It lost hundreds of thousands of pounds in unpaid bonuses, discounted stock and reduced servicing rates and, more importantly, was suddenly competing with other retailers looking to refranchise.
There was little warning from the field teams of the impending disaster. “MG Rover staff were still offering us cars the day before they closed – they were even requesting showroom improvements two days beforehand,” says Wicliffe managing director Ben Rambaut.
When the end came, MG Rover dealers were on their own, potentially facing a major backlash from customers. Wicliffe reacted instantly. “We offered our customers an aftersales package that would give them comfort, which included 60% discount on labour rates for servicing. It was a difficult situation, but in the end we had customers coming into our showrooms to check we were going to be alright!” says Rambaut.
He joined the family-owned business in February 2004, initially in a part-time role, with a brief to put it on a sound financial footing. Owner and chairman John Fincher is candid in his self-appraisal: “I felt Ben could add a lot to the company by managing the business better than I could and controlling the team. I was an enthusiastic amateur, and he brought a degree of professionalism that we hadn’t had before.”
#AM_ART_SPLIT# Every person has to be right for the job
Fast-forward to 2006. In one year’s time, Wicliffe will be celebrating its 100th birthday. All the costs from the MG Rover collapse were absorbed in the 2005 accounts.
Rambaut, who worked for Renault for 12 years and is a former finance director at Renault Retail Group, has reduced overheads and implemented new financial controls. Several senior managers were replaced (“in a small business every person has to be the right one for the job”) and the structure was slimmed down ready for refranchising, including a reduction in head count from 155 to 80 staff.
Big business practice in a family firm
New processes ensure profits, revenue and costs are assessed each day, while the company has greater focus on CRM, people management and incentivizing performance. In essence, it’s big business practice in a family firm.
In Stroud, Wicliffe already held the Nissan franchise, a good choice for a rural area with a fondness for 4x4 vehicles. It has added the Renault franchise, which has just moved into an adjacent new-build showroom. “Renault was a natural fit. It’s an 8% franchise but there had been no representation in the area for four years,” says Rambaut. “We are a retail-only dealership so we do not have the same volume pressures as a full main dealer.”
Meanwhile, in Gloucester, MG Rover has been replaced by Fiat. But with the Italian carmaker suffering a 50.8% fall in sales last year and performing badly in consumer surveys, was this a case of leaping from the frying pan into the fire?
“Fiat is a franchise that has been on the floor. It pulled out of rental and volume deals, and we felt it had hit rock bottom,” admits Rambaut, who started his automotive career with Alfa Romeo. “But it is definitely on its way back up. It’s a good car parc to service and it has some excellent new products. The management are not pushing too hard on volume because they want the dealers to be profitable.”
And, he adds: “You can make money from any franchise as long as you have the right structure in place. And the upper quartile of the Fiat network is achieving more than 3% return on sales.”
Wicliffe also takes on the Fiat LCV franchise, which will sit alongside the Nissan LCV business in a separate showroom on the Gloucester site, replacing the Peugeot-Citroën van business. It believes LCVs are a big opportunity for sales and aftersales.
The complex also includes a bodyshop. It’s due for a redesign and new oven to improve efficiencies and workflow. This will enable Wicliffe to centralize all body repairs at its Gloucester site; it has now closed the bodyshop in Stroud.
“At the moment it’s about sweating the assets, not growing the business – yet,” says Rambaut. He expects Wicliffe to exceed £20m turnover this year (the business peaked at £21m five years ago), from £15m in 2005, but believes it has the potential to reach £40m when all the practices are put in place and all the new franchises fully up and running. Return on sales should rise from 0.5% this year to “a minimum of 2% – it’s not worth it otherwise”. This will be achieved within three years. The business is also aiming for return on capital employed of 15%.
#AM_ART_SPLIT# Expansion rules: ‘Slowly does it’
Fincher does not rule out expansion once these thresholds are reached. “Slowly does it – it’s easy to buy dealerships but if you expand too quickly it’s very difficult to keep control,” he says. “Any expansion will follow our existing model so we would want more than one franchise on the site. Multi-franchising helps to keep our overheads down and means we can compete with the regional and national groups.”
Fincher became chairman in 1982. It was never his intention to join the company founded in 1907 by his grandfather – he actually wanted to go into the oil industry to satisfy his interest in geology and travel – but “circumstances dictated” that he joined Wicliffe, in 1965.
Building for the future
Fifteen years ago, much of the business was owned by individual stakeholders in trusts as previous family members gradually sold their shares for cash or to raise investment funds. As the shareholdings become available, Fincher started acquiring them. His family now has total ownership of the business.
Wicliffe sits in a key market area, splitting Bristol from the Midlands and Oxford from south Wales. Not surprisingly there has been a lot of interest from possible buyers, but Fincher, 63, now controls the group’s future and rebuffs all advances. His 36-year-old son runs the Stroud showroom and is the natural successor.
“Last year we lost a lot of money because of MG Rover, but this year has been a massive turnaround for us,” Fincher says. “But it’s still early days. If 2005 was about survival, 2006 is about a new start with new franchises. This is our building year.” #AM_ART_SPLIT# The business
Turnover 2006 (projected): £20m
Turnover 2005: £15m
No of sites: Two
No of staff: 80
New car sales 2005: 450
New car sales 2006: 750
Used car sales 2005: 700
Used car sales 2006: 1,000
LCV sales 2006: 80-100
Finance penetration: 35%