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Hit for Six: Tips on the key aspects of the auto trade

Welcome to the AM Hit For Six Conference Report.

Our annual AM Hit For Six Conference brings together expert advice and dealer case studies on the six crucial aspects of franchised motor retailing: used cars, new cars, finance, insurance, digital and aftersales.


The national event, held at the Ricoh Arena in Coventry, attracted senior directors and managers from franchised dealerships, groups and manufacturers.

This report includes key excerpts from the conference presentations, in particular a timely explanation from the FCA’s financial adviser of its incoming powers to ban credit-based products or cap charges from April 1, with actions he recommended dealers take now to minimise the risks of disruption to their businesses.

To view or download an easy-to-read PDF version of this report, go to the AM Hit for Six 2013 ezine or click on the image to the left. The Hit for Six Conference is part of AM’s busy event calendar. For future diary dates, go to AM events.


The AM editorial team



Financial Conduct Authority update

David Gagie, senior adviser, Financial Conduct Authority  


FCA will be able to ban products  
New rules enter force on April 1  

The way the Financial Conduct Authority (FCA) will supervise and enforce regulations for consumer credit will be very similar to its approach on other products such as insurance. However, it will have powers to ban products and cap credit charges and it will have a bigger team, having brought across people from the Office of Fair Trading.

That was part of an overview from David Gagie, one of a team of six at the FCA looking at how the regulations will apply in a practical sense. The FCA published proposals in October and asked for feedback from stakeholders involved in the supply and sale of credit before the start of December.

Gagie said the FCA had a great response, which will help it shape final proposals for the new regulatory regime, which takes effect on April 1.

The FCA recognises that consumer credit is vital to the economy and that much of it works very well. “Our goal is to ensure that this vibrant market continues to work well,” said Gagie.

“We want firms to continue to put consumers at the heart of their businesses, and the fair treatment of consumers from start to finish, from the initial affordability assessment right through to the loan and eventual collection of payments, will be central to what we’re asking firms to do.”

Gagie said firms must comply with the FCA Handbook provisions, high level principles and system controls rules, from April 1, 2014, so dealers should be working towards that now. “These will be immediately enforceable,” he said.

However, he assured dealers the draft rules and guidance being proposed largely replicated existing provisions in the Consumer Credit Act and OFT guidance. If dealers are complying with those, they should have no problem in complying with the new FCA rules.

Dealers will also need to comply with specific obligations set out in the new consumer credit sourcebook from April 1. These are the FCA’s conduct of business rules, but should be broadly familiar for dealers, as they are based on the OFT’s existing rules and guidance. The sourcebook also includes guidance describing the types of behaviour likely to contravene the FCA’s principles, such as targeting customers with credit agreements that are unsuitable for them, and subjecting customers to high-pressure selling, aggressive or oppressive behaviour or coercion.

But the FCA will take action when necessary, Gagie warned.

“We will likely intervene earlier, we will look to enforce our principles including treating customers fairly and we’ll want to apply better standards in the industry by applying better scrutiny at the gateway when firms and individuals come into the consumer credit market.”

By the FCA’s reckoning, there are 13,500 OFT licences in the motor sector, of which only 4,000 have by now applied for interim approval. “Please don’t leave it too late,” said Gagie.

Actions to take now:

Check all the information on your consumer credit licence is correct, especially licence categories and details of directors

Once your licence is fully up to date, then apply for interim permission by registering online

If you have subsidiaries, check whether they need permissions in their own right

Prepare to amend status disclosures and documents in time for the new rules

Check whether the firms you deal with need permissions and if so, whether they are aware of this

Consider possible alternatives to authorisation, such as being an authorised representative of a full authorised principal firm.


Used Cars


Tim Marriott, head of product for i-Control, Deltapoint, and Richard Manning, owner,
Hilton Garage Car Supermarket


Stock optimisation tools let dealers review prices against the market price weekly and adjust them accordingly


Hilton Garage in Derby has been using Deltapoint’s i-Control used car stock optimisation system since the beginning of this year with great results, said owner Richard Manning.

It enables him to review the price of his stock weekly against the market price, and adjust it accordingly.

He said: “60% of our sales are repeat customers, so we need to ensure the car is priced to the market.”

Manning also uses it to ensure his forecourt is stocked in line with the business’s policy, as the system makes him aware which cars are in demand in his region and therefore will sell more quickly. It also sends him alerts should a car in stock fall outside his market pricing policy.

Those models aligned with his policy sell on average six days sooner than those that aren’t.

The system uses car market data from various sources, including Auto Trader adverts and BCA auctions, to track demand and pricing.

Deltapoint’s Tim Marriott said it’s not about dealers abandoning their years of experience, but about aligning the elements of the business with the technology now available.




