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Mixed feelings over likely impact of VAT increase

Franchised and independent businesses joined AM for our roundtable in Brentword, Essex, sponsored by Ai Automotive.

The discussion kicked off addressing the effects of the increase in VAT to 20% on January 4, 2011.

Neil Durant, managing director of The Chelmsford Carriage Company, said: “I think we will be very busy in December with people bringing their purchase decisions forward.”
But not everyone agreed.

Colin Rate, R T Rates managing director, said: “I don’t think the rise will actually damage business too much.”

Les Fogg, managing director of Les Paul Motors, said: “It might prove to be a temporary blip, but it’s the sort of thing that will soon be forgotten, just like the return to 17.5%.”

Chris Butler, dealer principal at Heath Park Motor Company Peugeot, said the rise would be negligible in terms of making people bring their purchase forwards.

Nigel Gilmore, head of automotive for Ai Automotive, said: “If it does tempt buyers to bring purchases forwards there will be the inevitable lull in sales as a result of that.”

Peter Harris, managing director of Peter James Motor Group, said: “In the short term I don’t think there will be much impact, but there could be longer lasting problems next year.

“Cutbacks in Government departments and local communities will be affected differently.
“With cuts comes fear of unemployment and if jobs aren’t secure, people won’t spend.”

The second half of 2010

The majority at the roundtable agreed that the remainder of this year would be a challenge.

Rate said: “We have to be more dynamic. We’re moving away from standard direct marketing, making sure that if we contact our customers it’s personalised reminders or texts. They need to have a good reason for you getting in touch. We need to keep our arms around our customers at all times.

“It’s never going to be easy, but the more dynamic you are, the easier it will be to become successful.”

Butler said providing top quality customer service and not cutting key resources would mean the difference between surviving and falling by the wayside. He also believed networking was an untapped resource for creating lasting business relationships.

He said: “Networking events are so important. It doesn’t cost much, just a bit of time and you can build relationships with customers or other businesses in your area.

“We’re supporting a ‘trade local’ ini-tiative which gets the local businesses to talk with each other and to deal together rather than looking outside.”

John Walsh, managing director of JSW Car Sales, said: “The biggest problem is acquiring quality stock unless you are prepared to pay almost retail prices for it.”

Walsh said getting hold of three to four-year-old stock was proving to be a “nightmare” across all models.

He said: “You need to have a certain margin in the stock and it’s difficult.

“We’re mainly sourcing from main dealers. I don’t mind paying a bit over trade, but it’s just trying to find the stuff. It’s harder to buy than it is to sell.”

Internet and the digital age

Delegates explained how they were all taking the internet seriously.

Durant said: “We’ve got a very proactive manager that gets in bodyshop work from retail and fleet so we’re not just relying on insurance jobs.

“A lot of the work is generated from existing customers. We use Google Adwords and pay per click, but it’s best if you can get traffic from organic searches and we’ve made sure we’re on the first page on Google.

“You have to embrace the web or you will die as a business.”

Heath Park Motor Company has recently reworked its internet business to feature live chat.

Butler said: “We can talk to customers in real time. Broadband connections mean we can include 50 pictures for each of our used cars and upload videos to support that.”

Rate said: “The dynamics of the market are changing. People know how the internet works now, they’re comfortable with it.”

Durant added: “Even older people that have never used computers and shied away from the digital age are coming on board because they know the world is moving on without them.”

Butler said: “The people that are using iPhones today will be our customers tomorrow. To them, newspapers and the Yellow Pages are all old fashioned. Our marketing has to reflect that change.”

Durant said: “We’re on Facebook. It has worked for us. A customer was getting her tyres changed and asked her friends for advice on where to get it done and we were recommended: that’s the reason she gave us for coming to our business.”

Butler added: “We have an aftersales transactional shop to book in services. If you book online you get a reduced price and they can upsell themselves, essentially building their own bill.”

Durant said: “We use Bluetooth marketing which sends a message out to all mobile phones with Bluetooth activated in the area. They have to agree to download the message first. It can be monitored and it’s a one off cost of £400.”

 

Keeping on top of suppliers

Dealers have to spin dozens of plates in a busy dealership and delegates revealed their difficulties in having so many suppliers to satisfy.

Richard Ennis, Mercedes Benz Colchester dealer principal, said: “Suppliers are obviously heavily conscious about their own product, but what some may not understand is that some suppliers are a lot more important or profitable than others.

“A dealership has a lot of things to juggle on a daily basis so they will concentrate on the suppliers that give them the biggest return.”

Butler admitted: “Trying to keep up with all of them becomes really difficult. You have to look at what’s best for your business.”

 

THE DELEGATES

  • Colin Rate, managing director, R T Rates Ford
  • John Walsh, director, JSW Car Sales
  • Les Fogg, managing director, Les Paul Motors
  • Neil Durant, managing director, The Chelmsford Carriage Co
  • Richard Underhill, bodyshop manager, The Chelmsford Carriage Co
  • Richard Ennis, dealer principal, Mercedes Benz Colchester
  • Chris Butler, dealer principal, Heath Park Motor Company, Peugeot
  • Peter Harris, managing director, Peter James Motor Group
  • Nigel Gilmore, head of automotive, Ai Automotive 

 

Sponsor's comment

By Nigel Gilmore ,Head of automotive, Ai Automotive

If the discussion highlighted one thing it was the need for different groups in the industry to work much closer together. But working together doesn’t just happen; you need trust, transparency and honesty.

Too often companies look to take advantage of delaying tactics or litigation – it’s not right and does no-one any favours. Our approach is designed to speed up the entire process. It’s transparent, open and it works. It is valued by everyone we work with, from insurance companies through to bodyshops and manufacturers.

Working with an accident management company should be a win-win. It should mean a boost in revenues via increases to income from parts, paint and commissions and improved customer loyalty. It isn’t too much to ask. All you need to do is work together with partners

Ai Automotive has long championed this approach which has set it apart in a sector blighted by some players, who appear to make litigation rather than partnership the primary goal.

Our focus is on working with our partners and because of that we pride ourselves in having hire days and debtor days that are far lower than the industry standard. We also provide market leading commission packages to those who work with us. It’s a model that works for us, but also for our clients and most importantly for our customers.”

 

 

 

 

 

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