In this article we wanted to explore the most successful franchise dealerships in your network, the ones that are fully engaged, always achieving the objectives and supporting the aims of the manufacturer and this is important, because in terms of their staffing structure and the development of their people, they have much to teach manufacturers; and we think that this understanding will be important for European manufacturers, as European used car markets continue to evolve and assume far greater trading importance.
In the UK, as like many other European markets, there are many challenges in the automotive sector at the moment but somehow, no matter what the trading challenges, these businesses are always out-performing the market and the rest of your network and this does not happen by accident. Without doubt the most successful franchised dealerships we visit are those who build foundations for success; they train and develop their staff and then retain them for many years, there is no short term thinking, they know that they either develop their staff or have to “Buy Winners” when the challenges arrive, but guess what, by developing their staff and having this mind-set, the challenges never really arrive at the doorstep of their business, because the quality of the professionals employed mitigates against this risk.
Most importantly this engenders an atmosphere of trust between staff and the owners of the business. We have not met one senior professional owning or running a franchised dealer business who buys into the argument that new car sales, (or any other area of the business for that matter), can be grown year-in, year-out. So their mind-set is different and the successful businesses motivate and manage their staff around what is challenging but achievable, and that sometimes this inevitably means that, due to factors outside of their control, the business will go backwards.
They also realise that they must offer a broad range of services involving multiple income streams if they are to remain both relevant and successful; they realise new car markets are evolving and that they are in a fight for market share, a fight that not everyone can win, so they are forward thinking and making the investments required to ensure that they are resilient and profitable in the future.
Now compare this to the traditional short term thinking process of the majority of manufacturers, in terms of how they train and develop their staff and run certain parts of their business. This is important because your thinking in this regard and therefore the strategies deployed, means that you are generally at odds with your most important customers, your most successful franchise partners. Now we say this to challenge traditional thinking and because they are your most important customers; after all none of you are set up to survive without your franchise partners and the investments they make in your business model.
So let’s explore in this article how they might perceive the parent manufacturer and the way that you may run your organisation to drive your business forward. Well the majority will see you as being obsessed with just the new car business, but losing control over pricing and margins, because these are now effectively set by independent technology based businesses, the likes of Carwow. They may understand that you, as the importer into your market, are driven by the demands of the parent manufacturer, but they will not understand any lack of straight talking with the parent manufacturer regarding realistic expectations.
Now this understandable obsession with new car retailing has unfortunately resulted in a situation where the majority of manufacturers trading in the UK and Continental Europe are just leveraging the same business continually, (the new car business), and this is leaving business models exposed, in the same way as if McDonalds only sold the BIG Mac, their business model would be exposed. For sure McDonalds may have built their business on the Big Mac, but the business was launched in different times, now there are many similar burgers to the Big Mac, so McDonalds have had to broaden their offering into many more food and beverage products. So your franchise partners have seen their servicing and financing models attacked, other businesses have stolen a march on you in terms of aftersales and customising and the majority of you are losing the battle for the largest growing sales market in your country, the business where profits are unlimited, the used car market.
Sadly we are not sure this is going to change either, (well not in the UK), not until manufacturers encourage an environment and ethos where long term thinking will be possible. So again we wanted to share this article with our European contacts base in the hope that they will avoid making the mistakes of their UK based counterparts, especially during the critical next 2 – 5 years as new car markets become more and more fractured and used car markets continue to grow.
Currently the environment within the majority of UK based manufacturers encourages short term thinking and reactionary business decisions to get the job done in the short term, not the building of long term foundations. Now we don’t blame the professionals involved in the process for delivering exactly on the brief set to them, bearing in mind this is an environment where the job is a short term challenge on their way to the next job; but sadly in the past this has been most prevalent in the strategy of development of used car retailing, and we are beginning to see this happening again.
So let’s explore why this happens and hopefully we can help enlighten manufacturers, within whom nobody appears to want to take responsibility for the long term used car business development job, (which we sympathise with), but unfortunately leads to the wrong approach and the foundations for success never being built; because It is easier, (but not very clever), to throw short term resources at a defined problem in order to make it appear that it has gone away.
For example; if your brief is to improve used car retailing performance for 12 months, well that is easy, we would tell you that we will build a team who will visit your network on a monthly basis and drive short term results through your business, leave the accounts looking better whilst you go off to your next role; so job done! Sadly not, because to achieve this will involve a completely different process, one of short term delivery of results and “Dressing The Business” to achieve a specific set of numbers, so we will warn you that we are delivering the “Emperor’s New Clothes!” Under this scenario we won’t have time to invest in the business, develop the personnel involved and build any foundations, no we are just getting you a result, which is a million miles away from building your business for the long term; as whoever takes over from you will find out when performance immediately crashes back to previous levels.
