Are You Selling Cars Or Financial Ownership Packages? (UK Manufacturers Article)

An interesting question for you to ponder this morning, but an important one because it goes straight to the heart of how planning for your future new car and used car success can be guaranteed.

Depending on whose figures you read it is estimated that between 80% and 85% of cars sold in the UK today are sold via a form PCP agreement, a form of finance that has revolutionised the new car and used car market place in the UK. Those of you who follow my blog and read my previous article; PCP’s = Retaining Customers and Controlling Markets, will be left in no doubt as to my thoughts regarding the benefits that PCP’s delivered to the industry as a whole; I won’t repeat them in this post, but please feel free to follow the link above to the original article, which explored the commercial advantages and benefits of PCP’s in great detail.

I am returning to the subject of PCP’s because, as much as they deliver tremendous commercial benefits to your door, they do fundamentally change the perceptions and understanding of the purchasing process with your customers, so therefore it must also change the way that you as the manufacturer, along with your franchise partners, must operate and approach your customers. Regardless of the brand you represent it is the understanding of how PCP’s enable manufacturers and their franchise dealer networks to control and exploit existing customer bases that will provide the foundations for future new car success.

However, in order to do this we must first appreciate how we have changed perceptions with customers and how the advent of PCP’s has made the purchasing process more complicated and difficult to understand for the majority of customers. This process has resulted in many dealers becoming disconnected from the customers understanding of how these financial products work, resulting in some sending out confusing messages which, in some cases with more premium brands, are actually diluting the ownership experience by sending out distress messages.

LinkedIn and other social media platforms have been flooded during the first 2 months of the year with pictures of dealerships dressed up like “Sofa Stores,” with “Sale” banners all over the windows, and I wonder what message this actually sends to both their existing customers and those whom they are trying to attract. For the owners of cars associated with the more premium brands, I am sure that this is lessening the feel good factor associated with owning the product they have strived so hard to be able to afford, and just as seriously, I doubt that many customers can relate to what they are seeing, in terms of them being able to afford to change their car.

In the here and now, and to the customer owning a car on a PCP, just what good does this business having a “Sale” or “Ex-Demo Event” actually mean to the customer; and let’s be honest, we see a “Sale” sign and we never think “Oh There Is A Successful Business,” no we think the exact opposite! Subconsciously sales are associated with a struggle for business in the eyes of your target audience, so as an exercise in weakening your hand, it probably has no peer!

It is important to remember that for the customer the world of the new car and used car purchase has changed beyond all recognition during the last 10 years; gone are the simplistic trading days of you either having car to part exchange, which was worth “X” amount of pounds and you then having to find the balance; or of you having a company car supplied via a 3rd party leasing company which you changed every 2 or 3 years. Now we have 80 to 85 percent of the cars being sold via a PCP agreement, a far more complex ownership model to understand, and I would argue that for most reading this post, this fact fundamentally changes the approach required from your franchised dealer network.

Effectively the majority of customers now enter the market with a monthly budget, the actual purchase price is almost irrelevant, and as much as I don’t want to wonder on to the territory of “Teaching My Grandmother To Suck Eggs,” it is important to remember that if the customer has a monthly budget in mind, because of the complexities of PCP’s and how they are constructed, the customer actually has no idea of when they can afford to change, or into what!

They have no ongoing sight of the new car incentives at play or the residual values that will be set, let alone the monthly cost of ownership! So the industry has created a beast, but it is a beast that can be tamed and those who set their businesses up accordingly, will be the first to secure their future used car and new car success.

I would argue that once the sales operations of your franchised dealer networks are set up to operate this way, i.e. to sell finance ownership models first and cars second, they will be able to avoid the constant peaks and troughs of the market and secure your long term new car success. As mentioned in my previous article above, PCP’s give manufacturers and their franchised dealer networks many advantages, the first being a captive audience with all their customers currently driving a car supplied on a PCP agreement.

If managed and leveraged effectively the PCP agreement gives your franchised dealer network the ability to control their vehicle park, their cyclical new car performance and the ability to supply their used car operation with an ongoing supply of desirable used car stock, which can then be utilised to grow the customer bank of the business as a whole, whilst supplying the new car customers of the future, therefore further securing your new car success.

However, the ability to succeed within this new business model, the model of selling financial ownership products and the manipulation of markets, requires a totally different and continually proactive approach to the effective and successful running of both new car and used car sales operations. Yes your franchised dealer networks will still need the traditional skills that have got them to where they are, and they will still need to be masters in “The Art Of Selling,” but it is the financial understanding of that process and how that can be utilised to secure future new car success, that will need to be grasped.

However, for the manufacturer bold enough to grasp this and to build the franchised dealer networks capable of exploiting the business advantages available, the rewards are startling; everything from;

• Increased new car sales and profitability.
• Increased used car sales and profitability.
• More resilient franchised dealer networks.
• The ability to take back control of actual residual values.
• Decreasing cost of new car ownership.
• Eliminating the genuine threat posed by independent 3rd party businesses who are currently targeting your existing trading model.

In fact we would argue that for manufacturers that don’t grasp these new trading realities, there is a danger that their business continues down its current path where some elements of the new car purchasing process are now being targeted by independent 3rd party technology businesses, the likes of We Buy Any Car and Carwow, to name just a few. This path is dangerous and their success is currently weakening the stature of your franchised dealer networks, because your franchise partners are now not being seen as a “1 Stop Shop” by customers, therefore you are losing control over the customer.

These third party independent businesses are now changing consumer behaviour and becoming very powerful in your market place, (something I will be commenting about in a future article). Luckily though, at the moment, all is not lost but for some of you the situation is serious, because of how the perception of the purchasing process is being manipulated and changed in the eyes of the customer by these businesses; and let’s not forget that these businesses are not your partners, they are in this for themselves!