Neil Addley, Trusted Dealers

Chris Oakham, director, Trend Tracker, and Neil Addley, managing director, Trusted Dealers


SMR market hit £9.4bn in 2012
43% of service related searches ‘out of hours’


Franchised dealers’ accounts have suffered from falling aftersales absorption and revenue, although their retention of service, maintenance and repair (SMR) has risen during the recession, said Chris Oakham. The market opportunity increased to £9.4 billion in 2012, excluding MoTs, as consumers have kept their cars for longer and therefore had to pay for more maintenance.

However, independent garages have benefited more from this than the franchised sector has. Franchised dealers have been heavily reliant on servicing cars predominantly up to four years old, and these have declined in number.

Only 60% of UK franchised dealers sell MoT tests and tyres, two of the crucial SMR opportunities for older cars. Oakham said independent garages account for three-quarters of all MoT tests, and get the required repair work too, while franchised dealers only do 15% of MoT tests. In addition, replacement tyres account for 57% of the work franchised dealers lose when a car is two years old.

Dealers need to improve their offerings to compete for the opportunities, although sales of service plans and warranties were helping. “Independents are now professional and competitive and are out to take the SMR market,” Oakham said.

Neil Addley, managing director of Trusted Dealers and formerly of, Perrys and Reg Vardy, said a five-point digital marketing strategy could help dealers prevent customers defecting to the independent sector for servicing. He said if he found himself working for a dealer group again, he would put in place the following to ensure the business had online visibility to consumers looking for aftersales service:

Collate statistics on new car to service retention, plus used car to service and service to service

Mystery-shop dealerships on their customer retention skills

Check how the business measured customer satisfaction and reviews on social networking sites (33% of consumers will share their servicing experiences)

Produce a marketing plan to ensure the business didn’t miss the aftersales opportunity

Order branded tyre gauges – “When a customer checks their tread depth and finds they need new tyres, they call me first,” said Addley.

He also advised dealers to: follow up on satisfaction surveys; “plan to address disgruntled customers”; consider service price variations for older cars and advertise pricing alongside the cost of used cars.

Addley said 43% of service related searches were ‘out of hours’, making online visibility crucial.

“Once a consumer has decided not to return to their franchised dealer for aftersales, it takes them about eight days to decide where to go instead, with 80% using social media to decide. So the window of opportunity is still open for us,” he said.



Jim Haysom, development director, Trader Media Group   

Jim Haysom, business development director, Trader Media Group



Dealers should focus on digital influence more than activity  

Understand that social media is about connectivity, a ‘one-to-one connection’, Jim Haysom told delegates.

It’s not about big data, but little data and lots of it. Dealers should consider using a Twitter hashtag in their marketing, and have a relationship with customers through their marketing.

Dealers should focus more on being influential than being highly active and think about their customers and the way they interact. Plan for future interaction and appeal to the entire community, he said, giving an example of Perrys tweeting its customers about their choice of name for the Royal baby.

In another instance, Perrys picked up on a Facebook user talking about a Nissan GTR and posted a car with his name imposed onto the number plate. “Try and add value to the customer buying experience,” Haysom said. Car reviews, to-do guides and editorial on buying a first car are all useful for consumers. Dealers can also reward and recognise their staff on social media, putting their achievements in front of customers.

Another dealer, Caralot, put social media at the heart of its business with humorous, engaging posts, competitions and interviews on Facebook. It costs little, but gets hundreds of likes and shares.

“Show the human side of your dealership,” Haysom said.



Chris Codd, head of sales, Mapfre Abraxas Adrian Foster, director, Remit Showroom

Chris Codd, head of sales, Mapfre Abraxas,
and Adrian Foster, director, Remit Showroom


FCA looking at GAP insurance competition, prices and quality

MoT insurance popular as a freebie


The economic situation has created cautious consumers who want to protect their investment, said Chris Codd. They are mindful of protecting themselves against potentially costly motoring expenses and repairs, and on the back of warranty, MoT and service plan schemes, the industry has seen aftersales retention increase.

Dealers can build a robust, sustainable and compliant insurance sales stream, he said. This can be achieved by always satisfying the needs of the consumer, achieving customer satisfaction and working with suppliers to ensure dealers have the right product mix to fit their customer base and stock profile.

Codd said success starts at the top of the management tree, by embedding the right culture and putting the correct processes and training plans in place.

He gave an example of one AM100 dealer group that has regional reviews and sales meetings covering insurance, shares best practice across its sites, rewards staff with balanced payment plans that don’t have a bias on any particular product, and sets them behavioural KPIs.

“Staff should have ‘give the customer a reason to say yes’ uppermost in their mind,” he said. “Understand the products inside out and back to front.”

Adrian Foster said insurance can be sold for profit now, but also provides potential future opportunities for revenue and opportunities to build a relationship, very much in the ethos of treating customers fairly. Warranty should be sold because it benefits the customer, even if the dealers’ margins are now low, and MoT insurance is now popular as a freebie.

The Financial Conduct Authority is looking closely at GAP to determine if competition is effective and whether prices are excessive for the given quality. One potential outcome is commission disclosure or that dealers will have to advise customers they can buy the cover elsewhere. Foster said dealers should not shy away from GAP, but should ensure they offer all types of it and consider whether the profits it generates are fair.

