AM Briefing: Beating the recession

Shell Helix Motor Oils

Motor retailers are adopting a siege mentality to remain positive through the recession. Dealers at the AM Briefing in Newbury, held in association with Shell Lubricants, agreed that they were battling the car market’s downturn with new initiatives, a focus on customer and staff relationships and a reduction in unnecessary costs in the business.

Despite the doom and gloom portrayed by mainstream national media headlines, dealership senior executives are facing the challenges with buoyant humour.

Birchwood Group has put up signs in its dealerships stating: “At Birchwood Group, we refuse to participate in a recession.” Operations director Pete Parker said that its entire team was determined to work hard through the downturn.

Staff don’t complain about pay – they are thankful they still have employment. “I’ve never felt that there has been so much loyalty behind reaching the common goal of making some money for the business,” said Parker.

Others, like Trident Garages, are successfully countering motor retail’s bad press with their own positive regional PR and marketing activities, in support of the AM Buy A Car campaign.

Its managing director, Richard Roberts, highlights the fact that customers have benefited from significant mortgage payment cuts and, having remained in secure employment through the winter, are willing to buy a car. Used car sales were “phenomenal” in January as a result, says Roberts.

Simon Monahan, Citroen UK sales director, agrees: “Whichever market the customer is in, the customer can justify spending if they think they are getting a deal. Woolworths’ best three-month sales were its last – it was jam-packed with people who knew the situation it was in and believed they would be getting a great deal, even though it hadn’t slashed prices that much.”

AM Briefing: Beating the Recession

Confused media messages

Sue Robinson, trade associations director at the RMIF, said dealers were suffering because of the “confused media messages” surrounding consumer credit.

The national media has spread the perception that credit is as unavailable in the UK as it is in the USA, but dealers in the RMIF report that selling cars on credit is not a problem. However, until this message is spread, some potential car buyers will stay away from dealerships for fear of not being approved for credit, warns Robinson.

Another aspect which could drive a boost in car sales would be a scrappage scheme. Four of the major European markets have already adopted a scheme, but the UK hasn’t.

Robinson is pursuing the suggestion with the government, but says the issue is dragging on and a decision will rest with Gordon Brown, the prime minister (see page 3).

The present trading conditions mean that dealers must provide strong, motivational leadership and keep a close eye on the mood of their workforce. John O’Hanlon of Ridgeway Group sends his managers a daily communication of ‘reasons to be cheerful’.

“There’s always something to be shouting about. If we have just had our best weekend sales, we have to keep people informed and give them something to celebrate,” he said.

Training is still important, but some dealers look at it as a cost rather than an asset. Yet it need not be costly. Dick Lovett has always conducted a lot of training, through NVQs, vehicle manufacturer programmes and its own schemes.

“If we have just had our best weekend sales, we keep people
informed and give them something to celebrate.”
John O’Hanlon

Personnel manager Sarah Turner says that in the current climate training is a motivational tool, it shows staff that the company is still investing in them by revisiting core skills and sharing best practice. But with costs in mind, training must be selective “rather than sending people on courses for the sake of it”, she says.

Dick Lovett requires all employees to have two appraisals annually.

Its managers have bonuses linked to completing the staff reviews to encourage them to focus on motivation. As a result, staff absence is extremely low and when a vacancy arises in the business, employees are keen to recommend candidates.
Such recruitment recommendations could benefit more dealers, says Nick Wright, of training business Autavis.

He sometimes comes across motor retail staff who lack the right attitude and aptitude for customer-facing and sales roles.
“If more time and effort were paid to the selection process and filtering out unsuitable candidates, dealers would spend less money on training and development,” Wright adds.

Maximising aftersales revenue and profits is helping most dealers fight through the downturn at present. Retailers are targeting a broader age of car parc, and taking every opportunity to attempt up-selling.

However the franchised sector faces the problem that customers perceive their service charges to be far higher than the independent repairer. To combat this, some dealers such as Trident Garages offer fixed-price servicing for cars aged three years and older. Service plans and extended warranties are also being up-sold on new cars with great success, because of the appeal of enabling the motorist to spread their maintenance costs.

Forward-thinking dealers such as Foray Motor Group and Ridgeway Group have invested in either paper-based or electronic vehicle check systems, which allow technicians to highlight any further work that may be necessary in the coming months. Incentives can be linked to up-selling to further motivate service staff.

Ridgeway has begun price-matching independent garages in its Mercedes-Benz territories to encourage owners back to its workshops. It is marketing to its database that it is the best place for tyres, exhausts and batteries.

“The old days of saying ‘that’s the price we charge’ are gone. We have to give leadership, and the main thing is that those ramps in our workshops keep going up and down,” explains O’Hanlon.

Loyalty reward schemes

Other dealers operate loyalty reward schemes to keep customers coming back. Foray Motor Group has ‘advantage cards’ which customers can buy for a small fee and use to claim a 10% discount on service parts and labour. Fish Brothers uses a 10% discount voucher that customers can either use with their next service or pass on to a friend or family member for their use.

Attendees agree that manufacturers are being supportive, in the main. However, some franchises are slower to react than others. In some cases standards have been relaxed, or are at least being overlooked until the dealer’s audit, to reflect the difficult market. Nevertheless, dealers would like to see further action on demonstrator requirements, which remain a large proportion of most dealerships’ costs. Better margins on new cars and clearer, faster payments would also benefit the retailer.

While dealers had been able to focus on used sales at the beginning of the year, they predict the March plate-change campaign will bring renewed pressure to drive new registrations. Manufacturers have thousands of vehicles which they quickly need to turn back into cash to keep their own businesses going.

“It needs to be about what’s right for our business. Pre-registrations have killed our industry. Demonstrators are another easy way to force our market and we have to say ‘no’ to the manufacturers,” says one attendee.

“Dealers are suffering because of the confused media
messages surrounding consumer credit.”
Sue Robinson

Shell’s Loyalty Driver provides instant feedback on customer concerns

Whether you’re selling luxury marques or family saloons – in challenging economic times – dealerships looking to survive and thrive must remain positive. And that’s the message that came through loud and clear at the Shell Helix sponsored AM Briefing in Newbury.

In a downturn, dealerships should be looking to maximise every single customer interaction and that’s where aftersales can be key. Often it’s about getting the basics right and ensuring that opportunities to upsell are not overlooked.

Lubricants are a great example, upselling and top-ups are simple but effective opportunities to engage with customers. In fact, some of the best performing franchised dealerships among our customer base sell oil top-ups to over 40% of all their service customers. Those dealerships that adopt a consistent approach to upselling will undoubtedly go a long way to protecting their aftersales margins.

From specialised staff training techniques to increased investment in aftersales, the ideas and innovation on show at last month’s AM Briefing were exciting and encouraging. But dealerships should remember they’re not alone. Now more than ever, dealerships should look to leverage relationships with key suppliers.

At Shell Lubricants we take pride in the value we add to our customers’ businesses. That’s why we’ve collaborated with Peak Software to offer dealerships throughout the UK a new and exciting cost-effective business solution – Loyalty Driver.

Providing almost instantaneous feedback on customer concerns, Loyalty Driver enables aftersales managers to resolve customer issues in real time, helping dealerships to improve overall levels of customer satisfaction and retention, which in the current climate can only be good news!

Rita Rawson
Automotive Area Manager, Shell UK Oil Products

Shell Helix Motor Oils

Attendees