So as a manufacturer just what is the answer to these challenges? Well at the foundations of your future new car success will be a franchised dealer network of successful used car operations, who are capable of supporting the new car aspirations of the manufacturer; and just what is the secret to building effective and successful used car programmes for franchise dealer networks? Well, and in brief, the answer to this question is that it will take a standardised and fit for purpose approved used car programme aligned with the ability to deliver the support required to your franchised dealer networks, in order to ensure you develop the used car network capable of trading effectively and retailing the volume of used car stock required, (at the prices required), to support residual values and your new car aspirations, and this of course does not happen overnight.

Luckily though help is available and if this post has resonated with you and you would like to know more about our used car business development consultancy programmes, because you would like to partner with an organisation of professionals who have faced the challenges of fast paced evolutionary markets and know how to develop a successful and profitable used car dealer network programme on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you.

The owners of Autoformance have owned and run successful used car operations and been at the forefront of the development of approved used car programmes for a host of manufacturers. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com

Alternatively please feel free to call us on 0345 057 3177.

For more information about our services please visit our website at www.autoformance.com.

Andrew Banning.
Used Car Business Development Director.

Are You Selling Cars Or Financial Ownership Packages? (European Manufacturers Article)

An interesting question for you to ponder this morning, but an important one because it goes straight to the heart of how planning for your future new car and used car success can be guaranteed.

Depending on whose figures you read it is estimated that between 80% and 85% of cars sold in the UK today are sold via a form PCP agreement, a form of finance that has revolutionised the new car and used car market places in the UK, in the same way as it is also now changing European markets. Those of you who follow my blog and read my previous article; PCP’s = Retaining Customers and Controlling Markets will be left in doubt as to my thoughts regarding the benefits that PCP’s delivered to the industry as a whole; I won’t repeat them in this post, but please feel free to follow the link above to the original article, which explored the commercial advantages and benefits of PCP’s in great detail.

I am returning to the subject of PCP’s because, as much as they deliver tremendous commercial benefits to your door, they do fundamentally change the perceptions and understanding of the purchasing process with your customers, so therefore it must also change the way that you as the manufacturer, along with your franchise partners, must operate and approach your customers. Regardless of the brand you represent it is the understanding of how PCP’s enable manufacturers and their franchise dealer networks to control and exploit existing customer bases that will provide the foundations for future new car success.

However, in order to do this we must first appreciate how we have changed perceptions with customers and how the advent of PCP’s has made the purchasing process more complicated and difficult to understand for the majority of customers. This process has resulted in many dealers becoming disconnected from the customers understanding of how these financial products work, resulting in some sending out confusing messages which, in some cases with more premium brands, are actually diluting the ownership experience by sending out distress messages.

LinkedIn and other social media platforms have been flooded during the first 2 months of the year with pictures of dealerships dressed up like “Sofa Stores,” with “Sale” banners all over the windows, and I wonder what message this actually sends to both their existing customers and those whom they are trying to attract. For the owners of cars associated with the more premium brands, I am sure that this is lessening the feel good factor associated with owning the product they have strived so hard to be able to afford, and just as seriously, I doubt that many customers can relate to what they are seeing, in terms of them being able to afford to change their car.

In the here and now, and to the customer owning a car on a PCP, just what good does this business having a “Sale” or “Ex-Demo Event” actually mean to the customer; and let’s be honest, we see a “Sale” sign and we never think “Oh There Is A Successful Business,” no we think the exact opposite! Subconsciously sales are associated with a struggle for business in the eyes of your target audience, so as an exercise in weakening your hand, it probably has no peer!

It is important to remember that for the customer the world of the new car and used car purchase began to change during the last 10 years; and if European consumers embrace PCP’s to the extent that consumers in the UK have, then it will mean the end of the simplistic trading days of you either having car to part exchange, which was worth “X” amount of pounds and you then having to find the balance; or of you having a company car supplied via a 3rd party leasing company which you changed every 2 or 3 years.

If European consumers continue to embrace PCP as an car purchase option, (and there is every sign that they will), then as in the UK, European manufacturers could also have 80 to 85 percent of the cars being sold via a PCP agreement, which is a far more complex ownership model to understand for consumers, and I would argue that for most reading this post, this situation will fundamentally change the approach required from your franchised dealer network.

Once embracing PCP agreements, the majority of customers are then effectively entering the market with a monthly budget, the actual purchase price is almost irrelevant, and as much as I don’t want to wonder on to the territory of “Teaching My Grandmother To Suck Eggs,” it is important to remember that if the customer has a monthly budget in mind, because of the complexities of PCP’s and how they are constructed, the customer will actually have no idea of when they can afford to change, or into what!

They have no ongoing sight of the new car incentives at play or the residual values that will be set, let alone the monthly cost of ownership! So the industry has created a beast, but it is a beast that can be tamed and those who set their businesses up accordingly, will be the first to secure their future used car and new car success.

I would argue that once the sales operations of your franchised dealer networks are set up to operate this way, i.e. to sell finance ownership models first and cars second, they will be able to avoid the constant peaks and troughs of the market and secure your long term new car success. As mentioned in my previous article above, PCP’s give manufacturers and their franchised dealer networks many advantages, the first being a captive audience with all their customers currently driving a car supplied on a PCP agreement.

If managed and leveraged effectively the PCP agreement gives your franchised dealer network the ability to control their vehicle park, their cyclical new car performance and the ability to supply their used car operation with an ongoing supply of desirable used car stock, which can then be utilised to grow the customer bank of the business as a whole, whilst supplying the new car customers of the future, therefore further securing your new car success.

