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Operational standards set to change

Manufacturers are starting to recognize the need to reshape their franchise and operational standards requirements to allow retailers greater freedom to sell cars and keep customers satisfied.

Inchcape Retail managing director Spencer Lock believes this positional change is due to developments since the Block Exemption Regulations revision in 2003, and in particular the anticipated threat of new market entrants failing to materialize.

“Manufacturers are starting to wake up to taking cost out and recognizing that their standards are onerous and not in the best interests of selling more cars and keeping customers happy,” he says. “They are looking at whether their standards are relevant and appropriate in this marketplace.”

At present most manufacturers are carrying out an assessment of their current standards – Honda’s and BMW’s reviews have been well documented in AM. Few have implemented any significant changes, although several carmakers have put greater margin behind customer satisfaction.

“We expect to see some revised programmes next year,” says Lock. “Cost needs to be removed to improve dealer profits and dealer performance.”

Inchcape, which revealed a strong set of results this month despite the stuttering new car market, is considering re-appraising its strategy of capturing 10% of new car sales volume with preferred partners.

“We might have to exceed this with some partners – this is based on our aspirations of playing a part in market consolidation,” says Lock.

He is approached by a handful of small groups and individual operators every month who are looking to sell, mostly due to the increased manufacturer demands for investment.

Inchcape has money in the bank for acquisitions, while its confidence is also boosted by a perceived bottoming out of the new car slump. Showroom traffic in June was down, but has since picked up ready for the September plate-change.

Lock’s main concern is speculation about interest rates, which create consumer uncertainty, but he adds: “Interest rates are still low and prices are low, so affordability is not an issue for consumers. We have been trying to push this through our F&I plans.”

Inchcape invested in a web-based F&I system this year, which links to finance houses to provide customers with competitive quotes.

Together with a £750,000 spend on sales training, it has kept Inchcape’s finance penetration above 40% on new and used cars.

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