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Ringways: Fightback starts to pay dividends

The company
Name: Ringways Motor Group
Turnover: £75m
Number of staff: 200
Number of sites four: two dealerships, one aftersales centre, one bodyshop
New car/LCV sales: 3,500
Used car sales: 2,000
Used LCV sales: 500
Franchises: Ford, Mazda

Two years ago, Leeds-based Ringways Motor Group came to a crossroads. The industry was going through fundamental change with the large groups getting more dominant and independent repairers chipping away at aftersales.

Ringways, with its 50-year history as a solid performing family-owned Ford retailer in Leeds, had an old fashioned business culture based on daily invoicing and annual budgets.

It was a culture that had seen the two-site group lose £1.4m in 2004. It had a choice: sell up or fight back. It fought back.

“We basically broke up the business and put it together again with a strategic business plan,” says group managing director Stephen Russell.

His vision was to become the Marks and Spencer of motor retail, building on Ringways’ reputation for customer service (it has six Ford chairman’s awards).

In mid-2005 Russell, his group aftersales manager Andy O’Donnell and group general sales manager Phil Wardle, wrote their business vision into a working document. The vision was to split the Leeds dealership into three sites: car sales, service/parts/rapid-fit and bodyshop. Russell believed it would improve focus and customer experience.

The change came in September 2004 at a cost of £6m with the total redevelopment of the two-acre site in Leeds. It also included a £350,000 hit on parts stock write-offs because of a need to downsize to fit the new facility. Stock holding reduced from £1.2m to £500,000, but stock turnover has risen from 1.2 to more than 10 times a year.

“It was a big hit but, working with the manufacturer, it had to be done otherwise it would’ve been a problem for years,” says Russell.

Management went through a lot of training and some struggled to come to terms with the move away from a dealing culture to one focused on prospects and generating appointments. Walk-in business is now “the cream on the cake”.

The restructure is starting to come good. Generating appointments by controlling the database has seen existing customers now account for half of sales, up from 40%, and well on the way to achieving Ringways’ 60% target. Car sales have risen year-on-year by 17% at the Leeds and Doncaster (Ford and Mazda) sites.

Wholesale parts margins, retail labour sales, and paint margins are all up year on year. Finance penetration is 62% on new and 40% on used, way ahead of the industry average.

#AM_ART_SPLIT# Ringways has daily department meetings to discuss the previous day’s performance and issues, weekly management meetings and monthly management accounts. “We probably have more than 30 group operational meetings per month, but it leads to opportunities to grow the business which flows straight to the bottom line,” says Russell.

He believes Ringways is capable of making sustainable profits over the next three to four years. This year the group will return to breakeven on turnover of £75m after three consecutive annual losses. Next year, Russell is budgeting for a £400,000 profit, which will include contributions from a third franchise partner due to be slotted into the Leeds showroom later this year.

None of that would have been possible without the complete business overhaul. Ringways now understands its position in the market and how to compete with plcs by offering a different cultural experience. It is focused on long-term customer loyalty to deliver profit stability.

“If we hadn’t changed our mindset I’m not sure Ringways would still be here,” Russell says. “We aren’t the most profitable business yet, but we are catching up.”

The aftersales opportunity

“Aftersales is a different purchase to sales,” says Stephen Russell. That belief saw Ringways take its service and repair operation off-site.

Although the number of technicians has reduced from 14 to nine since the move, they are doing 25% more work because of effective pre-booking and staggered appointments, using the Shell Connect system. Technicians pre-assess the car with the customer when they arrive to check for additional work.

“We have no dreaded 11 o’clock calls to the customer to say their bill will be higher than expected,” says Russell. “Taking time with the customer makes a difference. The registration plate is picked up by spotters so when the customer comes into reception we can greet them by name.”

Light commercial service and repair is separate and carries out 45 jobs per day on a 7am-8pm split shift. The facility also includes two Rapid Fit bays and two for service advice.

An on-site call centre mostly takes in-bound but does make some out-bound calls. “Our marketing is so good for existing customers that it brings in a lot of calls and our conversion rates are typically 90%,” says Russell. “Last week we had 60 services due from our customer base and we only lost two – both because they had gone away.”

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