However, the ability to succeed within this new business model, the model of selling financial ownership products and the manipulation of markets, requires a totally different and continually proactive approach to the effective and successful running of both new car and used car sales operations. Yes your franchised dealer networks will still need the traditional skills that have got them to where they are, and they will still need to be masters in “The Art Of Selling,” but it is the financial understanding of that process and how that can be utilised to secure future new car success, that will need to be grasped.

However, for the manufacturer bold enough to grasp this and to build the franchised dealer networks capable of exploiting the business advantages available, the rewards are startling; everything from;

• Increased new car sales and profitability.
• Increased used car sales and profitability.
• More resilient franchised dealer networks.
• The ability to take back control of actual residual values.
• Decreasing cost of new car ownership.
• Eliminating the genuine threat posed by independent 3rd party businesses who are currently targeting your existing trading model.

In fact we would argue that for manufacturers that don’t grasp these new trading realities, there is a danger that their business continues down its current path where some elements of the new car purchasing process are now being targeted by independent 3rd party technology businesses, the likes of We Buy Any Car and Carwow, to name just a few. This path is dangerous and their success is currently weakening the stature of your franchised dealer networks, because your franchise partners are now not being seen as a “1 Stop Shop” by customers, therefore you are losing control over the customer.

As they are in the UK, these third party independent businesses are now changing consumer behaviour and becoming very powerful in your market place, (something I will be commenting about in a future article). Luckily though, at the moment, all is not lost but for some of you the situation is serious, because of how the perception of the purchasing process is being manipulated and changed in the eyes of the customer by these businesses; and let’s not forget that these businesses are not your partners, they are in this for themselves!

So as a manufacturer just what is the answer to these challenges? Well at the foundations of your future new car success will be a franchised dealer network of successful used car operations, who are capable of supporting the new car aspirations of the manufacturer; and just what is the secret to building effective and successful used car programmes for franchise dealer networks? Well, and in brief, the answer to this question is that it will take a standardised and fit for purpose approved used car programme aligned with the ability to deliver the support required to your franchised dealer networks, in order to ensure you develop the used car network capable of trading effectively and retailing the volume of used car stock required, (at the prices required), to support residual values and your new car aspirations, and this of course does not happen overnight.

Luckily though help is available and if this post has resonated with you and you would like to know more about our used car business development consultancy programmes, because you would like to partner with an organisation of professionals who have faced the challenges of fast paced evolutionary markets and know how to develop a successful and profitable used car dealer network programme on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you.

The owners of Autoformance have owned and run successful used car operations and been at the forefront of the development of approved used car programmes for a host of manufacturers. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com

Alternatively please feel free to call us on 0044 345 057 3177.

For more information about our services please visit our website at www.autoformance.com

Andrew Banning.
Used Car Business Development Director.

Successful Used Car Operations Will Lie At The Heart Of Your Future New Car Success! (UK Dealer Article)

In one of our most popular articles from last year, Effective Used Car Stock Practices Will Lie At The Heart Of Your Future New Car Success! I began to answer the questions surrounding that statement and the effects that your used car performance will have on your new car performance. The central theme to the article and the suite of articles that followed, as listed below;

Only A Successful Used Car Operation Can Protect Your New Car Success!

“Pre-Registrations” And Shutting Your Used Car Operation!

Was the understanding of what can happen when manufacturers are not supported by resilient and successful used car franchise partners and the effect that this will have on your business as a whole, as well as the combined objectives for the new car business that you share with the manufacturer.

As we all enter a more challenging and fragmenting new car environment, I commented on the potential for increasing amounts of stock returning to dealerships and manufacturer owned finance houses, (that were originally sold on a PCP agreement), where the actual market values are less than the guaranteed future values agreed when the car was sold. Now this unfortunate situation can always happen, but it is what happens at this stage that can dramatically affect future residual values and thus the cost of new car ownership, especially if it begins to happen in larger volumes.

If your business is supported by an effective, successful and profitable used car operation, in the eyes of the manufacturer you will be a franchise partner who is a successful retailer of used cars and therefore you will have businesses with a shared objective to work towards, where deals can be done, incentives put in place and you can trade your way out of these challenges by retailing the stock concerned, retaining more customers in the process and actually increasing the overall bottom line for both your business as well as for the manufacturer.

However, if you are not supported by a used car operation successful in retailing used cars, well then you have some problems and there is a danger then that future residual values are out of your control, and let me explain why. Every car has a value and a there is a customer for every car, provided of course that the car is priced correctly within the market place; so let’s focus on what happens to used car stock, when it is not retailed via your business or the franchised dealer network.

Well at this stage it still has to be disposed of and the money concerned returned to the business; and in the UK we are lucky because we operate the world’s only 24-7-365 trading environment for used car stock; a stock market for cars if you like. We may not like the price we are offered, but unlike other worldwide used car markets, stock can always be disposed of and funds returned to the businesses concerned.

So what’s the problem I here you say? Well the problem lies within the market dynamics at play here and what then happens to that stock when it is disposed of outside of your business or the associated franchised dealer network. For the funds to be returned, someone has to purchase the stock concerned and the people acquiring this stock are more than likely to then use that stock holding to undermine your business, those of your franchise partners and the future residual values of your new car product, in fact everything you as a business hold dear.

This stock is not being purchased by a charitable organisation, it is being purchased by another business, the owner of which will, in all likelihood, have a far greater understanding of the global used car business than maybe you or the manufacturer you represent, because this is all their business does, and because it does it on a massive scale across the whole of the market.

Invariably this stock will end up at an independent specialist, who will be in direct competition with your business or that of your franchise partners. So you can end up in a situation where stock is sold and then being advertised for sale at a business in direct competition with yours or one of your franchise partners; so in effect you haven’t got rid of the problem, you’ve created many more because this business is now undermining your business and/or that of your franchise partner and actually taking customers from your businesses.

