training is hands-on. The venue consists of a large conference room capable of seating 80 delegates. This room can be sectioned off with a fully insulated partition to provide two working areas: the larger one seats 60, the smaller room then provides boardroom-type facilities for up to 20 delegates.

There is also a fully equipped technical training area, comprising of a classroom capable of seating up to 15 delegates, and an adjoining fully equipped workshop.

The workshop has three of the latest Crypton engine analysers, Bosch diagnostic equipment, comprising access to all OBD 2 ports, a two post vehicle hoist, exhaust extraction equipment and a vast array of technical data, held both on computer and in data manuals, and a number of engine rigs.

The pride of the technical department is known as the ‘Black Museum’ which holds a selection of mainly faulty vehicle ancillaries that can be fitted to the engine rigs and used to aid fault diagnosis.

But the Academy of Learning is only part of Nationwide’s training and development programme. In conjunction with the IMI and the City of Bristol College, Nationwide also runs the largest aftermarket apprentice programme in the UK, with 180 apprentices on its books.

School-leaver policy

Apprentices are initially assessed centrally by staff at City of Bristol College with a (rarely broken) policy of only recruiting 16-year-olds straight from school.

Nationwide Autocentres company makes no bones about taking this process out of the hands of centre managers, saying it saves time and money.

Recruitment

Winner: Derek Sims

Derek Sims is passionate about achieving the best possible team for the company, which operates a Toyota dealership in Riverside Park, Northampton, which it bought from CD Bramall in December 2002.

At that point it had 28 staff, but a strong period of growth means the total workforce now numbers 49. When beginning its recruitment process, the company is often prepared to utilise a head-hunting service, where appropriate, to attract the most suitable calibre of candidate.

In addition, the Toyota dealership recognises the benefits of recruiting people who have gained skills outside the retail motor sector – often these people are able to adapt quickly to the company’s own processes as they have not already developed set ways of operating in a car sales environment.

Investment and commitment

The company’s recruitment team may plan an offsite two-day selection process which includes interviews and a matrix of competency tests that assess a candidate’s aptitude and ability. The process often includes a programme of initial training.

This investment and commitment to recruitment pays dividends. As the company says in its AM Awards application: “This brings in fresh blood, who will grow with the group.”

Applicants are issued with job descriptions, which are later issued in more detailed form to successful candidates together with an offer letter and contract of employment.

The company says this recruitment process, together with providing applicants with “a vision of what Sims will be” and giving an insight into the business at ground level is essential in attracting the best candidates to the industry, “Derek Sims took a two-year sabbatical with his own head-hunting business and is passionate about achieving the best possible team who will be capable of exceeding the average,” states the awards entry.

With all this effort and investment put into attracting good quality recruits to the business, it is not surprising that Derek Sims places a great deal of emphasis on keeping its staff satisfied and rewarded. Employee retention has traditionally been a problem area in the motor retail industry, and the Toyota dealership counters this with a number of bonus and training opportunities.

Financial incentives

Sales staff who achieve their targets are given regular financial incentives together with bonus gifts such as short breaks in the UK and abroad, designer watches or wide-screen plasma TVs.

Derek Sims also operates a number of departmental bonus schemes based on a percentage of that respective department’s profit achieved during a particular period, and department managers are provided with quarterly and year-end incentives.

Training is taken very seriously. Derek Sims’ sales director is fully qualified in his own right as a trainer, having previously been employed by Mercedes-Benz and Sytner Group, and therefore takes on the responsibility for the dealerships’ customer-facing staff training requirements whether off site or on-the-job.

In addition, the company makes great use of Toyota GB’s online training modules, which are available in all areas from sales to aftersales.

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