This is not the way to build successful businesses for the long term, where unfortunately there are no short cuts and until somebody is brave enough to enlighten manufacturers this will not change. Someone has got to brave enough to stand up and deliver the difficult message that in order to educate and invest, the business will probably see performance either plateau or go backwards and that during difficult times we must not revert to type and cut training and marketing budgets first, because this is sending the wrong message to our most important customers; our franchise partners.
Now under the current environment this may well have somebody talking themselves out of a job, and this goes to the heart of the problem at most big companies, not just automotive manufacturers, where they are run under a fear culture where everything must be possible and in a certain time frame! This is quite ludicrous and as much as you have all the trading advantages you could ever need to make a success of used car retailing, someone has to know how to deliver on this, and senior people at manufacturers must stop under estimating just what is involved, in terms of delivering on the potential to grow used car retailing.
But sadly not many people within manufacturer organisations have trodden the used car business development path and know therefore how to make the most of the opportunities available. Unfortunately used car retailing has for too long been seen as a second class career within the manufacturer and franchised element of the industry, therefore largely ignored. The irony now is that the business everyone dismissed and wants to ignore is now the most vital to the success of your franchise model in the UK, (as it will become to Continental European Manufacturers), and also the one where there is a tremendous skills shortage.
Now you all have the right to carry on down the current path where everything you offer has the new car trading model at its core but be warned, you will in all likelihood be entering a single and narrowing market of opportunity, one where you no longer have total control and where it is becoming a race to the bottom, in regard to margins. Now this may be seen as a desired strategy delivering a strategic and necessary culling process of your current network but it will also be a totally different investment proposition for your franchise partners in the future, some of whom may then question the financial returns likely to be enjoyed.
And as in the UK, the ever growing number of independent used car specialists will be over joyed that you continue to leave them to exploit the market that is, (in the UK), still over 3 times the size of the new car market, (the used car market), and to have it all to themselves. But the reality is that you have all the component parts required already within your organisation, to dominate the used car market place for your product, but you are more than likely missing the two most important ingredients; the staff and the knowledge and this is an issue we have explored many times, most recently in the articles below;
Do Successful Used Car Professionals Exist For European Manufacturers?
Do Successful Used Car Professionals Exist For Franchised Dealers?
So the decision is yours, do you take advantage of the used car trading opportunity or do you continue down the current path. In reality there will be no shortcut to either success or the professionals you require in both your own organisation and the businesses contained within your franchise dealer network. Without knowledge and education there can be no success, a decision has to be made to invest in the individuals required and to build the long term programmes of business and personnel development required to ensure that you can build your success in the used car market and then enjoy all the benefits that this will involve.
So where do you start on this journey of education and used car business development? Well 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, both in the UK and in Continental Europe. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, or to discuss any part of this article in greater detail, please do not hesitate to contact one of our Used Car Business Development Directors in the strictest confidence; 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.
In this article we wanted to explore the most successful franchise dealerships in your network, the ones that are fully engaged, always achieving the objectives and supporting the aims of the manufacturer and this is important, because in terms of their staffing structure and the development of their people, they have much to teach manufacturers.
There are many challenges in the automotive sector at the moment but somehow, no matter what the trading challenges, these businesses are always out-performing the market and the rest of your network and this does not happen by accident. Without doubt the most successful franchised dealerships we visit are those who build foundations for success; they train and develop their staff and then retain them for many years, there is no short term thinking, they know that they either develop their staff or have to “Buy Winners” when the challenges arrive, but guess what, by developing their staff and having this mind-set, the challenges never really arrive at the doorstep of their business, because the quality of the professionals employed mitigates against this risk.
Most importantly this engenders an atmosphere of trust between staff and the owners of the business. I have not met one senior professional owning or running a franchised dealer business who buys into the argument that new car sales, (or any other area of the business for that matter), can be grown year-in, year-out. So their mind-set is different and the successful businesses motivate and manage their staff around what is challenging but achievable, and that sometimes this inevitably means that, due to factors outside of their control, the business will go backwards.
They also realise that they must offer a broad range of services involving multiple income streams if they are to remain both relevant and successful; they realise new car markets are evolving and that they are in a fight for market share, a fight that not everyone can win, so they are forward thinking and making the investments required to ensure that they are resilient and profitable in the future.
Now compare this to the traditional short term thinking process of the majority of manufacturers, in terms of how they train and develop their staff and run certain parts of their business. This is important because your thinking in this regard and therefore the strategies deployed, means that you are at odds with your most important customers, your most successful franchise partners. Now we say this to challenge traditional thinking and because they are your most important customers; after all none of you are set up to survive without your franchise partners and the investments they make in your business model.