On top of this, the process will also be undermining and reducing the residual values of your own product, thus increasing the cost of new car ownership, so undermining your future new car performance as well; why? Well for the independent specialist to be a successful business, invariably they have to offer the same stock for sale at a lower price than similar cars priced under your approved used car programme, either at your business or that of your franchise partners, but to be able to do this, they have to buy at a lower price, thus driving down actual used car values, therefore future residual values over the medium to long term.

If you don’t believe me, but want to get an idea of the size of the threat these organisations represent, I would recommend that every owner and senior professional, whether dealer based or manufacturer based, who has a responsibility to the future sales success of your business and your brand, goes to visit one of these organisations in the guise of a potential customer. And I don’t mean your local budget car supplier, I mean one of the new used car supermarkets that are springing up around the country.

Just walk around the site, look at the breadth of product available for sale and the opportunity it presents; basically a customer looking at a car on a specific budget or as a genre of car, need now only visit one site to see the majority of stock on offer for sale within the local market, and guess what, with time at a premium in busy lives and the way technology is changing purchasing habits, especially in regard to price and value driven purchases, this is exactly what a lot customers do.

Now if you make the time to do this you will leave with many questions but also having learnt a lot, you may even recognise some customers that you have seen visiting your business, but if you are honest, you are unlikely to leave unimpressed. They may not represent what you consider “The Brand” and you may be tempted to look down a little on these businesses, but they are selling thousands of used cars a year, so by default they are doing something right, and the fact that they are will have a direct effect on both your used car and new car success, because they are becoming more representative of the true stock market of car values because they will purchase anything, providing there is consumer demand and there is a profit available; perhaps the time to really worry is when they are not purchasing your used car product?

So as the owner of a franchise dealer, what is the answer to the challenges of building effective and successful used car businesses within franchise dealer networks? Well the answer to this question is that it will take a standardised and fit for purpose approved used car programme from the manufacturer, aligned with the ability to deliver the investment and support required to your used car business, in order to ensure you develop the used car operation capable of trading effectively and retailing the volume of used car stock required, at the prices required, to support residual values and both your used car and new car aspirations, and this of course does not happen overnight.

If you don’t there is a danger that the industry continues down its current path where some elements of the new car purchasing process are now being targeted by third party technology entrepreneurs, the likes of We Buy Any Car and Carwow, to name just a few. This is dangerous, as your franchise dealership is now in danger of not being seen as a “1 Stop Shop” by customers, therefore you are losing control over the customer, because these businesses are reacting to changes in consumer behaviour and becoming very powerful in your market place; something I will be commenting about in a future post.

Luckily though help is available, so if this post has resonated with you and you would like to know more about our used car business development consultancy programmes, because you would like to partner with an organisation of professionals who have faced the challenges of fast paced evolutionary markets and know how to develop a successful and profitable used car business on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you.

The owners of Autoformance have owned and run successful used car operations and been at the forefront of the development of approved used car programmes for a host of manufacturers. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com

Alternatively please feel free to call us on 0345 057 3177.

For more information about our services please visit our website at www.autoformance.com

Andrew Banning.
Used Car Business Development Director.

Successful Franchised Used Car Networks Will Lie At The Heart Of Your Future New Car Success! (UK Manufacturers Article)

In one of our most popular articles from last year, Want To Grow Your New Car Business? Never Take Your Eyes Off Your Used Car Business, I explored the answers to the questions surrounding that statement and the effects that your used car performance will have on your new car performance. The central theme to the article and that of the subsequent article below, was the understanding of what can happen when manufacturers are not supported by resilient and successful used car franchise partners and the effect that this will have on their new car businesses.

Only A Successful Franchised Used Car Network Can Protect Your New Car Success!

As we all enter a more challenging and fragmenting new car environment, one of the issues explored was the potential for increasing amounts of stock returning to dealerships and manufacturer owned finance houses, (that were originally sold on a PCP agreement), where the actual market values are less than the guaranteed future values agreed when the car was sold. Now this unfortunate situation can always happen, but it is what happens at this stage that can dramatically affect future residual values and thus the cost of new car ownership, especially if it begins to happen in larger volumes.

Now future residual values are actually being targeted and threatened on many fronts; don’t think for one moment that the listing of your new car product on the websites of independent “E-Tailers” is helping the cause of strong residual values at all. Some of the discounts shown on these websites are mind boggling and terribly damaging to the perception of the brands associated, and just as threatening as this, is how these businesses are looking to manipulate and change customer purchasing habits. However this issue is a separate and in-depth post in itself, and I assure you all that I will return to this subject very soon.

But for now, let’s return to the original discussion point of cars returning when PCP’s have come to an end, because the long term strategy for these cars will be crucial to future residual values and the cost of new car ownership. It is important to remember that current statistics indicate that approximately 85% of new and used cars are sold using the PCP finance model so how this stock holding is manged, upon returning to your franchise dealer network, is going to influence the cost of new car ownership, and therefore your new car success, for years to come.

If you are supported by a network of franchise partners who are successful retailers of used cars then you have a network of businesses with a shared objective to work towards, where deals can be done, incentives put in place, and you can trade your way out of these challenges by retailing the stock concerned; therefore retaining more customers and actually increasing the overall bottom line for both yourself, (as the manufacturer), and your franchise partners, whilst protecting future residual values and securing your on-going new car success.

However, if you are not supported by a dealer network successful in retailing used cars, well then you have some problems and there is a danger then that future residual values are out of your control, and let me explain why. Every car has a value and a there is a customer for every car, provided of course that the car is priced correctly within the market place; so let’s focus on what happens to used car stock, when it is not retailed via your franchised dealer network, and the threats that then poses to your future new car success.

