Stenning chairs a dealer sales and marketing committee with Peugeot and if he thinks there’s a problem, he will tell them outright. Peugeot has dealer sub-committees on the dealer councils for aftersales and sales. Dealers tend to have conference calls and working meetings about the franchise, rather than large forum meetings, which Stenning believes are less effective.
FIGHTING BACK AGAINST THE FAST FIT PRICE CLAIMS
Seeing fast fits continue to market themselves to UK consumers as 40% cheaper than a main dealer is a particular point of frustration for David Stenning.
“Apart from using parts, the wrong oil, the wrong training, the wrong equipment, they don’t have the software, can’t do software downloads, can’t do warranty, have no goodwill process, don’t do delivery and collection, don’t clean the car, don’t provide keys to a brand new courtesy car.
“Apart from the fact that your car is worth
Stenning believes those reasons need to be highlighted more clearly to consumers and he wants the franchised dealer industry to get better at promoting itself.
“Some independents promote that they provide main dealer levels of service, but it’s complete rubbish. They don’t and cannot,” he said.
Stenning believes franchised dealers are undercharging based on the service and skills required: “I had my chainsaw serviced last week. It was £83. One spark plug, no brakes,
“It costs me almost as much to have my chainsaw serviced as we’re expected to service a car for – £99.”
Stenning believes the view that the franchised dealer is not competitive on pricing is reinforced by fast fit advertising, consumer magazines and a lack of understanding of the complexities involved in servicing a car.
Arbury puts a lot of focus on new cars and this approach works well for Peugeot. “You have to learn how to make money on the brand and it’s always been that way,” said Stenning.
“If you go back 30 years, you hit your new car targets and you make money; you don’t hit your new car targets, you don’t make money. We make more on a new car than we do off a used car so why wouldn’t we sell new cars?
“The customer comes back in two years’ time and buys another car, and he has his car serviced.”
While Arbury has a strong relationship with Peugeot, Stenning and Barrett made the decision to further balance its portfolio with more brands across the group.
Arbury is looking to expand further with Nissan and Škoda in the future.
PCPs driving growth
Many in the industry have cited personal contract purchases (PCPs) as the key to the consistent growth in new car sales for almost two years. They have been a consistent contributor to Arbury’s success with new car sales.
The product has been around for years but it is only now that the majority of manufacturers are really pushing it as a lead product in their marketing. Arbury and particularly Peugeot have been aware of the merits of PCP for many years.
Stenning said: “We are heavily into PCP and we are now running at 70% penetration on new cars with it across the group. Finance penetration overall is at 76%.
“Peugeot is really strong on PCP; they are probably recognised as being one of the market leaders and they were into it in the very early days.”
Stenning said staff at Arbury’s Peugeot sites are probably more aware of what the monthly payments are on a new car than they are of the cash prices.
Making a success of PCPs requires a cultural change within the dealership, because the customer doesn’t own the car. However, the strength of the deal is usually enough to persuade people.
“If you look at the Peugeot offer currently, with three years’ insurance, three years’ roadside assistance, three years’ warranty, three years’ road fund licence – it’s a phenomenal offer,” Stenning said.
“There’s a belief in the product from staff and like any offer a business is putting forward to customers, if it’s a product staff can believe in, it makes it much easier to sell the benefits to a customer.”
Arbury’s focus on new car sales means the business does generate a lot of part-exchanges. Its high penetration with PCP means the business is getting a lot of two-and-a-half-year-old vehicles back in stock to sell as used.
The group also took the decision several years ago to sell non-franchise cars and has also expanded its used car stock to include higher mileage vehicles. This means Arbury can compete with a wider variety of customers at different budget levels. The business was operating at a £5,000 entry price on its used cars and it was cutting off too much of the second-hand buyer market.
Arbury does not tend to use auctions to source stock, although it will dispose of cars at auction. The majority of its used car stock is from part-exchanges and from manufacturers’ used car programmes.
Aftersales is more of a challenge and is where Stenning believes dealers are feeling the most pressure, particularly with French and non-German brands. ASE currently has its overhead absorption rate benchmark at 80%.
Arbury’s overhead absorption figures are just under 60% and Stenning believes this level is the new norm, with dealerships across the industry working hard to stay there.
Arbury uses its own call centre to manage servicing enquiries and to keep in contact with customers. It opened the centre three years ago and six full-time staff are now dedicated to keeping in touch with customers. They make all outgoing calls for the group and take some inbound enquiries too. Barrett believes this gives the group a consistent process across sites.