So let’s explore in this article how they might perceive the parent manufacturer and the way that you may run your organisation to drive your business forward. Well the majority will see you as being obsessed with just the new car business, but losing control over pricing and margins, because these are now effectively set by independent technology based businesses, the likes of Carwow. They may understand that you, as the importer into the UK, are driven by the demands of the parent manufacturer, but they will not understand any lack of straight talking with the parent manufacturer regarding realistic expectations.
Now this understandable obsession with new car retailing has unfortunately resulted in a situation where the majority of manufacturers trading in the UK are just leveraging the same business continually, (the new car business), and this is leaving business models exposed, in the same way as if McDonalds only sold the BIG Mac, their business model would be exposed. For sure McDonalds may have built their business on the Big Mac, but the business was launched in different times, now there are many similar burgers to the Big Mac, so McDonalds have had to broaden their offering into many more food and beverage products. So your franchise partners have seen their servicing and financing models attacked, other businesses have stolen a march on you in terms of aftersales and customising and the majority of you are losing the battle for the largest sales market in the UK, the business where profits are unlimited, the used car market.
Sadly we are not sure this is going to change either, not until manufacturers encourage an environment and ethos where long term thinking will be possible. Currently the environment within the majority of manufacturers encourages short term thinking and reactionary business decisions to get the job done in the short term, not the building of long term foundations. Now we don’t blame the professionals involved in the process for delivering exactly on the brief set to them, bearing in mind this is an environment where the job is a short term challenge on their way to the next job; but sadly in the past this has been most prevalent in the strategy of development of used car retailing, and we are beginning to see this happening again.
So let’s explore why this happens and hopefully we can help enlighten manufacturers, within whom nobody appears to want to take responsibility for the long term used car business development job, (which we sympathise with), but unfortunately leads to the wrong approach and the foundations for success never being built; because It is easier, (but not very clever), to throw short term resources at a defined problem in order to make it appear that it has gone away.
For example; if your brief is to improve used car retailing performance for 12 months, well that is easy, we would tell you that we will build a team who will visit your network on a monthly basis and drive short term results through your business, leave the accounts looking better whilst you go off to your next role; so job done! Sadly not, because to achieve this will involve a completely different process, one of short term delivery of results and “Dressing The Business” to achieve a specific set of numbers, so we will warn you that we are delivering the “Emperor’s New Clothes!” Under this scenario we won’t have time to invest in the business, develop the personnel involved and build any foundations, no we are just getting you a result, which is a million miles away from building your business for the long term; as whoever takes over from you will find out when performance immediately crashes back to previous levels.
This is not the way to build successful businesses for the long term, where unfortunately there are no short cuts and until somebody is brave enough to enlighten manufacturers this will not change. Someone has got to brave enough to stand up and deliver the difficult message that in order to educate and invest, the business will probably see performance either plateau or go backwards and that during difficult times we must not revert to type and cut training and marketing budgets first, because this is sending the wrong message to our most important customers; our franchise partners.
Now under the current environment this may well have somebody talking themselves out of a job, and this goes to the heart of the problem at most big companies, not just automotive manufacturers, where they are run under a fear culture where everything must be possible and in a certain time frame! This is quite ludicrous and as much as you have all the trading advantages you could ever need to make a success of used car retailing, someone has to know how to deliver on this, and senior people at manufacturers must stop under estimating just what is involved, in terms of delivering on the potential to grow used car retailing.
But sadly not many people within manufacturer organisations have trodden the used car business development path and know therefore how to make the most of the opportunities available. Unfortunately used car retailing has for too long been seen as a second class career within the manufacturer and franchised element of the industry, therefore largely ignored. The irony now is that the business everyone dismissed and wants to ignore is now the most vital to the success of your franchise model in the UK, and also the one where there is a tremendous skills shortage.
Now you all have the right to carry on down the current path where everything you offer has the new car trading model at its core but be warned, you will in all likelihood be entering a single and narrowing market of opportunity, one where you no longer have total control and where it is becoming a race to the bottom, in regard to margins. Now this may be seen as a desired strategy delivering a strategic and necessary culling process of your current network but it will also be a totally different investment proposition for your franchise partners in the future, some of whom may then question the financial returns likely to be enjoyed.
And the independent used car specialists will be over joyed that you continue to leave them to exploit the market that is still over 3 times the size of the new car market, (the used car market), and to have it all to themselves. But the reality is that you have all the component parts required already within your organisation, to dominate the used car market place for your product, but you are missing the two most important ingredients; the staff and the knowledge and this is an issue we have explored many times, most recently in the articles below;
Do Successful Used Car Professionals Exist For Manufacturers?
Do Successful Used Car Professionals Exist For Franchised Dealers?
So the decision is yours, do you take advantage of the used car trading opportunity or do you continue down the current path. In reality there will be no shortcut to either success or the professionals you require in both your own organisation and the businesses contained within your franchise dealer network. Without knowledge and education there can be no success, a decision has to be made to invest in the individuals required and to build the long term programmes of business and personnel development required to ensure that you can build your success in the used car market and then enjoy all the benefits that this will involve.