Well at this stage it still has to be disposed of and the money concerned returned to the business, if on-going financial liquidity is to be assured, and in the UK we are lucky because we operate the world’s only 24-7-365 trading environment for used car stock; a stock market for cars if you like. We may not like the price we are offered, but unlike other worldwide used car markets, stock can always be disposed of and funds returned to the businesses concerned.

So what’s the problem I here you say? Well the problem lies within the market dynamics at play here and what then happens to that stock when it is disposed of outside of your franchised dealer network. For the funds to be returned, someone has to purchase the stock concerned and the people acquiring this stock are more than likely to then use that stock holding to undermine your franchise partners and the future residual values of your new car product, in fact everything you as a business hold dear.

This stock is not being purchased by a charitable organisation, it is being purchased by another business, the owner of which will, in all likelihood, have a far greater understanding of the global used car business than maybe you or your franchise partners, because retailing used cars is all the business does, and because it does it on a massive scale across the whole of the market.

This stock will end up at an independent specialist, who will be in direct competition with your franchise partners. So you can end up in a situation where valuable stock is sold and then being advertised for sale at a business in direct competition with one of your franchise partners; so in effect you haven’t got rid of the problem, you’ve created many more because this business is now undermining your franchise partners and taking customers from their businesses.

On top of this, the situation will also be undermining and, in all likelihood, be reducing the residual values of your own product, thus increasing the cost of new car ownership and undermining your future new car performance as well; why? Well for the independent specialist to be a successful business, invariably they have to offer the same stock for sale at a lower price than similar cars priced under your approved used car programme, at the businesses of your franchise partners; but to be able to do this they have to buy at a lower price, thus driving down actual used car values, therefore future residual values over the medium to long term.

If you don’t believe me, but want to get an idea of the size of the threat these organisations represent, I would recommend that every senior professional, (whether dealer based or manufacturer based), who has a responsibility to the future sales success of your brand, goes to visit one of these organisations in the guise of a potential customer. And I don’t mean your local budget car supplier, I mean one of the new used car supermarkets that are springing up around the country.

Just walk around the site, look at the breadth of product available for sale and the opportunity it presents; basically a customer looking at a car on a specific budget or as a genre of car, need now only visit one site to see the majority of stock on offer for sale within the local market, and guess what, with time at a premium in busy lives and the way technology is changing purchasing habits, especially in regard to price and value driven purchases, this is exactly what customers do.

Now if you make the time to do this you will leave with many questions but also having learnt a lot; you may even recognise some customers that you have seen visiting the businesses of your franchise partners, but if you are honest, you are unlikely to leave unimpressed. They may not represent what you consider “The Brand” and you may be tempted to look down a little on these businesses, but they are selling thousands of used cars a year, so by default they are doing something right, and the fact that they are will have a direct effect on your new car success, because they are becoming more representative of the true stock market of car values because they will purchase anything, providing there is consumer demand and there is a profit available. Perhaps the time to really worry is when they are not purchasing your used car product?

So as a manufacturer, what is the answer to the challenges of building effective and successful used car programmes for franchise dealer networks? Well the answer to this question is that it will take a standardised and fit for purpose approved used car programme aligned with the ability to deliver the support required to your franchised dealer networks, in order to ensure you develop the used car network capable of trading effectively and retailing the volume of used car stock required, (at the prices required), to support residual values and your new car aspirations, and this of course does not happen overnight.

If you don’t there is a danger that the industry continues down its current path where some elements of the new car purchasing process are now being targeted by third partner technology entrepreneurs, the likes of We Buy Any Car and Carwow, to name just a few. This is dangerous, as your franchise networks are now not being seen as a “1 Stop Shop” by customers, therefore you are losing control over the customer, because these businesses are reacting to changes in consumer behaviour and becoming very powerful in your market place; something, as mentioned above, I will be commenting about in a future article.

Luckily though help is available and if this post has resonated with you and you would like to know more about our used car business development consultancy programmes, because you would like to partner with an organisation of professionals who have faced the challenges of fast paced evolutionary markets and know how to develop a successful and profitable used car dealer network programme on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you.

The owners of Autoformance have owned and run successful used car operations and been at the forefront of the development of approved used car programmes for a host of manufacturers. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com

Alternatively please feel free to call us on 0345 057 3177.

For more information about our services please visit our website at www.autoformance.com

Andrew Banning.
Used Car Business Development Director.

Have You Come Into 2018 With the Right Used Car Team? (UK Manufacturers Article)

A thought provoking question for everyone I’m sure and as much as it is an entirely individual question, specific to every single manufacturer, it is one I thought would be worth asking, especially now as we deal with more challenging trading conditions and for some of you reading this, challenging volumes of “Pre-Registrations” within your franchise dealer networks, that will need to be traded out of during the 1st quarter of 2018.

Those of you who read my previous post; Are Your 2018 New Car Objectives Under Threat, will hopefully be left in no doubt as to the importance of the decisions the industry makes now, and all of you have your individual challenges dictated by many factors, including;

• The brand you represent.
• The volume of “Pre-Registered” stock carried over from last year by your franchise dealer networks.
• The 1st Quarter new car objectives.
• The capability and experience levels of the Sales Teams within your franchised dealer networks.

Now of all the points above, it is my opinion that the key to your success will lie in the last; “The Capability and experience levels of the Sales Teams within your franchised dealer networks.” Why do I say this? Well, it is critical and in my opinion you are always better off, (as a manufacturer), having the “Right” sales teams in a bad market than you are having the “Wrong” sales team in a good market and as a whole, unfortunately the industry has not invested in the right people, paid them what they are worth and supported their careers, and now that our moment of need has arrived, some franchise dealer networks are in danger of not being able to draw on the skills required, to be able to trade successfully and profitably through this period.

