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Hodgson Newcastle towering ambitions

Hodgson Newcastle is a retail sales-driven business with its sights set on becoming the north-east’s most innovative motor retailer. And one that is debt free.

Steve Hodgson, managing director, runs the £57m turnover business from the Mazda, Suzuki and Toyota dealership at Silverlink, Newcastle, which, together with its Toyota franchise in Gateshead, sold 4,500 cars in 2006.

In contrast to its north-east rival Pattersons (AM, March 23), the majority of its sales, 92%, are retail.

Hodgson hopes to increase sales to 5,800 when its expansion plans are complete. In the pipeline are a new PDI centre and a second Toyota dealership at the Gateshead site, which will feature the UK’s first car tower.

“In Germany they already have these towers, but they use them as a storage unit rather than a sales tool,” says Hodgson, who has a definite vision in mind for how he will use the tower to attract customers.

“It will have an octagonal shape and hold 31 cars across eight floors with a lift in the middle. The third floor will hold only one car and will feature access to the main dealership. At the bottom the tower will open out into a conservatory where customers will be able to wait for the cars. There will be plasma screens where you can watch the car you are interested in being brought down and when it arrives customers can drive it straight out the doors. This will give them a great overall impression.”

Nussbaum, which constructs car towers in Germany, is working with Hodgson Newcastle on the design, which is in the final stages.

Hodgson is in talks with several carmakers, including one he does not currently represent, to occupy the tower space and expects to make a decision within weeks.

Meanwhile, the group is to spend £5m on the neighbouring PDI centre and Toyota dealership, planned as a two-storey building. “The workshop at Gateshead is running at capacity and we are in negotiations with the council for the space we need,” says Hodgson. “We expect to have everything complete by March 2008.”

Expansion plans sits within a simple business strategy – pay off any investment within three years, then start again. In this way the group stays largely debt free.

In January, Hodgson announced plans to generate more than £15m of additional revenue by the end of the year, bringing the group closer to its £70m target turnover.

Growth in the future

Sales last year rose by 8%. Hodgson claims to have had the most successful Mazda and Suzuki dealerships in the country, with his Toyota sites in the top three for the manufacturer.

Margins on sales are comfortably above industry averages. Hodgson makes 2.9% profit from Toyota at Silverlink, 3% from Toyota at Gateshead and 2% with Mazda, while Suzuki tops the league at 4%.

“Last year, Toyota Gateshead was our top performer for profit and turnover,” he says. “Mazda is a 2% franchise in terms of retail share, but we have a 4.5% market share in our region with the brand.

#AM_ART_SPLIT# “I’m passionate about what I do and I know how to make the business work, but this doesn’t always sit well with the manufacturers. I revise my business plan every two years and I can’t believe people in this industry who don’t have control over their future.”

Hodgson as a brand

Last year’s sales success followed a marketing campaign that featured real customers talking about their experiences at Hodgson Newcastle.

Research and marketing for the campaign cost £25,000 and involved clinics where 4,000 customers gave their opinion on the company.

“The ad worked brilliantly for us and is due to be repeated on TV throughout 2007,” Hodgson says. He has spent £100,000 on production and air time.

The group is also involved closely with the local community. The group sponsors Jamie Noon of the Newcastle Falcons as well as the local Northern rugby team.

Making a success of Suzuki

When Steve Hodgson built his second showroom at the Silverlink site, he wasn’t sure which franchise to put in it.

“At the time Suzuki was in a pretty dire state,” he says. “But I went down to the motor show in Birmingham and told them ‘I think we’d be a good fit’.”

Suzuki called Hodgson two weeks later to say they wanted to meet up.

“They told me the Suzuki dealership in the area, which at the time was run by Newton Park Motors, was going into receivership and would I like to take over the franchise.” Hodgson hasn’t looked back since. Last year the brand had its best year ever for the group, selling 388 cars, and won the Suzuki dealer of the year award.

“It’s our most profitable brand in terms of percentage profit, it makes 4%. The cost of operating Suzuki is considerably less than for Toyota and Mazda,” says Hodgson.

Last year the franchise posted a turnover of £7.5m, which Hodgson hopes to build on in 2007. “Over the last few years Suzuki has really changed the way it markets its brand. Suzuki has had the courage of its convictions and really believes in the brand. It also has great new products that allow us to sell a lot of cars.”

Company details

Name: Hodgson Newcastle Ltd
Established: 1992 Number of sites: Two
Number of staff: 142
New car sales: 2,800
Used car sales: 1,700
Franchises: Mazda, Suzuki, Toyota

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