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Roundtable Oxford: Controlling costs is key in a tough market

A mix of franchised and independent businesses met in Oxford for AM’s latest roundtable, sponsored by Close Motor Finance.

Key topics discussed included the impact of the current economic climate on dealers, used car strategies and the costs of advertising used car stock online.

The meeting gave a varied view of the pressures of holding a franchise and the different approach independents take to their businesses.

What has been the impact of the current economic climate?

Keith Brock, Wessex Garages managing director, said: “We have been continually looking to cut costs for the last four years and we’re evaluating on an ongoing basis.

“We’ve saved massively from talking to our utility partners and suppliers.

“It’s something I thought we were on top of, but we were quite ruthless with how we approached it and demanded 50% reductions in some cases, which we did get.

“Although saying that we’ve had an exceptional start to the year in January.”

Brock said one of the biggest challenges facing his group was managing the different business plans his franchises have and fitting that in with the group’s own business plan.

He said: “Sometimes those plans don’t correlate.”

Mike Bell, sales director at three- site used car specialist Imperial Car Supermarket, said: “We’re actually in a fortunate enough position that we’re adding more sales people at the moment due to the way we structure remuneration.

“We pay a very low basic of £500 a month so they’re driven to bring in sales. If we have a slow month, the wage costs aren’t crippling.

"It creates hunger and if they’re successful they can earn up to £6,000 a month.”

Bell said that despite a “strict discipline” turnover on sales staff was low, with only four people leaving in 2011. Of the four that left, three came back to the business.

Are used car marketing costs out of control?

Neil Smith, business development director at Imperial Car Supermarket, said: “Half of our sales come from Auto Trader but we do pay £19,000 a month so we invest heavily with them.

“I’m looking to reduce our reliance on Auto Trader down by 30% and looking at cutting some of our other channels that aren’t delivering.

"If I can save the money I’d rather invest it in improving search engine optimisation on Google.”

John Miskin, Sportif Citroën managing director, said: “We are feeling the pain in terms of costs from Auto Trader. They know how good they are so they’re in a powerful position.”

Smith said from Imperial’s own research, he can see that on average, customers look at nine cars online and will narrow it down to two vehicles which they come in person to see.

They already know what they want before they go to the showroom. Each car is videoed and photographed with 40 images available for customers to see.

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