Over the last 10 years we have seen the transition, (especially with some of the more premium brands), from entrepreneurial sales teams to teams capable of administering the desire to own the product generated by the manufacturer, which has driven the customers to the showrooms within the franchise dealer networks. Now I understand this thought process and the obvious benefits to the bottom line that these decisions delivered; after all when it comes to sales, as I have heard it said many times, “We Do Not Need A Sledge Hammer To Crack A Nut!” and these more administrative and customer handling sales teams have been important to the success of many of your franchise dealer networks. But let’s be honest, the fact that they have been, (on the whole), a cheaper overhead, has played a part in the decision to embrace this employment model in the sales departments of some of your franchise partners.

Especially when you consider just how much more expensive the previous sales team may have been, but I want to challenge this perception. I have heard it said many times that a sales professional can’t be paid as much as their Sales Manager or the Dealer Principal! Well I would answer “Why?” Sales teams and individual professionals are like any other team, so let’s draw a comparison between a sales team and a football team.

Now I readily admit that I’m not a great football fan and I wonder at the salaries being paid but like our industry, in football, not everyone can be a winner. If you want to win and the landscape is getting more challenging, for whatever reason, you have a decision to make; do you want to win or just survive? As I write this I am reading about a footballer called Alexis Sanchez, who will reportedly be earning £600,000:00 Per Week, when he leaves Arsenal and joins Manchester United; not because he is necessarily worth that amount of money but because the manager of Manchester United, Jose Mourinho, has made the decision that his skills are required if they are to achieve their objectives.

Now unfortunately because Manchester United have not produced players of this quality in enough numbers, they have to go to the open market and pay whatever is required to get the skills they need right now! And I would guess that at no time did he worry that a player he needs may earn more money than him. This mind-set is a million miles away from what the majority of businesses have done and right now, at the moment of most need for some of your franchise partners, their sales team may be lacking in the skills required to get the job done.

The right sales team, the one capable of predicting the changes in the market and rolling their sleeves up and getting the job done, would have asked the pertinent questions, done the work required during the last quarter of 2017 and hit the decks running as of the 2nd January, and would now be well on the way to achieving the objectives required by you, as the manufacturer. They would not have been forced into making so many of the mistakes I see being posted on business social media platforms; of sending out distressed sales messages and looking for trading relationships with 3rd party independent businesses that are in fact “Trojan Horse” businesses that actually threaten the business model of the manufacturer they represent, as well as their own survival.

These Directors, Used Car Managers and Sales Professionals, although a lot more expensive for your franchise partners to employ, would have been forward thinking and during December of last year, (at the latest), would have been planning for what was required to achieve the 1st quarter new car objectives of the manufacturer, which would have included asking the business many questions, (and building the foundations required), including;

• What is the quality of our database, are we leveraging it efficiently and to the benefit of the business?
• How are we going to return liquidity to the business?
• How are we going to ensure that we have a successful used car business and a successful new car business; not a new car business and a nearly new car business?
• Are repeat business and new business campaigns/initiatives clearly identified and running in unison?
• Do we understand the drivers behind the customer’s decision to purchase our products?
• Can we leverage desire for ownership?
• Are we selling cars or financial ownership products?
• How do we protect the brand and avoid sending out a distressed sales message?
• Are our advertising and marketing initiatives fit for purpose?
• Do I need additional skill-sets to achieve the objectives?

Now of course I readily accept that this process is different for every manufacturer and every business within your franchise dealer network; for some of you the product cycle and the market are still with you, especially in specialist markets where desire for the product and lack of supply is keeping the pivotal “Supply and Demand” ratio in your favour. Although of course, this is not to say that these markets are easy to be successful within, just that they are different.

For other manufacturers reading this article the challenges will be many and oversupply of product will make it difficult for everyone to succeed. If you are reading this article and those responsible for running the used car and new car sales departments within your franchised dealer network are not asking the questions above and preparing for the challenges of the 1st quarter, luckily help is available.

The owners of Autoformance have owned and run successful used car operations and franchised dealer groups, as well as having been at the forefront of the development of approved used car programmes and sales training programmes for a host of manufacturers. Part of our long term used car business development and consultancy offering is the construction and delivery of specific on-site used car and new car campaigns, designed to deliver the sales performance and results that your business requires. As part of this process which can be delivered on a bespoke basis and outside of the scope of a more traditional used car business development and consultancy programme, we can work to a specific and defined brief on your behalf, which could involve auditing the used car operations and sales departments concerned and agreeing on the stock holdings to be sold.

Our services in this regard are numerous and bespoke to the exact and immediate sales requirements of your franchise partners, but can include;

• The organising and delivery of appointment generation events.
• The construction of specific existing and new customer direct marketing campaigns.
• Loss lead campaigns.
• The construction and delivery of used car and new car sales campaigns, up to and including the sale, working with the existing sales teams or utilising our own experienced professionals.

For an exploratory conversation regarding these services or how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com

Alternatively please feel free to call us on 0345 057 3177.

For more information about our services please visit our website at www.autoformance.com.

Andrew Banning.

Used Car Business Development Director.

Have You Come Into 2018 With The Right Used Car Team? (UK Dealer Article)

A thought provoking question for everyone I’m sure and as much as it is an entirely individual question, specific to every single business, it is one I thought would be worth asking, especially now as we deal with more challenging trading conditions and for some of you reading this, challenging volumes of “Pre-Registrations” to trade out of during the 1st quarter of 2018.

Those of you who read my previous post; Is 2018 The Year For Securing Your New And Used Car Trading Model, will hopefully be left in no doubt as to the importance of the decisions the industry makes now, and all of you have your individual challenges dictated by many factors, including;

• The brand you represent.
• The locality you serve.
• The volume of “Pre-Registered” stock carried over from last year.
• The 1st Quarter new car objectives.
• The capability of your Sales Team.