So where do you start on this journey of education and used car business development? Well if this post has resonated with you and you would like to know more about our used car business development consultancy and training programmes, because you would like to partner 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. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, or to discuss any part of this article in greater detail, please do not hesitate to contact one of our Used Car Business Development Directors in the strictest confidence;
Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com
Alternatively please feel free to call me on 07796 260261.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
In this article we wanted to explore the most successful businesses in your network, the ones that are fully engaged, always achieving the objectives and supporting the aims of the manufacturer and what it is they are doing differently, and this is important, because in terms of their staffing structure and the development of their people, they have much to teach their fellow franchise partners, the parent holding companies and the associated manufacturers.
There are many challenges in the automotive sector at the moment but somehow, no matter what the trading challenges, these businesses are always out-performing the market and the rest of your network and this does not happen by accident. Without doubt the most successful franchised dealerships we visit are those who build foundations for success; they train and develop their staff and then retain them for many years, there is no short term thinking, they know that they either develop their staff or have to “Buy Winners” when the challenges arrive, but guess what, by developing their staff and having this mind-set, the challenges never really arrive at the doorstep of their business, because the quality of the professionals employed mitigates against this risk.
Most importantly this engenders an atmosphere of trust between staff and the owners of the business. I have not met one senior professional owning or running a franchised dealer business who buys into the argument that new car sales, (or any other area of the business for that matter), can be grown year-in, year-out. So their mind-set is different and the successful businesses motivate and manage their staff around what is challenging but achievable, and that sometimes this inevitably means that, due to factors outside of their control, the business will go backwards.
They also realise that they must offer a broad range of services involving multiple income streams if they are to remain both relevant and successful; they realise new car markets are evolving and that they are in a fight for market share, a fight that not everyone can win, so they are forward thinking and making the investments required to ensure that they are resilient and profitable in the future.
So let’s compare this to what appears to be the traditional short term thinking process of some of the large PLC parent holding companies and the majority of manufacturers, in terms of how they train and develop their staff and run certain parts of their business, because sadly many have forgotten this business ethos. Well the majority will see the large parent holding companies and manufacturers as being obsessed with just the new car business, but losing control over pricing and margins, because these are now effectively set by independent technology based businesses, the likes of Carwow. They may understand that the parent holding company or the importer into the UK, are driven by the demands of either shareholders or the parent manufacturer, but they will not understand any lack of straight talking with these interested parties regarding realistic expectations.
Now this understandable obsession with new car retailing has unfortunately resulted in a situation where the majority of the large parent holding companies and manufacturers trading in the UK are just leveraging the same business continually, (the new car business), and this is leaving business models exposed, in the same way as if McDonalds only sold the Big Mac, their business model would be exposed. For sure McDonalds may have built their business on the Big Mac, but the business was launched in different times, now there are many similar burgers to the Big Mac, so McDonalds have had to broaden their offering into many more food and beverage products.
In the main we are not sure this is going to change either, not until the large parent holding companies and the associated manufacturers encourage an environment and ethos where long term thinking will be possible. Currently the environment within the majority of both franchised dealer networks owned by the big PLC’s and manufacturers, only encourages short term thinking and reactionary business decisions to get the job done in the short term, not the building of long term foundations. Now we don’t blame the professionals involved in the process for delivering exactly on the brief set to them, bearing in mind this is an environment where the job is a short term challenge on their way to the next job; but sadly in the past this has been most prevalent in the strategy of development of used car retailing, (the business that should be the most profitable), and we are beginning to see this happening again.
So let’s explore why this happens and hopefully we can help enlighten both senior professionals within the PLC’s, who own vast swathes of franchised dealer networks, and the associated manufacturers, within whom nobody appears to want to take responsibility for the long term used car business development job, (which we sympathise with), but unfortunately leads to the wrong approach and the foundations for success never being built, because It is easier, (but not very clever), to throw short term resources at a defined problem in order to make it appear that it has gone away.
For example; if your brief is to improve used car retailing performance for 12 months, well that is easy, we would tell you that we will build a team who will visit your network on a monthly basis and drive short term results through your business, leave the accounts looking better whilst you go off to your next role; so job done! Sadly not, because to achieve this will involve a completely different process, one of short term delivery of results and “Dressing The Business” to achieve a specific set of numbers and we will warn you that we are delivering the “Emperor’s New Clothes!” Under this scenario we won’t have time to invest in the business, develop the personnel involved and build any long term foundations, no we are just getting you a result, which is a million miles away from building your business for the long term; as whoever takes over from you will find out when performance immediately crashes back to previous levels.
