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Face-to-face: Mark Squires, chief executive of Benfield Motors

Asked to describe Benfield’s attitude towards future growth and expansion, chief executive Mark Squires relates the tale of the hare and tortoise.

The arrogant hare, remember, sprinted out to an early lead before becoming complacent and taking a nap, allowing the methodical tortoise to win the race.

Squires’ point being that while Benfield will take opportunities if they crop up, its main aim is not to grow speedily by adding lots of sites; it’s for gradual organic improvement.

That said, Benfield is now drawing breath after what has been, for the group at least, a period of rapid, almost hare-like, expansion. Five sites have been acquired in four years with capital investment over the past couple of years of £12m. Turnover has risen by £70m since 2003 to a projected £310m this year.

Consolidation is the corporate policy while Benfield’s business strategy is called Vital Ingredients.

It has identified 11 key areas, including the internet, used cars and aftersales, with a plan on how each can be improved.

“It’s about getting the best return from our assets and ensuring we have a business model that will give us north of 2% returns, and one that can be replicated for new purchases,” says Squires.

“Capital is no restraint and people want us to expand with them – we’ve turned down three or four opportunities this year to grow with manufacturers because we are focusing on organic growth.”

With Benfield this year celebrating its 50th anniversary, Squires adds: “We have seen people expand and contract over the years but no-one has yet demonstrated, with the possible exception of Arnold Clark, that you can build to that kind of scale with a business model that is sustainable.

“There is a law of diminishing returns. Our business is about what happens within the dealership. We can support it with back office systems but it’s what happens within the site that is the unit of profit. The bigger you get the more difficult it is to control each site and eventually it becomes a negative return through scale.

“No-one has come up with what a unit of scale is. For example there is no bulk discount on used cars, and labour hours and non-productive wages are the same – they don’t get less if you employ more people, you have the same level of overhead. Also, you will never get to a size where the dealer dictates to the manufacturer.”

According to Benfield managing director Nigel McMinn, the lack of scale even extends to new cars.

“Manufacturers go out of their way to ensure a level playing field on new car purchases,” he says.

“The only opportunities for discounts are at the quarter end and then they are available to every group. So economies of scale are only there at the fringes, for example 0.1% through better finance rates or electricity deals.

“But quality of local management can change a site from one that is losing money at 2% to one making money at 2% - and 90% of that 4% swing will be down to the quality of the local management.”

McMinn knows better than most; he spent 11 years at Reg Vardy. He left to join Benfield 10 months ago, becoming the first non-family managing director. It was a move that sparked a business reorganisation that resulted in the removal of a layer of management.

Previously the executive board had been separated from the dealerships by four divisional directors.

Now McMinn oversees the north, principally Tyne & Wear, and Paul Rogers has been appointed as regional director of the Yorkshire division.

#AM_ART_SPLIT# “The executive board now has more involvement and interaction,” says Squires. “We have also given our general managers more responsibility and accountability for their own actions where previously the divisional directors and GMs were stepping on each other’s toes. Decisions can be made much more quickly now.”

The reorganisation has made an immediate impact. Benfield’s net profits in the first quarter of the year were up 60% on 2006 which Squires says can be traced directly to the changes. However, gross profits are up just 6% and he is now focusing minds on sales process, retail labour growth and used cars.

Benfield’s used to new ratio is 1.5:1; the target is 2.5:1, with an emphasis on stock mix and older cars under the Smart Buy brand launched this year. Smart Buy sells cars priced under £5,000 and is expected to account for 20% of Benfield’s sales mix.

Also new is Benfield Quick which advertises nearly new cars as loss leaders to draw people into the dealers. Benfield has refreshed its Open Road brand, which offers used car buyers a free Experian check and 12 months free warranty and breakdown cover worth £600.

Squires wants his 25 dealerships to share a common sales process that focuses on the basics. “The motor industry is obsessed with closing the deal; that is important but we are focusing on the sales experience for everyone,” he says.

“It’s about quality of engagement and understanding that if they don’t buy a car today, they are still a potential customer and that means following them up.

“It’s also about whether the process is happening and that is down to the senior team engaging with the business and also our DMS matrix.

“We don’t measure closing rates; our staff have clear targets on the number of opportunities we want them to handle and we measure the quality of the experience by mystery shopping using real customers. We use measurements to open their eyes, not to beat them up. And we have tweaked our remuneration to support this.”

McMinn adds: “This is all about our staff engaging with as many people as possible. We would rather they sold 15 cars out of 50 than 15 out of 30 because it gives us more customer details to follow up and more people that have experienced our service.”

Parts and corporate sales

Benfield has opened a new trade parts centre in the east of Newcastle after being appointed by Volkswagen as the sole agent for its five brands - VW, Audi, Skoda, Seat and Bentley – in Tyne & Wear and Northumberland.

The group believes parts sales from the centre could reach £4.5m once the operation is established with its 22 staff and eight vans. It fought off tenders from two or three other dealers for the contract.

The Benfield centre will be one of 60-70 ‘TPS’ partners for Volkswagen each with sole supply rights in their agreed region. It is one of 17 to be selected in the first wave of appointments.

The deal comes during a busy period for Benfield, which earlier this year invested £250,000 in the launch of Benfield Corporate to focus on the needs of fleet buyers in the north east and Yorkshire.

The new division, headed by John Spreadbury, will help Benfield grow its corporate sales by £20m over the next three years.

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  • ian barnes - 24/06/2013 19:31

    Good Evening Mark Today I picked up my very first Motability Vehicle , the handover was second to, none, everything explained, together with the sales executive tuning in my Bluetooth with my Samsung phone contacts, Peter delivered an outstanding customer experience, which was second to none, at the end of the handover Tom asked me some questions, which I rated excellent, Iam 50 now and have bought cars from many dealerships today you have delivered a Great customer experience to whom I will recommend to all, I did mention day your mother Mrs Squires who resided behind the corner house, Newcastle, I worked there in 1983 she always loved her jazz nights together with in her Gin& Ts God Bless Regards Ian Barnes