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autoretailing: Franchise standards spark fierce debate

NADA 2005 – a couple of hundred UK dealers make the trip to New Orleans in America to find out the latest thinking and best practice tips from some of the automotive industry’s foremost experts.

These type of events are where the industry comes together, where trends become common practice, where ideas are shared and where business leaders go home armed with tips that will improve the way they run their companies and, ultimately, boost their profits.

Now, for the first time, the UK and the rest of Europe has an opportunity to create its own business community through autoretailing 05, a two-day convention on June 22-23 at the International Convention Centre in Birmingham. It is being jointly organised by AM and the Retail Motor Industry Federation (RMI), with lead sponsorship by Experian Automotive.

"autoretailing 2005 is a tremendous opportunity for professional motor retailers to acquire more of the skills they need to drive their organisations forward, and to debate the current burning issues," says Eamon Bradley, chairman of the RMI’s National Franchised Dealer Association and chairman/chief executive at Jardine Motors Group.

"If you are serious about making your business more successful in an increasingly competitive market, I urge you not to miss this new event. I believe it will become an essential date in the diary for the retail motor industry."

Franchised dealers are concerned about the increasing levels of standards being imposed on them as a result of the revised block exemption regulations – and the costs they are incurring. Carmakers have tightened their franchise contracts and a substantial part of retailers’ bonuses are based on successfully meeting their terms and conditions.

For some contracts, a chair out of alignment, the wrong potted plants in reception or failure to display the right promotional leaflets can be used as an excuse to strip a sizeable annual bonus down to a few pence – and with sales margins being squeezed, that could spell the difference between profit and loss for many retailers.

The RMI has strong reservations about the new franchise arrangements. It believes they are an expensive way for manufacturers to protect their networks from the threat of new entrants. And in some cases, it is actively preventing dealers from growing their business.

At the AM Financial Management conference last November, Alan Pulham, RMI franchised dealer director, predicted the rate at which franchised dealerships are closing would accelerate unless manufacturers eased the financial pressures they are placing on their franchisees. "The sector is now at a financial crossroads," he said. “There’s a case across the whole industry for people to look at sensible cost levels."

Franchise standards will be a key focus at autoretailing 05. On day one, Matthew Carrington, chief executive of the RMI, will address the issue of standards-related bonus payments, on which dealers increasingly depend for their profitability.

"The way dealers are rewarded for selling the manufacturer’s products and services has been changing for some time," says Carrington. "Margins are getting smaller as bonus payments become less focused on achieving sales targets and more on achieving manufacturer franchise standards and CSI. Many dealers feel this approach does not always help them to attract, satisfy and retain more customers."

Grant Thornton Motor Retail is seeing many situations where standards are impacting on the way manufacturers and retailers work together. Paul Burrows and Nigel Ruddock will provide autoretailing 05 with an insight into the financial effects on retailers and the longer term issues arising from franchise contracts.

Ruddock is head of motor retail at Grant Thornton and has extensive experience in helping retailers restructure to meet the demands of today’s trading environment. Burrows runs the General Practice division of Grant Thornton Motor Retail and specialises in merger and acquisition activity within the sector and also in strategic planning for retailers.

Day One will also cover issues of major strategic importance, to help the industry plan for the future. Delegates will hear from political heavyweights like Jacqui Smith MP, minister of state (see panel right), about the regulatory environment and the outlook for the UK economy – including forecasts and analysis of factors that are driving the trends.

Day Two is based around one-hour management seminars and workshops aimed at helping managers improve their own and their companies’ performance. They will run concurrently throughout the day, enabling delegates to focus on specific areas of interest and relevance to their own operations. Industry specialists will provide impartial, best practice advice, innovative ideas and fresh thinking.

Institute of the Motor Industry members who attend the seminars and workshops on Day Two of autoretailing 05 will receive credit towards their IMI Continuing Professional Development requirement.

Kwik-Fit founder Sir Tom Farmer will give the keynote address, before delegates break into the pre-booked seminars.

autoretailing 05 will be an ideal opportunity for dealers to take a step back from the day-to-day running of their businesses to understand how the industry is changing and to consider their plans for the future. "autoretailing 2005 will become the main annual industry conference, and will enable those that work in the sector to deal with the issues that impact on their businesses," says Carrington.