This is not the way to build successful businesses for the long term, where unfortunately there are no short cuts and until somebody is brave enough to enlighten the boards of the PLC’s and the manufacturers this will not change. Someone has got to be brave enough to stand up and deliver the difficult message that in order to educate and invest, the business will probably see performance go backwards and that during difficult times we must not revert to type and cut training and marketing budgets first, because this is sending the wrong message to our most important people; our franchise partners and our staff.
Now under the current environment this may well have somebody talking themselves out of a job, and this goes to the heart of the problem at most big companies, (not just automotive manufacturers and the parent holding companies), where they are run under a fear culture where everything must be possible and in a certain time frame! This is quite ludicrous and as much as you have all the trading advantages you could ever need to make a success of used car retailing, someone has to know how to deliver on this, and senior people at the PLC’s owning franchised dealer networks and at the manufacturers, must stop under estimating just what is involved, in terms of delivering on the potential to grow used car retailing.
But sadly not many people within the big PLC’s or the manufacturer organisations have trodden the used car business development path and know therefore how to make the most of the opportunities available. Unfortunately used car retailing has for too long been seen as a second class career within the manufacturer and franchised element of the industry, therefore largely ignored. The irony now is that the business everyone dismissed and wants to ignore is now the most vital to the success of your franchise model in the UK, but also the one where there is a tremendous skills shortage.
Now you all have the right to carry on down the current path where everything you offer has the new car trading model at its core but be warned, you will in all likelihood be entering a single and narrowing market of opportunity, one where you no longer have total control and where it is becoming a race to the bottom, in regard to margins. Now this may be seen as a desired strategy but it will also be a totally different investment proposition for you and your franchise partners in the future, some of whom may then question the financial returns likely to be enjoyed.
And the independent used car specialists will be over joyed that you continue to leave them to exploit the market that is still over 3 times the size of the new car market, (the used car market), and to have it all to themselves. But the reality is that you have all the component parts required already within your organisation, to dominate the used car market place for your product, but you are probably missing the two most important ingredients; the staff and the knowledge and this is an issue we have explored many times, most recently in the article below;
Do Successful Used Car Professionals Exist For Franchised Dealers?
So the decision is yours, do you take advantage of the used car trading opportunity or do you continue down the current path. In reality there will be no shortcut to either success or the professionals you require in both your own organisation and the businesses contained within your franchise dealer network. Without knowledge and education there can be no success, a decision has to be made to invest in the individuals required and to build the long term programmes of business and personnel development required to ensure that you can build your success in the used car market and then enjoy all the benefits that this will involve.
So where do you start on this journey of education and used car business development? Well 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 successful and profitable used car operations 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 in the strictest of confidence; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com
Alternatively please feel free to call me on 07796 260261.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
Well the state of the new car market in the UK has been laid bare by the SMMT registration figures for the 1st Quarter in 2019; for some franchise dealer networks there are extremely positive signs yet for others? Well some of you appear to be stuck in a continual downward trend but for some we are sure that the downward trend will be temporary however, in truth there are warning signs for every franchise dealer network, the parent holding companies owning the individual businesses and the manufacturers.
There is no doubt that the new car market has been challenging over the past 12 months and for a myriad or reasons; on top of that confusion over Brexit, and all that Brexit entails for the Automotive Sector, hasn’t helped businesses to plan and no doubt affected consumer sentiment. But in truth and just like any other retail market, there are always pressures and trading challenges in new car markets and it is also true that all manufacturers and their franchise partners have the ability to protect their business models from any turmoil affecting new car markets, providing their trading model encompasses a broad enough selection of business opportunities.
Unfortunately the narrow and extremely vulnerable new car – parts – servicing franchise model is now never going to be broad enough to survive the challenging and evolving new car trading conditions we are likely to see over the next 2-5 years and there is no doubt a danger for manufacturers that soon many of their franchise holders will give up on their franchise model, the model where 2-4% returns are trumpeted as success.
Now we speak to a lot of senior personnel owning and running franchise models and delivering on their investment via their dealer operations, so we have an insight perhaps not enjoyed by the parent manufacturers, and what is startling is the number now questioning the financial returns from some manufacturers’ franchise models and those likely to be enjoyed in the future, should the manufacturer franchise business model not change.
Now parent holding companies of franchise dealer networks questioning their long term commitment to the manufacturer is about as serious as it gets for manufacturers. Although this delicate balance of power in the franchisor/franchisee relationship is different for all manufacturers, it is important to remember that, (as the manufacturer), you get the franchise dealer networks you deserve, and for many manufacturers right now the tail might be about to wag the dog, because we wonder who has the most to lose in any future “Mexican Stand-Off” between the manufacturer and their franchise dealer networks; you as the franchise partners or the manufacturer themselves?
There is a genuine threat here to some manufacturers because, (at the moment), they all need a franchise dealer network to sell their new car products, support the ever lengthening warranty programmes/servicing packs and to service their vehicle park, but with an increasing lack of control over, (and reducing), new car margins, lengthening warranty/servicing packages to support and vehicle parks that are too small to ensure continual 100% overhead absorbency in the service department, some franchise models are in danger of beginning to not stack up on a financial investment basis.
