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GM UK improves networks' profits

Continued improvements in profitability are a focus for GMUK across its core Vauxhall, Chevrolet and Saab networks.

The carmaker has just completed regional summit meetings with retail partners to update them on the pending sale of GM Europe and to highlight some of the successes of its brands.

The message was about leadership, vision and getting a grip on cashflow.

Andy West, retail network development director at GMUK, said: “Despite the new car industry being down 30% profitability for our networks is significantly up.”

The average market area has reduced its annual cost base by around £100,000, through cutting headcount, interest costs and negotiating supply contracts.

GMUK has simplified how its franchise standards are communicated, so dealers can understand better what they have to do.

“We’re encouraging retail managers to get closer to the ground and focus on what’s going on in the showroom,” said West.

Vauxhall’s network has improved its profit performance by 50% year-on- year, while Saab and Chevrolet have both doubled their earnings.

West declined to share financial information, but did say that dealers’ average return on sales now stands at 2% for Saab, above 1.5% for Vauxhall and above 1% for Chevrolet.

Only a small proportion of the network – “about 5%” – is loss-making, he said. GMUK is working with those to improve, but has existing dealer partners keen to expand, should a sales point become available – as was the case with Bicknells Vauxhall. 

A team of business management consultants, all with accountancy or motor retail management backgrounds, reviews each member of the network monthly.

Best practice sharing is encouraged, such as through DMS user groups which help dealers get the most from their system and make their workshops more efficient.

West also assured dealers that GMUK has no plan to issue termination letters to its networks ahead of whatever decision is taken on Block Exemption by the European Commission.

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