“The add-on is a key part of the dealer’s dealer profitability because we’ve had to look at other ways to make money when we’ve lost the traditional ways of making it on the car.”
‘Our focus is on used car sales and service profitability’
The frequent changes of leadership at manufacturer national sales company level does little to help the industry, Clark said. Those who pump up sales volume in the belief it’s money from heaven before heading off to another job don’t benefit the process and leave their franchisees to cope with the after-effects.
“A change to the leader can make a complete change to the franchise, a change to the profitability for the dealer network. With the current volumes we’re all enjoying, what would we have if that volume suddenly disappeared?
“Sitting back, you’ve got to look at these things. So our focus is on used car sales and service profitability while still giving high levels of customer satisfaction.
“It’s a very fine balance to make sure that you are doing all the things that manufacturers want you to do, and by the same token, to increase your profitability.”
Clark said he cannot get to grips with the euphoria about the size of the new car market at present. While some of it may be pent-up demand, from people who’d held off changing their car until economic recovery appeared secure, he fears manufacturers pushing the rental markets and retail PCP business based on very high residual values will create a softening of used car values. A drop in used car values as the new car market flattens out will impact on any dealer’s profitability.
“I think we’ve invested fairly wisely in what we’ve done, we’ve just got to be cautious about what we do in future because we’re not sure about the market. It’s all very well talking about figures, but you have to remember we’re on the back of a very strong market. And we’ve been here before.
“Do I see us having the same economic turmoil that we had in 2007/2008, I don’t. But we haven’t seen the end of the current battles in Syria, Israel and Ukraine, and how we deal with the Russian problems is bound to cause us problems ourselves.”
Like manufacturer churn, those problems are well out of the hands of John Clark Motor Group. For now, he and his business development director (and son) Chris, who will take over the managing director role in 2015, must concentrate on the opportunities and challenges they can influence.
Further ahead, Clark would like to grow, through acquisition and organically. Its purchase of two Jaguar dealerships from Pendragon last year leaves it well placed when Jaguar’s XE mid-size saloon comes to market in 2015 in a new segment for the marque. Clark’s single Nissan dealership, in Aberdeen, is steadily winning market share in its territory and has been rehomed in a purpose-built showroom. Expansions to several other premises are also on the cards.
Should acquisitions be on the table, he would like the business to expand with some of its existing brands. Northern Scotland could provide opportunities closer to home, but asked if he’d broaden the group’s footprint south of the Border, Clark’s caution did not desert him: “It will take a bit of a push for us to go south of the Border, but there’s a possibility of that.” .
As editor, Tim is responsible for the media content, planning and production of AM's multiple channels (AM print and digital magazines, website, social media and contributing to our events planning). He interviews and writes about as many franchised dealer groups and UK divisions of motor manufacturers as possible, to explore the issues facing UK motor retail and understand what solutions dealers and suppliers are using to overcome these.
Busterrabbit - 20/11/2014 11:14
The PCP bubble will burst soon, PCPs haved damaged the sales (and therefore the RVs) of used cars and there will be hundreds of thousands of buyers in negative equity when they come to change their car, what are they going to do, cough up a few £000's and start again? I think that PCPs will soon be viewed as the "endowment mortgage" of the car industry, and the FCA will get involved, again. Talking of mis-selling, who needs paint protection with modern cars? It might make a car marginally easier to clean but is it worth upwards of £300? This type of upsell shows that customers' interests are not paramount, it's about maximising profit, whatever the PR speak.