And the ramifications of this are already beginning to play out with many of the, what we call “Up And Coming” manufacturers, now beginning to run out of investors willing to financially invest in, and support, the associated franchise business model in standalone showroom sites, so many are now only finding investment and representation under a dual franchise model within one facility. Even in affluent parts of the country it is staggering to see how some of these “Up And Coming” marques are beginning to struggle to secure standalone investment and having to then share showroom facilities with a competitor marque, not associated with the their marque whatsoever, and this is not ideal, not when the incoming manufacturers new car product represents the competition and when some of their cars are now costing in excess of £40,000.
In truth we don’t understand why anyone involved, from the manufacturers to the franchise holder, would be willing to do this, so let’s explore why. Firstly this is not a picture of success in the customer’s eyes, for either manufacturer being represented under the one roof. The perception of the manufacturer approved business that is already there and in situ is that it is not successful enough to stand alone, and the incoming manufacturer and their associated business gets tarred with the same brush. Let’s not kid ourselves, as a franchise holder, if you had a site that was running at full speed, containing a successful used car operation, the last thing you would do is muddy the waters and inhibit further growth at an already successful site, (by adding another franchise), so the perception to the customer is that this long standing business is seen as not being successful.
In all likelihood there can only be one winner here because one of the manufacturers represented will have no used car business to represent and support the new car trading model and this will have only one eventuality, the slow demise of one of the businesses associated with the site so, as much as we are surprised that franchise holding companies choose to run this model, we are also just as surprised that the existing manufacturer at the site will allow another competitor franchise to share the same building.
Surely the solution to an underperforming business is to develop that business and ensure its success, not add another competing business to the same building resulting in 2 businesses then having half a site each in which to grow? Now we are not sure that this can be pulled off successfully and it is no coincidence to us that some of the manufacturers and their associated franchise dealer networks now having to adopt this dual franchise per site model are now, (despite growing over the last 5-10 years), reporting double digit declines in year on year new car registrations for the first quarter of 2019.
But worse than this, under this model, you also have little or no ability to then invest effectively in the business so overlooked by some parent holding companies, those responsible for running franchise dealer operations and the manufacturers concerned; the used car business, the business that both you, (as the franchise holder), and the manufacturer are going to need in the coming years to provide the foundations for your new car trading model and the financial resilience of your franchise dealer business. Just because you move another franchise model into an existing site, does not mean the site grows in size and if there is already a used car operation in situ, (and let’s face it there probably will be), how are you going to ensure that there is an effective used car presence for the second manufacturer’s product?
The real problem for the franchise holder and thus the question posed in the title of the article, is that neither the parent holding company or the manufacturer are providing genuine business solutions that will provide the long term solution, and this is also true of some manufacturers seeing growth in new car registrations during the first quarter of this year, although the reasons may be different.
We would advise the franchise partners of these manufacturers, don’t be fooled by new car success this year, maybe off the back of new model launches taking you into new markets and therefore increased demand from loyal customer bases, not conquest sales from another. This can be a warm glow of Summer with Autumn and Winter just around the trading corner. If there is no expanding and adapting business model to support your expanded new car model range and trading model, (and over the term of the new models production life), this will take your businesses into new and unchartered territory with many of them needing business development and personnel training provision to adapt and survive.
We think we can all agree that the pace of evolution in the new car market is dizzying and we sympathise with manufacturers trying to come up with more and more answers to the questions posed by the new car market, but in truth many manufacturers and their franchise partners are looking in the wrong place, in terms of growing their businesses and ensuring their long term success. Remember you can only expect so much from one area of your business and for many of you reading this the new car market has evolved beyond all recognition. Disruptors and technology entrepreneurs targeting our established markets have changed the new car market forever, so although you must adapt to the challenges of an evolving new car market, you must also look to add and/or expand other income revenue streams if your new car trading model is to be protected, and your business is to survive.
Unfortunately due to the new car demands of the manufacturer many franchise dealer networks have become a new car sale via PCP agreement “One Trick Pony” business over the last 10 years, a time when new car retailing has experienced some tremendous success. But the “High” of these new trading environments is over; for sure they are here to stay but we have allowed third parties to target our consumers and we have the spectre of a new car customer with declining confidence and questioning personal debt levels to contend with over the next few years.
Now the new car market will peak again, it always performs in peaks and troughs so it always will, but surviving the troughs is becoming more challenging and it is changing the face of franchise dealer networks, and unfortunately the last 10 years of this trading environment has left many dealer networks and their associated parent holding company organisations, missing the professionals now required for the challenges that lie ahead.
