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Face to Face: CEM Day reaps the dividend of diversification

It is only in the past decade that these operations have truly come to the fore, however. A combination of low motor retail margins and difficult economic conditions required CEM Day’s directors to consider the profit growth offered by its non-retail streams.

A tough territory

Since the decline of the mining industry, a high proportion of the population of south west Wales has been on a low income. Gross household disposable income is £13,800, 87.5% of the UK average. One in four adults is in the ‘economically inactive’ bracket, which includes people with long-term illnesses, unpaid carers, those who retired early and others not actively looking for work. Swansea has the third highest proportion of Motability customers, after Glasgow and Liverpool.

Russell Day, sales director, explained: “We’ve got a very unique base here. There is a lot of low income, or public sector workers that have certain deals with manufacturers, or Motability recipients, so it’s tough to get true retail business here. Some manufacturers struggle to understand this.”

CEM Day’s business is split equally into one-third Motability, one-third retail and one-third Ford employees.

While Ford ran a car parts factory in Swansea, it fed CEM Day’s high local market share. During the course of its 80-year partnership with Ford, the dealer was geared up for a partner with 30% national market share, and it outperformed this thanks to Ford’s attractive new car scheme for its employees. But last decade, after Ford pulled out of Swansea and other brands ate into the manufacturer’s national share, CEM Day decided to multi-franchise, despite the challenges posed by the different systems, requirements and incentives often demanded by each brand. It first took on Peugeot in Swansea, then at Haverfordwest. It then introduced Fiat in Swansea in 2010 and an unsuccessful trial with a Nissan dealership has left the group retaining its aftersales franchise for Swansea. Overall, multi-franchising has given the dealer group the opportunity to keep its customers when they’ve fancied trying another brand.

Russell Day added: “The fact that there was a Ford plant here has meant we’ve enjoyed good success with Ford over the years. Okay, there isn’t the Swansea plant anymore, but there’s still the Ford engine plant in Bridgend and we have a lot of customers that bought from us that still buy from us that work in Bridgend or retired in Swansea. The repeat customers we’ve been serving for decades are our lifeblood.”

That CEM Day has won the Ford Chairman’s Award – a customer satisfaction accolade – for 17 years is a testament to its success. It averages more than 90% completely satisfied for CSI, and recognises when a customer issue arises it may be better to take a financial cost and keep that customer than risk them going elsewhere and telling their friends about a bad experience. Almost two-thirds of its sales customers are repeat visitors.

“There’s no point making a killing once, we’d rather shave the beast every year,” said Graham Day.

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