Listed motor retailers are not famous for making stacks of money for shareholders, but despite that another one emerged on the junior market – London’s Alternative Investment Market (AIM) on April Fools’ Day.
The choice of date attracted plenty of comment, but the shares’ 50p float price was happily accepted and in the two subsequent weeks, were trading between 5% and 10% up.
At 53p, Cambria has an implied valuation of £53 million which is going some for just 37 franchises on 25 locations.
But what Cambria Automobiles Holdings has is an encouraging, though brief, track record, and an impressive profit growth.
The man who runs the show, Mark Lavery, is out of the same school as Robert Forrester, founder of Vertu. They both learned their trade under Sir Peter Vardy.
Lavery is good company. The conversation is regularly punctuated with laughter as he attempts to come to terms with the naivety of some motor retailers, the ease with which their businesses are bought from them and the simplicity with which the businesses are repaired, serviced and let loose as money-making machines.
And he does mean let loose.
He buys a new business, puts a man in charge, gives him the four core pillars of the operational strategy, shakes his hand, wishes him well and goes home.
Every league table of the profitability of UK motor dealers shows that it is the small regional groups and the focused mom and pop businesses that make the rich margin.
Yet the big UK groups persist with a command and control format.
Lavery is a self-confessed petrol-head born in 1965 whose parents died when he was 13. He skipped college and popped up at a dealership in Skelmersdale.
He was a general manager for the AFG group by 22 and a regional director at 24.
His longest stint was 10 years with Hartwell, then it was finishing school with the Reg Vardy group.
Then he met the-men-with-the-money, the Promethean investment capital group which put up the early cash and has remained a shareholder since the flotation. Lavery was determined that he would only have an investor that would stay in.
Lavery has retained 40% of the business and effective day to day control.
Flotation is the end of the beginning, he says. Turnover has reached £400m, but Lavery says that he does not believe that he is halfway there yet.
“The biggest inhibition to growth is ourselves. We have to attract high calibre individuals. Only the top 10% of individuals can manage one of our businesses.
“I can see us as a £1 billion turnover group, but not £2bn. Our plan is to achieve that without raising money.
“When I first came to town, my greatest frustration was the way things were managed. We decided we would never have a head office.
"There is a great temptation to centralise accounts, administration and finance and I have been in places where they did that and went back to local control.
“Our directors are based in cars not offices. They can go to a dealership and offer help and advice, but they may not set up office and take control.”
Lavery has no truck with words like customers and salesmen. The correction to guests and associates is instinctive and tireless. It’s a hallmark of many a successful business leader.
Lavery is respected for his financial instincts and leadership nous. He instils great loyalty and the success of every dealership depends on the mutual loyalty between business owner and branch manager.
He chuckles as he talks about local control. His biggest acquisition. Summit Motors Investments, was owned by Sumitomo and run from Tokyo by a Japanese national.
It takes a while for the laughter to die down and for Lavery to catch his breath. “What does he know about the requirements of a Ford buyer in Ashford? The business was haemorrhaging money and they had no idea why.
“Our GMs have their own cheque book. If he can afford whatever it is he wants to buy, he buys it. If he can’t afford it, we will lend him the money and charge him for it.”
There are examples of transformation to the acquired businesses that are extraordinary. Lavery reels off a few.
One of them is Dees Ford in Croydon that used to trade 145 used cars a year. In February it traded 248 in the month.
Is it the money that is driving him? It is to a degree.
“When my parents died when I was 13, I made a vow that I would not leave my family in the position I was in then.”
But that is the extent of it, he says. He has a “modest house and car” and no vices other than Manchester United and the England Rugby team.
His greater concern seems to be for the associates. “There are now 1,000 of them depending on us. That’s quite a responsibility.”
Four pillars of the Cambria strategy:
Associate delight: team members will not be referred to as staff or employees.
They will be proud to be associated with the group and will be rewarded on contribution to the four pillars.
They should feel empowered and have autonomy to make decisions that affect the running of the business. They will feel they can achieve all their career aspirations with Cambria. Cambria will invest in them so they can achieve their full potential.
Guest delight: all associates will be encouraged to treat customers at all times in the way that they would treat a guest in their own home. Associate empowerment is key to achieving this. The organisation must be transparent and open – at all times empathising with a diverse guest base. Guests should feel they have enjoyed their experience of ‘touch-pointing’ with associates and that it is an experience that they would wish to repeat.
Brand delight: The group’s goal is to become the retailer of choice for all the brands it represents. This is focused on: brand vehicle and parts sales objectives, top quartile brand customer satisfaction and an open and trusting relationship with all brand personnel.
Stakeholder delight: The group’s goal is to focus on delivering all financial and non-financial criteria agreed with stakeholders, to be open and transparent in all communication to ensure a trusting relationship and to provide timely and accurate information so the stakeholders understand the business.