As we approach the time of year when our thoughts begin to wander towards the objectives for 2019 and budgeting for growth, I thought it prudent to revisit Einstein’s famous quote on the definition of insanity; “Doing The Same Thing Over And Over Again And Expecting Different Results!"
Unashamedly I quote Einstein regularly on this as I feel it can bring some clarity to the whole process of planning for growth year on year, and in terms of the focus that that planning process requires. I work on the premise, (quite rightly), that if you continue to do the same things in your business, you will continue to achieve the same results, thus the fact that expecting the outcome to be any different, is madness.
I’m sure that every manufacturer, just like every dealer network and franchised dealership, will have a different set of objectives, (and therefore a different focus), but the one thing that remains constant between us all, is the importance of understanding what is happening in the used car market and how that is going effect your new car objectives; and as used car markets continue to evolve across Europe this understanding is going to become critical to the on-going success of European manufacturers.
Moving forward what is happening to your product in the used car market place is going to directly affect your new car aspirations, because what happens here will do more to effect the future residual values of your product range than any manipulation of future residual values attempted within your organisation, or indeed your in-house finance company, and as such, it will directly influence the cost of ownership of your new car product in the future.
So although it may not be the first priority for the manufacturer planning their immediate growth in their new car sales volumes and profits, if you want to succeed on a continual basis, the performance of your franchised dealer network, (in terms of their used car remarketing and sales performance), is going to be of paramount importance in dictating the future cost of ownership for your new car product in the future, and therefore your new car performance as a whole.
The importance of supporting the marque and controlling, (as much as is possible for any market), the used vehicle park as it returns from its first period of ownership, really is the future shared objective between European manufacturers and their franchised partners, the importance of which, must not be overlooked. Therefore if I was responsible and/or involved at a senior level with the new car sales strategy within a European manufacturer, my thoughts would be turning to what is happening within my dealer network at this time of year, how my franchise partners will be supporting our shared on-going new car objectives, (by planning for, building and securing their success in the used car market), and what we, as the manufacturer, are doing to support this?
The importance of your franchise partners now planning, (both financially and operationally), for the growth of their used car operations must never be underestimated. If the success of your new car business and your total business as a whole, is dependent on enjoying a growing and successful network of used car operations, (and I promise you it is), it is important that time is now taken by your franchise partners to think about their used car growth objectives for next year, (and thereafter), and what will be required, in terms of financial and operational investment, in order to ensure that their objectives for growth in the used car market are going to be achieved.
However aligned to this process and just as important, is what you as the manufacturer will be doing to support these initiatives? The Senior Management at Autoformance know the used car market and how fickle and cruel a mistress it can be; and it will take much planning, resilient approved used car programmes, adequate and cost effect manufacturer warranty programmes, as well as successful used car operations within your dealer network, if the foundations are to be in place, and your used car remarketing initiatives are going to support your new car aspirations.
Adding to the complexities for you as the manufacturer though, is the fact that all your franchise partners will be at different stages in their evolution as a used car retailer and the more successful their individual used car operations become, the more involved this planning process becomes. To compound matters for your franchise partners, the focus for growth and the investments required to deliver growth over and above their current level of performance, will change year on year dependent on where they are in their used car growth journey.
Unfortunately your franchise partners can’t take it for granted that any of the processes and operational procedures that got their used car operations to where they are today, will necessarily be the focus and operational procedures required for where you need them to be operating at tomorrow. For sure we mustn’t be in a rush to change what has got both you, as the manufacturer, and your dealer network to where you are today, (it has worked after all), but the operational structure and financial investment in used car operations that got your franchise dealer network to where they are today, are likely to be unrecognisable compared to the operational structure and financial investment required, in order to get the used car operations contained within your franchised dealer network, to where you need them to be!
So quite understandably this process of used car business development and growth can take much thought as well as a level of strategic knowledge and experience, and once your franchise partners have identified what is required, in order to meet their used car growth aspirations for next year and support their, (and your), new car aspirations, they are going to have to make sure that all the components required to achieve the objectives, are in place within their business before the year begins.
They may need more staff, they may be at the stage where they need to split their sales teams and amend their operational procedures within the business; they will certainly need more used car stock and more money and/or improvements in their current rate of stock turn, in order to be able to run with the stock levels required to achieve their growth objectives, and perhaps much more?
Unfortunately there is also the inconvenient truth that the professionals required, those with the skills and experience required to plan these strategies of used car development for both you as the manufacturer and your franchise partners, are unlikely to be employed within your organisation or within the businesses contained within your franchise dealer network; a fact that was covered in our recent articles; Do Successful Used Car Professionals Exist For European Manufacturers? And; Do Successful Used Car Professionals Exist For Franchised Dealers?
So at this critical moment for the sector in Europe, many manufacturers and their franchised dealer networks are finding that the professionals required to begin to plan and deliver success in the used car market are not available, and worse, you don’t know where to find them either.
Luckily help is at hand because this is where Autoformance can help, with our Strategic Budgeting Review Consultancy Day. Normally this bespoke consultancy module would be delivered as part of our Used Car Business Development Consultancy Programme, but it has proved to be so popular and requested year on year by our clients, that we have decided to offer this service as an individual days consultancy for new clients and the used car networks of manufacturers.
Delivered by one of the founding directors of our business, during the day on site we will review the key business areas of attention required in budgeting and planning, for the growth of used car operations, including;
- Stock Turn Review.
- Adherence to manufacturer core standards.
- Staffing structure including departmental and individual targeting.
- Used car stock acquisition.
- Current budgeting review.
- Cyclical demand.
- Stock levels and profiling.
This day on site will also encompass a presentation to the senior management team and a written report including our recommendations, aligned specifically to their growth aspirations for next year.
So if this post has resonated with you and you would like to know more about our Strategic Budgeting Review Consultancy Day, as well as the opportunity to work with an organisation of professionals who have faced the challenges of fast paced evolutionary used car 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. If you would like to explore how our Strategic Budgeting Review Consultancy Day can be offered to your dealer network, you have any questions about this initiative, or you would like to have an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, then 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 me on 0044 7796 260261.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
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