“Once you’re on it, you’ve got to stay on it. We’re in a pretty good place, especially with Vauxhall, and we only tactically pre-register at the end of the month when the deal is right for us. But it’s just the challenge of it all. And at the back of that, there’s all the investment in showroom updates. We did three Vauxhall showrooms last year and have another two to do this year.
“What manufacturers don’t realise is we still have our own investments to make for our own futures. Because we’re making money again, we can go back to doing the things we should be doing, but which got sacrificed in those two or three challenging years. Since December, we’ve put our training manager in and we’re in the process of taking on 27 apprentices. Now we’re coming out of the tough trading period we need to make sure we get the right balance between what we need to do as a group and what our manufacturers want us to invest in.
“What I’m saying is that you start off with plenty of margin or standards money, but it’s ensuring you don’t lose anything. I employ a member of staff who does nothing but tell me where I’ve lost a penny. She’s empowered to go out and ask questions of any dealership. It’s phenomenal the amount of money that is at risk now.”
Reeve said manufacturer power is in balance across Pentagon’s six brands now, but they’re proficient at weighting monies to get the result they want from their network. A challenge for the dealer is when management at a manufacturer changes and wants to change direction and quickly make a mark before moving on.
“What there should be is a blueprint, their three- to five-year business plan, so that if there’s a change of hands whoever comes in might modify it, but basically sticks within the framework of the business plan. Maybe manufacturers will tell you that’s the way they operate, but the retailer doesn’t see it like that because it’s all about the demands of Europe or market share.
“We as retailers have to put three-year plans in if we’re going to invest in training and systems and showrooms, and I suggest manufacturers want to look at the way they reward with, what I believe is, the dealers’ margin. With one manufacturer that we took on, we agreed a three-year business plan and still within six months it dropped 1% from the margin. These things happen, or they’ll take some margin off you and convert it into standards money.”
Pentagon is fit for fleet and ready to repair
Pentagon has one foot in the traditional franchised dealer camp. Unlike many smaller regional groups, the company is also heavily engaged in fleet sales and accident repair. Both are notoriously low-margin sectors, but Reeve sees value in them nevertheless, particularly given that the fleet sector accounts for almost half of the UK’s new car market.
Pentagon has two fleet operations, in Derby and Lancashire, that serve customers nationwide, with six standalone business centres based beside its dealerships. The make-up of its fleet sales has become one part other-marques and three parts Vauxhall since the group broadened its manufacturer relationships. Reeve said he is keen to stick to that ratio and he is confident that Pentagon’s fleet sales will reach 15,000 units in 2014 – that’s almost three times as many as the retail new cars the group sold in 2013.