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Taking advantage of low cost growth opportunities - guest opinion

It is no news a lot has happened in the acquisition and deals department in the past couple of years, for both franchised and independent dealers. 

We noticed manufacturers were getting more and more franchised dealers to move out of their current locations into bigger, shared premises. A move never before seen that is presenting anyone looking to expand with low-cost opportunities, which are likely to continue for the foreseeable future.

Opportunity-based acquisition

Expansion strategies come in all shapes and sizes. Our strategy is opportunity-based acquisition, which, at this moment in time, means taking on these low-cost former franchised sites for as long as it will be a viable option.

With multiple opportunities on the table, we would opt for the ones that, geographically, fit with what we’re trying to achieve: a nationwide presence with a local dealer feel.

Ideally, we look to locate sites somewhere between 50 and 100 miles apart, so they can each have their own 50-mile catchment area plus a slight overlap.

We’re also looking for opportunities for additional preparation centres to support our existing facility in Eastleigh, increase work capacity and further reduce stock turnaround.     

New dealership up and running in up to 4 weeks

In general, the sites that dealers leave behind are in top notch condition, which means it’s possible to considerably cut the time between sale and opening day - in our case, to a maximum of 4 weeks.

It should also allow for dealers to cut renovation costs and generate profit from month one, provided processes that seamlessly integrate stocking, car preparation, distribution, marketing and sales are in place.

Immediate profit with integrated processes 

For instance, once the right stock is applied to the new site and delivery is scheduled, it would be recommended to kick off a digital marketing campaign targeting exclusively local people in market to buy a used or nearly new car, as early as a week before the site is open to the public. 

We usually combine this with a short term radio and Facebook advertising campaigns to boost local awareness.

At the same time, we’re able to cut training time by using our bespoke DSM system, which guides our new members of staff through the sales process.

For our recently opened sites at Halesowen, Newport Pagnell and Grangemouth, this has resulted in sales in the region of 75 to 100 cars per month, effectively putting us in profit from month one. 

Competition isn’t a threat

While it is true that competition is tough and is likely to get even tougher in the future, that shouldn’t be a good enough reason for businesses to either slow the pace or stop pursuing their growth plans altogether.

As long as there is a clear strategy and the appropriate processes are in place, challenging times provide the most exciting opportunities.

Author: Neil Smith, operations director, Imperial Cars 

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