Now of all the points above, it is my opinion that the key to your success will lie in the last; “The Capability Of Your Sales Team.” Why do I say this? Well, it is critical and in my opinion you are always better off, (as a business), having the “Right” sales team in a bad market than you are having the “Wrong” sales team in a good market and as a whole, the industry has not invested in the right people, paid them what they are worth and supported their careers, and now that our moment of need has arrived, some businesses are in danger of not being able to draw on the skills required to be able to trade successfully and profitably through this period.

Over the last 10 years I have seen the transition, (especially with some of the more premium brands), from entrepreneurial sales teams to teams capable of administering the desire to own the product generated by the manufacturer, which has driven the new customers to the showroom. Now I understand this thought process and the obvious benefits to the bottom line that these decisions delivered; after all when it comes to sales, as I have heard it said many times, “We Do Not Need A Sledge Hammer To Crack A Nut!” and these more administrative and customer handling sales teams have been important to the success of many of you but let’s be honest, the fact that they have been, (on the whole), a cheaper overhead has played a part in the decision to embrace this structure in the sales department.

Especially when you consider just how much more expensive the previous sales team may have been, but I want to challenge this perception. I have heard it said many times that a sales professional can’t be paid as much as their Sales Manager or the Dealer Principal! Well I would answer “Why?” Sales teams and individual professionals are like any other team, so let’s draw a comparison between your sales team and a football team.

Now I readily admit that I’m not a great football fan and I wonder at the salaries being paid but like our industry, in football, not everyone can be a winner. If you want to win and the landscape is getting more challenging, for whatever reason, you have a decision to make; do you want to win or just survive? As I write this I am reading about a footballer called Alexi Sanchez, who will reportedly be earning £600,000:00 Per Week, if he decides to leave Arsenal and join Manchester United; not because he is necessarily worth that amount of money but because the manager of Manchester United, Jose Mourinho, has made the decision that his skills are required if they are to achieve their objectives.

Now unfortunately because Manchester United have not produced players of this quality in enough numbers, they have to go to the open market and pay whatever is required to get the skills they need right now! And I would guess that at no time did he worry that a player he needs may earn more money than him. This mind-set is a million miles away from what the majority of businesses have done and right now, at the moment of most need for some of you, the sales team may be lacking in the skills required to get the job done.

The right sales team, the one capable of predicting the changes in the market and rolling their sleeves up and getting the job done, would have asked the pertinent questions, done the work required during the last quarter and hit the decks running as of 2nd January and be well on the way to achieving the objectives required. They would not be forced into making so many of the mistakes I see being posted on business social media platforms; of sending out distressed sales messages and looking for trading relationships with 3rd party independent businesses that are in fact “Trojan Horse” businesses that actually threaten their own survival.

These Directors, Managers and Sales Professionals, although a lot more expensive, would have been forward thinking and during December of last year, (at the latest), would have been asking the business many questions, and building the foundations required, including;

• What is the quality of our database, are we leveraging it efficiently and to the benefit of the business?
• How are we going to return liquidity to the business?
• How are we going to ensure that we have a successful used car business and a successful new car business; not a new car business and a nearly new car business?
• Are repeat business and new business campaigns/initiatives clearly identified and running in unison?
• Do we understand the drivers behind the customer’s decision to purchase our products?
• Can we leverage desire for ownership?
• Are we selling cars or financial ownership products?
• How do we avoid sending out a distressed sales message?
• Are our advertising and marketing initiatives fit for purpose?
• Do I need additional skill-sets to achieve the objectives?

Now of course I readily accept that this process is different for every brand and every business; for some of you the product cycle and the market are still with you, especially in specialist markets where desire for the product and lack of supply is keeping the pivotal “Supply and Demand” ratio in your favour. Although of course, this is not to say that these markets are easy to be successful within, just that they are different.

For others reading this the challenges will be many and oversupply of product will make it difficult for everyone to succeed. If you are reading this article and those responsible for running the used car and new car sales departments within your business are not asking the questions above and preparing for the challenges of the 1st quarter, luckily help is available.

The owners of Autoformance have owned and run successful used car operations and franchised dealer groups, as well as having been at the forefront of the development of approved used car programmes and sales training programmes for a host of manufacturers. Part of our long term used car business development and consultancy offering is the development and delivery of specific on-site used car and new car campaigns, designed to deliver the sales performance and results that your business requires. As part of this process we work to a specific and defined brief on your behalf, having audited the sales department and agreed on the stock holding to be sold.

Our services in this regard are numerous and bespoke to the exact and immediate sales requirements of your business, but can include;

• The organising and delivery of appointment generation events.
• The construction of specific existing and new customer direct marketing campaigns.
• Loss lead campaigns.
• The construction and delivery of used car and new car sales campaigns, up to and including the sale, working with the existing sales teams or utilising our own experienced professionals.

For an exploratory conversation regarding these services or how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com

Alternatively please feel free to call us on 0345 057 3177.

For more information about our services please visit our website at www.autoformance.com

Andrew Banning.
Used Car Business Development Director.

Have You Come Into 2018 With The Right Used Car Team? (European Manufacturers Article)

A thought provoking question for everyone I’m sure and as much as it is an entirely individual question, specific to every single manufacturer, it is one I thought would be worth asking, especially now as we deal with more challenging trading conditions and for some of you reading this, challenging volumes of “Pre-Registrations” within your franchise dealer networks, that will need to be traded out of during the 1st quarter of 2018.

Those of you who read my previous post; Are Your 2018 New Car Objectives Under Threat, will hopefully be left in no doubt as to the importance of the decisions the industry makes now, and all of you have your individual challenges dictated by many factors, including;

• The brand you represent.
• The volume of “Pre-Registered” stock carried over from last year by your franchise dealer networks.
• The 1st Quarter new car objectives.
• The capability and experience levels of the Sales Teams within your franchised dealer networks.