"A conference on this scale will also make the importance of the sector clear to Government, and publicity generated by the event will help to promote the industry as a potential career option for those employed in other industries and school leavers. It will become a crucial date in the UK automotive industry’s diary, as well as being a benchmark at European level."

Also confirmed for Day One is Dr Leslie de Chernatony, professor of brand marketing at Birmingham University Business School. He will address the issue of retail branding, drawing on experience as international consultant on effective brand strategies. De Chernatony has written several books on brand marketing, including Creating Powerful Brands and From Brand Vision to Brand Evaluation.

John Russell, managing director of Harley-Davidson Europe, will focus on the impact of branding on customer retention. He is responsible for sales, marketing and distribution at Harley-Davidson and Buell in Europe, the Middle East and Africa.

Management seminars

Business management

  • Cash flow management and finance for growth, plus best practice tips
  • How property can impact your profitability

    Leadership/HR

  • Turning your managers into leaders
  • Recruiting and retaining the best staff

    Information Technology

  • Database management masterclass
  • Using your dealer management system to make more money

    Used cars

  • Used car buying and stock management
  • How to drive more traffic with advertising

    F&I

  • How to sell more finance
  • Dealing with finance regulations

    Aftermarket

  • Selling service and maintenance contracts
  • Running a successful apprenticeship technician scheme

    Customer retention

  • Running a call centre from your dealership or group
  • Lifetime customer value – how to get your share

    Franchise standards

  • Working with manufacturer standards and bonus schemes
  • Making money from your franchise

    DTI minister to address delegates

    Motor retailers have a chance to hear first hand how the Government plans to help them prosper when Jacqui Smith MP gives one of the opening presentations at autoretailing 2005.

    Smith, minister of state and deputy minister for women and equality at the Department for Trade and Industry since June 2003, will offer delegates a political insight and an analysis of current policy issues. The session will also examine forthcoming legislation that is likely to affect the retail motor industry.

    The Redditch MP has served on the Treasury Select Committee and was promoted to government in 1999. In 2001 she was promoted to become minister of state for health with responsibility for social services.

    AM100: find out which UK retail groups are the biggest

    Senior industry executives will gather on the evening of June 22 at the Birmingham ICC to witness the unveiling of the 2005 AM100 – the UK’s most comprehensive analysis of automotive retailers.

    Sponsored by ExxonMobil Lubricants & Specialties, the AM100 Dinner is a chance for the UK’s biggest retail groups to re-appraise their achievements over the previous 12 months as Grant Thornton Motor Retail and AM editor Stephen Briers present the top 100 countdown. The spotlight will be put on notable risers and the top biggest groups by turnover.

    This year, the AM100 Dinner will be the focal point of the two-day autoretailing 05 convention. It’s an opportunity for business leaders to chat with their peers in a relaxed environment – it’s even been the venue for the start of acquisitions talks!

    At the end of the evening delegates will receive the AM100 supplement – two weeks before it appears in AM.

    Invitation to the AM100 Dinner is free to senior management at AM100 retail groups. To reserve your place, please call Luke Clements on 01733 468325 or email: luke.clements@emap.com

    Experian named as event lead sponsor

    Experian Automotive has signed up to become the lead sponsor of autoretailing 2005.

    Commenting on the event, the company’s MD Rob Whalley says: “We’re delighted to be taking part in what I believe is going to be a hugely important event for the retail motor industry.

    "There is a clear need for this kind of forum, which will help motor retailers to become more professional and successful in an increasingly competitive marketplace. We want to be at the forefront of helping motor dealers to develop, learn and grow their businesses. I believe that by combing the strengths of the RMI and AM, this event has the potential to become a focal point for retailers in the UK and across Europe."

    Experian Automotive delivers information solutions to manufacturers, dealers, auction houses, finance and insurance companies and consumers. These solutions help automotive clients increase customer loyalty, target and win new business, and make better lending and vehicle purchasing decisions. Its products include the market-leading vehicle provenance products, Car Data Check and Vehicle Mileage Check, which are built on comprehensive vehicle and mileage databases.

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