Franchised and independent businesses gathered in Bolton recently for the AM Round Table, sponsored by AI Claims Solutions.
Key topics discussed included how dealers are fighting the downturn, supplier and consumer behaviour, customer retention and accident management.
Surviving the recession
Delegates felt that scrappage had certainly brought new customers into their dealerships and helped sustain the industry through the last 10 months. At Fiat dealership Corts, scrappage had accounted for some 42% of its sales, said managing director Richard Cort.
However some franchises rewarded their dealers poorly compared to others which still provided significant profit margins on scrappage sales.
Service promotions have also been helpful in enticing motorists into franchised workshops. At Bolton Kia, managers have developed fixed-price basic services which help to keep its substantial workshop full, explained Alex Purdie, group business manager. It also provides an opportunity to offer additional sales, such as air-con services or replacement tyres, and ensures contact is maintained ahead of when they might decide to change their car.
Cort agreed that the aftersales experience is key to keeping the customer coming back and eventually selling them their next car. In his opinion, the service receptionist is the most important role in the business, and should be rewarded as such with a good basic salary and car. And although Cort’s service receptionists are incentivised on their performance, he said he was uncomfortable with upselling, adding: “Either it needs doing or it doesn’t.”
Although accident repair is a distress purchase and customer retention is not such an issue, a good bodyshop should treat the customer as an individual, said Malcolm Duxbury, director of Walshaw Motor Bodies. In such circumstances a customer may be agitated and staff must spend time with them to explain the process.
Training and renewing the skills related to selling will be vital now that scrappage has ended, delegates felt. With scrappage having removed the need for staff to appraise many trade-ins over the past 10 months, the dealers suggested that this skill and sales negotiation will need to be honed.
Some delegates felt that manufacturers’ sales training, paid for by a levy, failed to deliver real value and was often based on out-of-date principles. There was also concern that some franchises fail to conduct a fundamental training needs analysis of their dealerships before mandating courses for franchisees.
Daniel Kirkham, a regional aftersales manager with Kia Motors UK, said it now conducts training needs analysis and is trying to tailor courses to dealers’ needs.
It was suggested that a softer process is necessary with today’s car buyers, most of whom have researched their purchase online ahead of their visit, rather than a “try to nail them on the day” approach.
As Alex Purdie stated: “Process is important but it has to be a soft process.”
Nevertheless, all agreed that the basics of meet-and-greet, qualification and providing test drives were absolutely essential parts of the sales process.
The internet has given today’s customer every opportunity possible to prepare for their buying experience. Information is prevalent about new car specifications, options, prices and used car values, and dealers felt that some customers could be very aggressive in negotiating their deal. Some even found that customers were prepared to check online after signing their deal in case they could get a better price elsewhere and cancel the original agreement.
Chris Shaw, commercial director of AI Claims Solutions, raised the point that some buyers still have a perception that dealers and manufacturers make far more profit out of a new car than they actually do. Shaw’s colleague, Nigel Gilmore, AI Claims Solutions’ head of automotive, suggested the RMI could do more to correct that perception.
Shahzad Anjam, executive director of Cambria Automobiles, questioned whether it was an issue of margin or the confidence of dealership staff to tackle difficult customers, now that much training is classroom-based rather than role-play.
Some of the suppliers and services which dealers rely on are still stuck in the past. Delegates felt that banks and finance companies are not supporting motor retailers sufficiently – their decisions can quickly and ruthlessly pull the rug out from under their clients.
Slow decisions from finance companies are also blamed for lost business and a negative customer experience. Getting the customer more quickly on the road in their new car looks set to be a hot topic for the future.
Purdie said his ideal would be to be able to allow a customer to drive away their car on the day they buy it. One useful tool to help achieve this is free seven-day insurance for buyers – more than 50% of Bolton Kia’s customers have taken up this offer.
At Cambria, Anjam said he had enhanced commission to encourage staff to get cars out within 48 hours however it hadn’t worked because of reliance on third parties such as finance to play their part quickly.
Cort added: “The level of service and urgency in a finance company is appalling. Our sales executives have a burning desire to close a deal, but there’s no burning desire at the finance company to get back to us. And we’re finding that if the customer is not squeaky clean it can take days to get an answer for their finance application.”
Delegates agreed on the need to regularly review their suppliers. At Bolton Kia, an employee annually sources three quotes for major commodities, power, gas, insurance.
Chris Shaw urged delegates to carefully consider their supplier of accident management services as it can be a useful tool for customer retention. He pointed out that some major rivals of AI Claims are increasingly having to fight in court for their credit hire charges, which could impact on dealers’ relationships results with their customers who get called to testify.
Shaw also warned that insurance companies will be looking for ways to keep their policyholders within their approved lower-cost repair networks in future. They will want to combat telematics which are likely to give vehicle manufacturers and their franchised networks an upper hand by alerting them when a car has been crashed.