John Bailey, Manheim Europe’s chief executive, talks about its ongoing development and acquisition of products and services – and the dealer’s need for a great sales experience.
How serious to you is the decline in the number of franchised and independent dealers?
It doesn’t keep me up at night, other than to consider how we deal with it.
Aside from during the worst of the recession, two million new cars are sold each year in the UK. Consolidation means the volume sold by each of our customers has increased. My challenge is to ensure we can provide the services and products they need to meet changes in the market. Because fewer dealers are taking a larger slice of the market, they have more leverage over how they select their suppliers.
What can dealers do to stay fit for the future?
Dealers must continue to focus on the buying experience and that includes face-to-face. Customers seldom buy a car from a dealer because it’s the cheapest; it’s the experience with the salesperson. They research their car purchase thoroughly: they know the product and what cars are available. But customers still impulse buy with an emotional product like a car, they will be prepared to pay more than they might have done up the road because the experience with the salesperson triggered the buying decision.
Is technology a boon or a burden for dealers?
It’s decided by the dealer. They can lower their cost base by being lean and taking advantage of technology. Take advertising: there are dealers still using newspapers because they’re afraid if they don’t no-one will come to their showroom. But online provides the exposure a newspaper can never compete with. Then dealers should ensure the same quality standards are applied to the web as the showroom. A dealer will spend six figures to maintain CI standards, yet on their website some stock doesn’t have a photo or the picture quality is poor.
You’ve grown your product portfolio recently with the acquisitions of Motors.co.uk and Dealer Auction. What drives the need to continue to grow?
We want to provide the full circle of services to our customers. The challenges and opportunities in our market change and develop and we want to be there to meet them to the benefit of Manheim and our customers.
Manheim is an international business. What governs the decisions made in the UK?
Manheim is part of a $16 billion revenue business. We look to the long-term for returns on investment, we’re not answering to shareholders or private equity owners. Whatever comes across my desk, I consider the following way: does it fit our model and our strategy and does it help our dealers?
What are your development priorities?
Data is a new battleground: collation, analysis and provision of valuable insight to dealers. In the US we have a product, vAuto, that uses real-time market supply and demand data to maximise profitability. We are working on bringing this to the UK.
The market is crying out for alternatives to Auto Trader and no-one is better positioned to offer that than Manheim with Motors.co.uk.