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Marketplace: March isn’t everything

By Richard Yarrow

So how was it for you? Good, bad or indifferent?

March is the key month in automotive retail and the prospect of owning a potentially unlucky 13-plate new car didn’t seem to put many people off. SMMT figures reveal registrations rose 5.9% compared with March 2012 and by coincidence it was the 13th consecutive month of growth.

But what if new car sales weren’t as positive as you’d hoped for?

According to John Leech, head of automotive at finance firm KPMG, it’s not all doom and gloom.

He believes a good September can make up for a bad March.

The trick is to ensure that it happens and the starting point is to carry out an effective post-mortem – what went wrong at the end of Q1, why and how do  you stop it happening again?

“It will be a worrying time for a dealer,” Leech said.

“He will be concerned about make-up of the new car sales team and what will it mean for the future of the business.

"It’s important to channel that emotion into a calm review. Was footfall low? If so, why? Was it high but we didn’t convert?”

His advice is to devise a two-fold plan.

Firstly, deal with short-term issues; for example, if you’ve sold less new cars you may be low on part-exchange stock you can remarket. Address that quickly.

Secondly, fix the situation for the long term, which could mean a culture, personnel or leadership change.

Don’t panic

Leech was clear about the importance of avoiding knee-jerk reactions. “Dropping prices in April after a poor March isn’t the right strategy.

"Dealers will rightly be worried about volume bonuses and if Q1’s has been missed because of a poor March, failing again in Q2 is going to have the manufacturer coming down like a tonne of bricks. Don’t start panicking.”

Start by evaluating your online presence. Make sure the website is simple, accessible and user-friendly.

Customers are most interested in searching for product and price, and if they can’t get those easily they often won’t persevere.

Regularly updating information is one the characteristics which can pull dealers on to the first page of a search, so make sure it’s happening. Use the web to promote the business.

Presenting your product to the widest possible audience will help maintain sales momentum.

One expanding shop window is Auto Trader.

“Although traditionally recognised as the primary source of used cars, it’s now firmly established as the destination of choice for online buyers searching for new cars,” said Nathan Coe, group director of Auto Trader.

The site attracts more than 500,000 potential new car buyers each month, and last year’s introduction of a revised search function with new, nearly-new and used filters has simplified the process for consumers.

The result was a 39% increase in new car leads to dealers, and two of the three peak search months were March and September.

Ridgeway Group has been advertising new cars on Auto Trader for more than five years.

Philip Deacon, group communications manager, said new car response levels were significantly lower than used ones.

But he added: “All enquiries are good news and there tends to be a natural level of nearly- new enquiries turning into new ones dependent on the offers.”

Next, re-evaluate your advertising strategy.

Are you going where people are looking? It’s pointless placing ads in the local newspaper if its circulation is falling through the floor.

Special offers and service plans

New car sales are obviously important, but profitability is more likely to be driven by aftersales.

A sluggish March might mean a shortfall in new business for the workshop, so devise a strategy to make up for that. Special offers and service plans should form a key element.

“Don’t be afraid to write your own service plan on used cars” said Leech.

“Also think about the MoT. It’s the moment the customer thinks about moving from the franchised sector, so have some special deals.”

Illustrating how tiny new car sales needn’t be a problem is Graeme Chatham, owner of Chathams of Edinburgh.

Having previously had long-standing new car franchises with Honda and Skoda, he’s now selling SsangYong and Great Wall.

He said: “The numbers are so small they’re barely worth talking about, so I’m hunkering down and going back to my roots – taking small franchises and building them up, but not relying on them to be profitable.”

Chatham has a strong aftersales business and is completely restructuring the company.

He’s created a relationship with rental company Sixt and together they will be moving to new premises in the autumn.

Despite low new car turnover in March, he sees the rest of 2013 being very bright.

Backing up Leech’s advice to identify the root cause of the problem is Tim Holden, MD of Norwich-based Holden Group.

He said: “You can never single one thing out because retail is about detail. It’s the basics of continuous attention and focus.”

He said March had been good, with Honda doing best thanks to strong performances from Civic, CR-V and Jazz.

“It was a tough because it always is, and the fact it had Easter at the end put some pressure on, but it was a nice way to finish the quarter.”



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