Now of all the points above, it is my opinion that the key to your success will lie in the last; “The Capability and experience levels of the Sales Teams within your franchised dealer networks.” Why do I say this? Well, it is critical and in my opinion you are always better off, (as a manufacturer), having the “Right” sales teams in a bad market than you are having the “Wrong” sales team in a good market and as a whole, unfortunately the industry has not invested in the right people, paid them what they are worth and supported their careers, and now that our moment of need has arrived, some franchise dealer networks are in danger of not being able to draw on the skills required, to be able to trade successfully and profitably through this period.

Over the last 10 years we have seen the transition, (especially with some of the more premium brands), from entrepreneurial sales teams to teams capable of administering the desire to own the product generated by the manufacturer, which has driven the customers to the showrooms within the franchise dealer networks. Now I understand this thought process and the obvious benefits to the bottom line that these decisions delivered; after all when it comes to sales, as I have heard it said many times, “We Do Not Need A Sledge Hammer To Crack A Nut!” and these more administrative and customer handling sales teams have been important to the success of many of your franchise dealer networks. But let’s be honest, the fact that they have been, (on the whole), a cheaper overhead, has played a part in the decision to embrace this employment model in the sales departments of some of your franchise partners.

Especially when you consider just how much more expensive the previous sales team may have been, but I want to challenge this perception. I have heard it said many times that a sales professional can’t be paid as much as their Sales Manager or the Dealer Principal! Well I would answer “Why?” Sales teams and individual professionals are like any other team, so let’s draw a comparison between a sales team and a football team.

Now I readily admit that I’m not a great football fan and I wonder at the salaries being paid but like our industry, in football, not everyone can be a winner. If you want to win and the landscape is getting more challenging, for whatever reason, you have a decision to make; do you want to win or just survive? As I write this I am reading about a footballer called Alexis Sanchez, who will reportedly be earning £600,000:00 Per Week, when he leaves Arsenal and joins Manchester United; not because he is necessarily worth that amount of money but because the manager of Manchester United, Jose Mourinho, has made the decision that his skills are required if they are to achieve their objectives.

Now unfortunately because Manchester United have not produced players of this quality in enough numbers, they have to go to the open market and pay whatever is required to get the skills they need right now! And I would guess that at no time did he worry that a player he needs may earn more money than him. This mind-set is a million miles away from what the majority of businesses have done and right now, at the moment of most need for some of your franchise partners, their sales team may be lacking in the skills required to get the job done.

The right sales team, the one capable of predicting the changes in the market and rolling their sleeves up and getting the job done, would have asked the pertinent questions, done the work required during the last quarter of 2017 and hit the decks running as of the 2nd January, and would now be well on the way to achieving the objectives required by you, as the manufacturer. They would not have been forced into making so many of the mistakes I see being posted on business social media platforms; of sending out distressed sales messages and looking for trading relationships with 3rd party independent businesses that are in fact “Trojan Horse” businesses that actually threaten the business model of the manufacturer they represent, as well as their own survival.

These Directors, Used Car Managers and Sales Professionals, although a lot more expensive for your franchise partners to employ, would have been forward thinking and during December of last year, (at the latest), would have been planning for what was required to achieve the 1st quarter new car objectives of the manufacturer, which would have included asking the business many questions, (and building the foundations required), including;

• What is the quality of our database, are we leveraging it efficiently and to the benefit of the business?
• How are we going to return liquidity to the business?
• How are we going to ensure that we have a successful used car business and a successful new car business; not a new car business and a nearly new car business?
• Are repeat business and new business campaigns/initiatives clearly identified and running in unison?
• Do we understand the drivers behind the customer’s decision to purchase our products?
• Can we leverage desire for ownership?
• Are we selling cars or financial ownership products?
• How do we protect the brand and avoid sending out a distressed sales message?
• Are our advertising and marketing initiatives fit for purpose?
• Do I need additional skill-sets to achieve the objectives?

Now of course I readily accept that this process is different for every manufacturer and every business within your franchise dealer network; for some of you the product cycle and the market are still with you, especially in specialist markets where desire for the product and lack of supply is keeping the pivotal “Supply and Demand” ratio in your favour. Although of course, this is not to say that these markets are easy to be successful within, just that they are different.

For other manufacturers reading this article the challenges will be many and oversupply of product will make it difficult for everyone to succeed. If you are reading this article and those responsible for running the used car and new car sales departments within your franchised dealer network are not asking the questions above and preparing for the challenges of the 1st quarter, luckily help is available.

The owners of Autoformance have owned and run successful used car operations and franchised dealer groups, as well as having been at the forefront of the development of approved used car programmes and sales training programmes for a host of manufacturers. Part of our long term used car business development and consultancy offering is the construction and delivery of specific on-site used car and new car campaigns, designed to deliver the sales performance and results that your business requires. As part of this process which can be delivered on a bespoke basis and outside of the scope of a more traditional used car business development and consultancy programme, we can work to a specific and defined brief on your behalf, which could involve auditing the used car operations and sales departments concerned and agreeing on the stock holdings to be sold. Our services in this regard are numerous and bespoke to the exact and immediate sales requirements of your franchise partners, but can include;

• The organising and delivery of appointment generation events.
• The construction of specific existing and new customer direct marketing campaigns.
• Loss lead campaigns.
• The construction and delivery of used car and new car sales campaigns, up to and including the sale, working with the existing sales teams or utilising our own experienced professionals.

For an exploratory conversation regarding these services or how we can develop bespoke used car business development and consultancy programmes on your behalf, please do not hesitate to contact one of our Used Car Business Development Directors; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com

Alternatively please feel free to call us on 0044 345 057 3177.

For more information about our services please visit our website at www.autoformance.com


Andrew Banning.
Used Car Business Development Director.