The ‘best or nothing’ ethos of Mercedes-Benz’s founding father Gottlieb Daimler is a philosophy that Mercedes-Benz of Salisbury’s sales team has integrated with huge success.
The philosophy has been at the heart of its day-to-day operations since the business became part of the Jacksons Group in 2002, taking over from Caffyns following the manufacturer’s re-organisation of its retail network.
From the outset, the retailer began building a team that would not only re-launch the business, but would form the cornerstone of its future activity.
While a long overdue move to new, state-of-the-art premises in Southampton Road in 2005 has been vital to that process, it is the people at its heart that have been pivotal in helping the group to become Mercedes-Benz Retailer of the Year in 2009 and now AM’s Best Used Car Retailer.
From the beginning Chris Wells, Mercedes-Benz of Salisbury sales manager and David Weston, Jacksons group sales director, looked at revamping the site’s used car operations.
Weston said: “We wanted to take advantage of the ability to stock as many used cars as possible. It didn’t really have a used car business before we took over the site, with just 20 used cars in stock at any one time.”
The business now stocks an average of 60 used cars.
Before working at Jacksons, Weston was with volume brands and Wells was at used car sites. That combined knowledge helped to shape the future of the Salisbury site’s used car strategy.
Used car preparation is a key area that Wells believes leads to the group having such success with used cars. All cars are pre-prepared before they go anywhere near the forecourt, going through a rigorous check-list system.
The group is spending up to £900 on each used vehicle to make sure it’s in the best condition possible with an average turnaround time of 72 hours. It sounds like a lot, but that extra effort and cost is always reaped back.
The profitability on used cars proves that the strategy is working.
According to the Mercedes-Benz composite, the top performers nationally made £1,084 per unit in 2009 compared to the £1,532 earned by Mercedes-Benz of Salisbury.
This performance helps the group post 3% return on sales across the business, in comparison to the network average of 1.8%.
The success of the sales team has had a reciprocal effect on the retailer’s aftersales operation. Mercedes-Benz of Salisbury’s service department is ranked within the top four sites within its group across a number of criteria, including the number of retail hours and labour, with the gross profit per technician some £37,000 higher than that achieved by the top performing locations.
Wells said: “Our entire used car forecourt ethos is based on a clear objective.
"If a customer makes an enquiry after seeing a car on the internet, there should be nothing about the car that will prevent them from buying it at the price on the screen when they come into the dealership to see it in the metal.”
The dealership retails used cars that some Mercedes-Benz sites might not look at, widening the age range and choice of stock on offer for customers.
He said: “The average age of a used car in the Mercedes-Benz network is about two and a half years, but we retail a lot of cars that are over five years old.
"More than a third of our stock is over three years old, so it’s a different market you’re appealing to.”
The dealership sold an X-reg SL-Class recently and has an R-reg ready to be sold in stock too.
Le Roy Muntingh, Jacksons Group managing director, said another area that stood the business’s used car operation apart from others is the treatment of customers.
He said: “We treat customers with the same respect, no matter if they’re buying a used A-Class or a new S-Class.”
Weston said: “Mercedes-Benz garages over the years have probably been guilty of ignoring customers that might not look like big spenders.
"We want customers from each end of the spectrum, whether that’s someone looking to spend £10,000 or £100,000.
“We get a lot of conquest customers coming in for used that want to trade in their Ford or Vauxhall to put them into a used C-Class. We try to make sure we have something for everyone.”
Wells takes the view that for each used car he sells, that customer will be coming back for the first service, hopefully the second and then you’ll be talking to them about changing their car again.
Muntingh believes there are some things that can’t be “bought off the shelf” when it comes to running a successful used car operation.
He said: “You’ve got to know how to buy cars. If you get that bit wrong, you’re stuffed. But the problem is, you can’t go on a course and learn how to buy and price used cars, it just comes with years of experience.”
Wells has 10 years’ experience with the Mercedes-Benz brand and the local market area and has built up a knowledge of the customer base.
The skills to underwrite the correct stock have come with that experience.
The dealership uses its good relationship with Mercedes-Benz to its advantage, buying a lot of quality stock from the manufacturer. Cars that are coming back from contract hire are put back through the network.
Weston said: “We’re a three dealership market area and we’re massively punching above our weight in terms of the amount of used cars we sell.”
The Salisbury business currently has the best used to new car ratio of 1.75:1 in the UK, with the closest dealership hitting 1.13:1.
And that’s without missing new car targets, hitting 124% of the dealership’s new car target last year.
Wells said: “The ratio of used to new should be higher than it has traditionally been because with a used car you’re not limited by your own market place because you’re advertising the car nationally.”
The longevity of Salisbury’s sales team has undoubtedly been another key factor in helping drive the success of the dealership.
Wells joined the business prior to its takeover in 2001 and has led the team since 2005 yet is still only 34-years-old.
He has recruited a close-knit team that is now well-established within the local community and boasts a combined length of service of 37 years – quite a rarity within the traditionally transient car retailing sector.
The team is not targeted on profit, they get a bonus based on the lack of discount they give away.
Muntingh said: “Before the deal even comes to Wells, the sales executives are already trying to limit the amount of discount they’re giving away.”
Wells said: “It has to be like that for us because the cars are priced keenly so we can turn them round quickly.”
Weston added: “We price cars to create an enquiry. That means you can’t put fortunes of margin across it, which means you have to deal hard to achieve a high level of profit per unit.”
Used car hand over
Jacksons uses customer support executives to help manage its hand over process.
Muntingh said some dealers don’t like to use them as it can be seen as adding in too much expense, for what essentially, the sales executive should be doing themselves.
He said: “It frees up our sales guys to sell and it means we have dedicated staff looking after our customers so we can guarantee they have our undivided attention.
Jacksons invests more than £100,000 a year in its customer support executive programme and it had to see revenues that are considerably higher than the national average to support it.
Muntingh said: “We give our sales guys every single tool to sell cars. We try to take care of as much of all the admin work as possible, so they can concentrate on talking to customers, rather than doing paper work.”
Muntingh, Weston and Wells are expecting to have a good year, but it’s going to be tough.
"The dealerships are having to work harder to get the same result and they believe consumer confidence isn’t great at the moment.
Weston said: “Q1 has been a bit barren in terms of offers from the manufacturer, but Q2 we’re going to see a lot more support.
“March has gone OK. We’re having to be extremely proactive in contacting customers. There’s not a great deal of market confidence and that’s not going to change a lot this year.
"We’re going to be okay, we’ll probably be just ahead of last year but it’s an absolute battle every day doing twice as much to get the same. We had a record year in 2010 so if we get anywhere near that we’ll be delighted.
"With the future product coming through we’ll be in a few different markets that will see us speaking to new customers. Between now and 2016 Mercedes-Benz has got huge aspirations for market share growth, if that comes to fruition that will obviously benefit us.”
Approved used car checklist
Although speed is of the essence as far as the Mercedes-Benz of Salisbury team is concerned, the minimum standard its approved used cars is never negotiable.
Every box on the following criteria has to be ticked before the car is released for the public to view in person or online:
- The vehicle has to have successfully completed a Mercedes-Benz Approved Used Car check and have all purged parts replaced
- All cosmetic repairs are taken care of as a matter of course to ensure that the car’s condition exceeds those expected of its age and mileage
- The car is cleaned inside and out to an ‘exceptionally high’ standard
- All cars are presented on the forecourt with Mercedes-Benz of Salisbury number plates, price hanger and rear windscreen sticker A ‘silent salesman’ hanger detailing all relevant information about the car and a CO2 emissions hanger are placed inside
- No car will be displayed without any of the above being carried out