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Skoda targets big guns to grow new car sales

Dealer groups have become the recruitment target of Skoda UK as it seeks heavyweight retailers who can help it take a larger slice of the new car market.

The Czech carmaker is undertaking a rebrand next year, with a change to its corporate identity and a new emblem will follow later. Skoda’s plan is that this will signal that it wants to leave behind its traditional, ordinary and conservative image, and instead become seen as more modern, self-confident, enjoyable, dynamic and visible.

Skoda wants to increase new car volume from 700,000 units globally to more than 1,000,000 in the next five to 10 years. Although Brazil, Russia and China are firmly in its sights, some of that volume growth is expected from western Europe. That will mean larger targets for the 130-strong Skoda UK network and higher retail standards.

As a result, Skoda will need its dealers to invest in premises, systems, processes and people to be able to deliver higher sales volumes. However, UK director Robert Hazelwood is confident the brand’s profitability, currently 1.8% average return on sales, will encour-age dealers to make the investment.

He said: “Our retail partners are absolutely enthused by the brand. We have an order bank in place of 13,000 cars and we’re on track for a record year. I’m confident we’ll do well over 41,000 cars this year. In market share terms we’ve got 1.99%, but we’ll probably achieve 2% plus for the first time in the brand’s history.”

Some of that growth is in the fleet market, a segment which Skoda aims to grow further, but Hazelwood said this will not be costly short-term business – “that’s not the Skoda way,” he added.

Retailer DNA
Hazelwood first outlined the strategy at Skoda’s dealer conference in February. Since then, national franchising manager Stephen Shepherd and his four area franchise managers have been meeting dealers individually to outline the ‘retailer DNA’ and what they need to do. Further information was given to dealers at an event last week at the Millbrook Proving Ground in Bedfordshire.

For some, this news may mean a move to a more visible location, larger showroom, or putting in accounting controls or a proper sales process.

Shepherd explained: “We’ve always had a network of about the right size, but too often our businesses have been in secondary locations, not on main roads, in villages or in older facilities. Typically the Skoda partner has been single site, single owner family businesses.

“They have been typically focused on doing a fantastic job of looking after local retail business, but for the most part have resisted to get into scale fleet business. But we’ve been making a lot of progress. We’ve changed our partner selection profile. We now don’t just look to be the franchise of choice for owner drivers, but we’re engaging many groups and some of the major plcs.”

These are attractive to Skoda as they can offer scale and financial strength, have proven systems and process and are already proactive in the fleet market. Recent recruits include Wayside Group, Sinclair Group, Clare James Automotive, SG Smith and City Motor Holdings. AM100 top 10 group Lookers will open its first Skoda site in Stockport by the end of the year.

In return, Skoda aims to help dealer groups build the scale operation that they often seek.

 

Bringing existing partners along
“But it’s not just about bringing in new partners. It’s also to define to existing dealers what the Skoda network should look like in the future.

“We’re not getting rid of the whole network. They’ve done a fantastic job and we want to take as many of our existing partners on this journey,” said Shepherd.

Those that won’t come up to standard will be replaced. However, Skoda UK is confident that most will stay and will see better performance in return for their investment.

Like Skoda’s volumes, the network’s average return on sales has been building in recent years, from 1% in 2005 to 1.5% last year and 1.8% YTD (although it averaged a 0.6% negative return in recessionary 2008). The average dealership is making £100,000 annual net profit, while the upper quartile are achieving almost £250,000.

Skoda is also entering new market segments. The Yeti SUV arrived last year and is proving very successful. A city car, based on the Volkswagen Up, is due in showrooms from early 2012 and a small family hatch will put Skoda into the C-segment from late 2012. A new Octavia will follow in 2013.

Hazelwood said: “Overall our dealers are very positive. The brand has had an extremely good run in the last 12 to 18 months and most dealers understand where we are coming from. They’re madly passionate about the brand.”

Skoda has a history of strong customer satisfaction. The brand has finished in the top 10 of the JD Power owner satisfaction survey for the past 16 years.

That’s an achievement which Hazelwood does not see diminishing with the brand’s change of focus away from small, family-run dealerships. A strong induction process is in place for new franchises, which impresses Skoda’s heritage and customer service focus on all staff, from the administrators to the owners. What is vital, said Hazelwood, is the quality of the general manager and the team, and that they are focused on Skoda.

His background with top 10 dealer group Inchcape means he understands the retailer’s view. He’s aware that a single Skoda business won’t be enough for many major groups, which will look to grow scale with the franchise in order to give it the focus he demands. His aim is for Skoda to be of sufficient importance to groups that he and his team have access to top level management.

The brand’s progress, both in product quality and in customer experience, has put it on more dealers’ radars. Its Yeti and Superb models have won numerous accolades, and Skoda UK scooped Fleet News Most Improved Fleet Manufacturer, Auto Express Driver Power Best Manufacturer Award and Which? Best Car Manufacturer trophies this year.

The Skoda customer promise
On September 20 Skoda launched the Skoda customer promise. All dealers in the network have committed to delivering a minimum standard of service to the brand’s retail and fleet aftersales customers.

The promise is being published at all Skoda sites and will also be communicated to customers through marketing and a keyring.

Elements of the promise include:

  • To endeavour to diagnose a vehicle defect within 24 hours of its arrival
  • To offer free collection and delivery within a 10-mile radius
  • To provide a courtesy car if the vehicle is kept overnight
  • To complete a free vehicle health check and wash the car
  • To ensure the invoice matches the booking price and provide a full explanation of work completed, avoiding jargon
  • To complete a walkaround of the vehicle with the customer where possible

For fleet customers, Skoda is working with its retail business development group on a fleet pricing package, which will make it simple for fleets to know the cost of servicing or certain repairs within the network. A guide to Skoda aftersales will be published for fleets soon.

 

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