If you want a bullet proof franchise business model, one that can protect new car trading models and the financial resilience of your franchise dealer business, it must contain and business with genuine “Barriers Of Entry!” A business that cannot be targeted by market disruptors from outside the Automotive Sector, (businesses like the technology based platforms), and this is the used car business. Why? Well the answer to that question is an article in itself and a subject we will return to for our next article but just ponder this; in a market where 2 – 4% returns are lauded as success a successful used car operation should be returning 7.5-10% net returns; in other words it should be the most successful and profitable operation contained within the franchised dealership.
On top of that the benefits that a successful used car operation delivers to the new car business and the business as a whole, are immeasurable, yet many franchise holders and the manufacturers they represent choose to pay lip service to the used car business and/or offer no programmes of used car business development to franchise holders and/or training for their personnel.
So we wonder why any franchise holder and/or the manufacturer they represent would ignore the market that is most beneficial to their new car aspirations and the financial wellbeing of their total business. Especially when as the franchise holder you have huge costs of investment in buildings to meet the manufacturer’s satisfaction and numerous unprofitable “Cost Of Franchise” issues and product lines to deal with on a daily basis.
So what’s the answer? Well for most reading this article there is much work to do and the dangers of doing nothing now have been explored in many of our articles, most recently the article below;
Will Your New Car Franchise Model Be The First To Fail?
We also appreciate that used car professionals do not grow on trees and that growing successful used car businesses is a highly complex and specific skill-set, but would ask all those running franchise dealer networks and individual businesses, where do you expect these professionals to come from, those capable of delivering the results your franchise dealer businesses require? We also appreciate that finding genuinely successful used car professionals is very difficult for both manufacturers and their franchised dealer networks, we discussed this very same operational problem in our article below;
Do Successful Used Car Professionals Exist For Franchised Dealers?
But if you are to survive and grow your businesses in the future something has got to change; as the franchise holder and owner of the business you must make a decision, do you want to secure your long term new car success and ensure that you enjoy a financially resilient franchise dealer network? Because if you do, then this will only be achieved via successful used car retailing, and unfortunately there are not many parent holding companies or manufacturers grasping this imminent skills shortage. We know of far too many just burying their heads in the sand and offering no used car business development and training programmes that are fit for purpose, so waiting for the business development and training programmes required to be supplied by either your parent holding company and/or the manufacturers you represent, is likely to be foolhardy at best.
Luckily help is at hand; 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 operation 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 in the strictest of confidence; Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com
Alternatively please feel free to call me on 07796 260261.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
Well the state of the new car market in the UK has been laid bare by the SMMT registration figures for the 1st Quarter in 2019; for some there are extremely positive signs yet for others? Well some of you appear to be stuck in a continual downward trend but for some we are sure that the downward trend will be temporary however, in truth the warning signs are there for everyone.
There is no doubt that the new car market has been challenging over the past 12 months and for a myriad or reasons; on top of that confusion over Brexit, and all that Brexit entails for the Automotive Sector, hasn’t helped businesses to plan and no doubt affected consumer sentiment. But in truth and just like any other retail market, there are always pressures and trading challenges in new car markets and it is also true that all manufacturers have the ability to protect their business models from any turmoil affecting new car markets, providing their trading model encompasses a broad enough selection of business opportunities.
Unfortunately the narrow and extremely vulnerable new car – parts –servicing franchise model is now never going to be broad enough to survive the challenging and evolving new car trading conditions we are likely to see over the next 2-5 years and there is a danger for manufacturers that soon many of their franchise holders will give up on the franchise model, the model where 2-4% returns are trumpeted as success.
Now we speak to a lot of senior personnel owning and running your franchise models and delivering on their investment via their dealer operations; thus we have an insight perhaps not enjoyed by yourself, (as the manufacturer and master franchise holder), and we promise you all that the question posed in the title of this article is a question you should all be pondering, because for some of you, desire to invest in your franchise model is dwindling amongst your franchise partners and many are questioning the financial returns being enjoyed and those that are likely in the future, should your business model not change.
Now franchise networks questioning their long term commitment to the manufacturer is about as serious as it gets for manufacturers. Although this delicate balance of power in the franchisor/franchisee relationship is different for all manufacturers, it is important to remember that, (as the manufacturer), you get the franchise dealer networks you deserve, and for many of you right now the tail might be about to wag the dog, because we wonder who has the most to lose in any future “Mexican Stand-Off” between you and your franchise dealer networks; you as the manufacturer or your franchise partners?
There is a genuine threat here to some manufacturers, those who, (like all of you), need a franchise dealer network to sell their new car products, support the ever lengthening warranty programmes/servicing packs and to service their vehicle park, but with an increasing lack of control over, (and reducing), new car margins, lengthening warranty/servicing packages to support and vehicle parks that are too small to ensure continual 100% overhead absorbency in the service department, your franchise model is beginning to not stack up on a financial investment basis.