“As we’re selling insurance products on the back of the car sale, we need to consider whether the nature of the sale inhibits the consumer’s desire to shop around,” he added.

Foster said dealers will need to look at margin and profit, because it is likely to be squeezed. Review margins and diversify with other add-ons, he suggested. Technology and training will help dealers manage the complexity.



Gerald Grimes, managing director of Hitachi Capital, Steve Reynolds, F&I manager at Stoneacre

Gerald Grimes, managing director of Hitachi Capital, and Steve Reynolds, F&I manager at Stoneacre


Finance companies must innovate

Contactless payments to increase


Gerald Grimes said 66% of people in any year have some kind of consumer debt, and that’s an indication of our credit-hungry society.

However, the forthcoming regime under the Financial Conduct Authority means the interests of the consumer must be at the heart of finance business. The role of the finance company is to help the retailer generate incremental sales, he said. An irresistible credit offering can mean the consumer will buy something they had not considered previously. It’s down to the dealer to determine the value of the car being sold and down to the finance company to come up with an appropriate, affordable loan to fund that. In doing so, the dealer can then judge the effectiveness of its finance suppliers.

The finance company also needs to innovate, said Grimes. Hitachi Capital has worked with DIY chain B&Q recently to demonstrate a revolving credit account, similar to a credit card, which consumers would use by scanning a QR code on products with their mobile phone. Contactless payments are predicted to become more common over the next 18 months.

“The principle of omni-channel retailing is something retailers and support channels like ourselves have to get our heads round. People will enquire on the internet, go to the showroom for a look, and maybe complete the purchase on their phone. They want to pay on the phone, they don’t want to sort bankers’ drafts out, or go for BACS payments. It’s all about convenience.”

Steve Reynolds described how a partnership with a secondary finance house allows dealer group Stoneacre to resolicit more customers if they don’t get the deal they want first from the manufacturer’s captive finance company. The result is more car sales.

“Other finance houses have got to change the way we look at customers,” Reynolds said. Given that dealers must give adequate explanations to the consumer under the Consumer Credit Act, factors such as top-up loans to fund ancillaries, alongside the actual car loan, can confuse the customer and are unsafe for the dealer, he said. A funder who can wrap everything into one loan is beneficial for both parties.


New cars

Terry Hogan, managing director of Anton Hanley, managing director, The Auto Network

Terry Hogan, managing director of and Anton Hanley, managing director, The Auto Network



80% of people contacted within 48 hours went on to buy a new car


Improvements in the wider economy and the resulting boost to consumer confidence are behind the current, long-running surge in new car registrations – not dealers getting better at selling.

Terry Hogan, managing director of new and used car buying advice and review website, demonstrated how house price index figures and new car registration figures mirror each other.

“You’re not doing a better job than you were in 2009 – in fact you were probably trying harder during the worst of the recession,” he said. “It’s the wider market that’s improved and dealers are benefitting from it.”

He emphasised three principles that would help dealers win business from competitors: response, experience and aftersales events.

Consumers, Hogan said, were happy if they were contacted within an hour or on the same day of their approach to a dealer. Of those contacted within 48 hours, 80% of 1,000 people surveyed by went on to buy a car. But only 28% of consumers were contacted on the same day. “A huge amount of new car consumers are not having their contact expectations met.”

Showroom experience matters. Hogan said his wife was excited to receive a recall notice for her Mini because it meant she could enjoy the hospitality – and the wifi – on offer, whereas he had his buying “balloon burst” when his chosen car smelt of cigarette smoke on a test drive.

Keeping customers loyal to a brand through post-sales events was also important. Dealers that package service plans into the new car buying process are much more likely to retain customers, Hogan said. A total of 93% of buyers surveyed would buy a servicing arrangement from the franchised dealer where they bought their car or from another franchised dealer.

Anton Hanley, managing director of lead generator The Auto Network, said an effective contact strategy is crucial for dealers to boost conversion rates and exploit continuing health in the new car market in 2014.

Hanley said while the Society of Motor Manufacturers and Traders forecast of 2.27 million units in 2014 could be surpassed, a European recovery, particularly in Germany and Spain, and Euro currency improvement could see less stock allocated to the UK and reduced availability of finance incentives.

However, he forecast an increase in online lead generation activity – 30% up on 2013 – as manufacturers take more control of the dealer experience offered to consumers.

Hanley detailed one dealer group case study, in which dealers’ contact with consumers who had submitted phone numbers was monitored.

The attempted contact level was at 55% and actual contact 45%, in line with the industry norm. But after several months of tracking, the actual contact rate increased to just shy of 80% and attempted went up to almost 90%.

Over the seven-month project, the average time to contact went from 120 hours in January to less than 24 hours.

Hanley said: “Ultimately this delivers a better customer experience and more sales.”

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