He means respect for his staff, his customers, his suppliers and his manufacturer partners and this culture is wrapped up in the group’s vision.
Unlike many business visions, which are launched with much fanfare, then end up as a forgotten plaque hanging in reception, Haga clearly lives his. That commitment has overcome the usual British cynicism about corporate brand values. As he puts it: “Management has to lead by example and that means doing what it promises to do for staff.”
A sound footing for growth
Haga joined Summit in June 2004, 10 years after Japanese investment bank Sumitomo established the business by buying Dove Group. Further UK acquisitions created a hot-potch of sites and franchises, spread across a wide geographical area.
Management controls were poor and the business was losing money. Haga, who had previously helped Sumitomo set up and then grow a car retail business in Australia (see panel), was told to put Summit on a sound footing, ready for further growth.
Few would disagree that the motor industry is driven by sales and the bottom line, but Haga believes many companies have the wrong focus.
“They forget who’s most important – customers and employees,” he says. “The term customer satisfaction is overused and means nothing. Super-satisfaction is key and it’s the staff who provide it.”
Haga spent his first three months as CEO interviewing Summit’s 85 managers. During the two-hour consultation, he asked a series of questions designed to make them think about customer service, motivation and their role in the business.
“The first question I asked was: what was the best day of your life,” he says. “That surprised a lot of them. But I wanted them to relate what we were trying to achieve with their personal experiences.”
The intention was to get them to understand the link between customer satisfaction and loyalty, and how that establishes relationships. This leads to higher profits, happy staff and happy shareholders, which enables the company to reinvest in the business to improve working conditions.
The consultation unearthed empowerment issues. Managers did not feel able to make business decisions.
Bin Haga (centre) with the staff at Summit’s Jaguar dealership in Brentwood – the group’s dealership of the year.
#AM_ART_SPLIT# Vision and core values
Haga’s response was to produce a vision card (“to be the best quality service provider in the UK”) containing the group’s core values, including leadership, teamwork and ethics. He then carried out a ‘moment of truth’ exercise with his dealer principals, establishing every touch point when customers buy a car or servicing.
“It opened the DPs’ eyes because there were so many touch points. They didn’t have the time to cover all of these for every customer, so they realized they needed to empower their staff,” says Haga. “It means everyone now works together and that has really impacted well on our employees.”
This was backed by training. Every manager has been on a three-day course. “To empower, a manager has to change their style of management; it needs coaching and leadership skills,” adds Haga.
“We have also given our employees the total picture about what we are doing. They know our vision, structure, strategy and what we need to do to achieve it, including the type of staff we need. Everything is aligned to one point: the vision.”
Quality first, second and third
Transforming the business culture is a three-year project, which is just over halfway complete. Until then, Haga does not intend making any further acquisitions.
“I tell my staff that quality comes first, quality comes second and quality comes third. Quantity will follow,” he says. “When you expand you can lose focus and we can’t afford to do that, so we will withhold the temptation to grow until we have a clear, solid way of doing business.”
Buying dealerships is all about preparation, planning and then instilling the company culture in the acquired site. “We have to have this established in our business before we go elsewhere,” he adds.
Critics argue that Summit needs to reassess its structure; that without growth a geographical spread from Brentwood in Essex to Exeter in Devon means the group cannot benefit from regionalized economies and management control.
Haga counters by saying he has a minimum of two meetings each month with his dealer principals to talk about finances, forecasts and business issues.
He believes this communicative closeness, combined with the three senior managers regularly visiting each site, overcomes physical distance.
Moving from loss to profit
When Haga joined the business it was losing a lot of money and the internal controls were not strong: just four of the 11 sites were in profit. Twenty months later and seven are in the black, with the rest close to break-even. Overall, the £210m turnover group is now making money.
When the time does come to expand, priority will be given to Summit’s existing franchise partners Jaguar, Aston Martin, Ford, Audi and Honda.
However, as the motor industry moves to the global stage, the group also has an opportunity to take on franchises with which Sumitomo has a relationship in other countries, in particular Japanese brands Toyota, Mazda and Mitsubishi.
Haga’s argument is compelling. “In this industry, the manufacturers are losing money, dealers are struggling and customers are unhappy. We hope we can help to change this,” he says.
‘Credibility and belief’
Jeff Brown, dealer principal at the Jaguar showroom in Brentwood, the group’s dealership of the year, has been with Summit since July 2003 and has seen significant change since Bin Haga’s arrival.
“Bin Haga has credibility and strong beliefs – the staff believe what he says because he has followed through. Our vision runs through the thread of the business,” he says.
“Investment has been put behind it as well. We’ve seen the results and this has driven belief.”
Brown says Summit encourages all departments to work closely together. He sits behind the service desk, next to the service manager, so he can see first hand everything that happens. “It means you can react quicker,” he adds.
“The managers walk the site and talk to people, while our facilitator groups help to get ideas from staff. Once they see they have an input into the business, it encourages even more feedback.”
#AM_ART_SPLIT# The business
No of sites: 11
No of employees: 750
New car sales (’05): 6,000
Used carsales (’05): 6,000
Franchises: Aston Martin, Ford, Jaguar, Audi, Honda
The parent company
Japanese investment bank Sumitomo moved into car retailing to offset a decline in its core export business during the Eighties and Nineties.
It set up in America first before acquiring Fury Ford in Australia in 1992, under the advice of former Ford chief executive officer, then Ford of Australia CEO, Jac Nasser. Bin Haga managed that 22-site business from 1995-2002 (it was bought by Ford in 2000).
In 1994, Sumitomo came to the UK with the acquisition of Dove Group, creating Summit Auto Group. It bought Invicta in east Kent two years later then, in 1999, acquired Dees of Croydon and Dees of Wimbledon. In 2003, Grange Motors and an Audi and Honda business was added, taking the group to its present size of 11 sites. Haga joined Summit in June 2004.
The business puts all its emphasis on values and culture. After a number of management changes, Summit has finally settled down with a strategy that works. The team faced some resistance from staff to begin with but Bin Haga really believes in the values approach.
Summit is made up of a lot of groups put together and this has created some problems. The geographic spread is not presently coherent and the group must grow and reshape to make sense of its franchises.
Scale with franchise partners is key, but Summit should do well with Jaguar, which has some good models coming out. Its volume approach and focus on used cars will help.
#AM_ART_SPLIT# Bin Haga CV
2004-present: Transferred to the Summit Auto Group, a business with 14 sites and five franchises, as chief executive officer.
2002-2004: Returned to Tokyo in 2002 to manage the Global Retail businesses and the Japanese Retail, Auction and Finance business.
1995-2002: Transferred to Summit Investment Australia in Sydney and was responsible for running a £350m group with 22 sites.
1990-1995: Became involved with Lotus Engineering, as a Japanese Agent for its business. Also involved with the Team Lotus Formula One Team, including product development.
1986-1990: Joined Sumitomo Corporation in Tokyo. Involved with Ford of Japan’s export business to the USA and other countries.
Summit Auto Group turnover 1996-2005
Stop-start growth, which mirrors the number of management changes at the group in recent years. Acquisitions have fuelled the increase in turnover.