And the ramifications of this are already beginning to play out with many of the, what we call “Up And Coming” marques, now beginning to run out of investors putting their franchise business into standalone showroom sites and now only finding representation under a dual franchise model within one facility. Even in affluent parts of the country it is staggering to see how some of these “Up And Coming” marques are beginning to struggle to secure standalone investment and having to then share showroom facilities with a competitor marque, not associated with their marque whatsoever, and this is not ideal, not when they represent their competition and when some of their cars are now costing in excess of £40,000, so let’s explore why.
Well firstly this is not a picture of success in the customer’s eyes, for either marque being represented under the one roof; the perception of the marque that was already there and in situ is that it is not successful enough to stand alone, and you as the incoming marque get tarred with the same brush. Let’s not kid ourselves, as a franchise holder, if you had a site that was running at full speed, containing a successful used car operation, the last thing you would do is muddy the waters and inhibit further growth at an already successful site, (by adding another franchise), so the perception to the customer is that this long standing business is seen as not being successful.
So why of why would you as the incoming marque looking to share the single facility want to be associated with this? In all likelihood you are going to be the second class citizen in this relationship and in the eyes of the customer you have a business that can’t support a standalone operation either; this is not the ideal foundations from which to then try to convince the customer that they should spend over £40,000 on one of your new cars?
Now we are not sure that this can be pulled off and It is no coincidence to us that some of the manufacturers now having to adopt this dual franchise per site model are now, (despite growing over the last 5-10 years), reporting double digit declines in year on year new car registrations for the first quarter of 2019.
And worse than this, under this model, you also have no ability to then invest in the business so overlooked by some manufacturers; the used car business, the business that you, (as the manufacturer), are going to need in the coming years to provide the foundations for your new car trading model and the financial resilience of your franchise dealer network. Just because you move your franchise model into an existing site, does not mean the site grows in size and if there is already a used car operation in situ, and let’s face it there probably will be, how are you going to ensure that there is a used car presence for your product?
Either way there can only be one winner here so one of the manufacturers represented here will have no used car business to represent and support the new car trading model and this will have only one eventuality, the slow demise of one of the businesses associated with the site, so we are also just as surprised that the existing manufacturer at the site will allow another competitor franchise to share the same building.
But the problem for the franchise holder and thus the question posed in the title of the article, is that you as the manufacturer are not providing genuine business solutions that will provide the long term solution, and this is also true of some manufacturers seeing growth in new car registrations during the first quarter of this year, although the reasons may be different.
We would advise these manufacturers, don’t be fooled by success this year, maybe off the back of new model launches taking you into new markets and therefore increased demand from loyal customer bases; this can be a warm glow of Summer, with Autumn and Winter just around the trading corner. If there is no expanding business model to support your expanded new car model range and trading model, (and over the term of the new models production life), this will take your franchise holders into new and unchartered territory with many of them needing business development and personnel training provision to adapt and survive.
We think we can all agree that the pace of evolution in the new car market is dizzying and we sympathise with manufacturers trying to come up with more and more answers to the questions posed by the new car market, but in truth many of you are looking in the wrong place. Remember you can only expect so much from one area of your business and for many of your reading this the new car market has evolved beyond all recognition. Disruptors and technology entrepreneurs targeting our established markets have changed the new car market forever, so although you must adapt to the challenges of an evolving new car market, you must also look to add and/or expand other income revenue streams if your new car trading model is to be protected, and you are to also to attract investment from the franchise partners you require.
But whilst doing this you must also appreciate that for many franchise dealer networks, they have become a new car sale via PCP agreement “One Trick Pony” business over the last 10 years, a time when new car retailing has experienced some tremendous success. But the “High” of these new trading environments is over; for sure they are here to stay but we have allowed third parties to target our consumers and we have the spectre of a new car customer with declining confidence and questioning personal debt levels to contend with over the next few years.
Now the new car market will peak again, it always performs in peaks and troughs so it always will, but surviving the troughs is becoming more challenging and it is changing the face of franchise dealer networks, and unfortunately the last 10 years of this trading environment has left many dealer networks and manufacturer organisations missing the professionals now required for the challenges that lie ahead.
If you want a bullet proof franchise business model, one that can protect new car trading models and the financial resilience of your franchise dealer network, it must contain and business with genuine “Barriers Of Entry!” A business that cannot be targeted by market disruptors from outside the Automotive Sector, (businesses like the technology based platforms), and this is the used car business. Why? Well the answer to that question is an article in itself and a subject we will return to for our next article but just ponder this; in a market where 2 – 4% returns are lauded as success a successful used car operation is returning 7.5-10% returns and is the most successful and profitable operation contained within the franchised dealership.
On top of that the benefits that a successful used car operation delivers to the new car business are immeasurable, yet many manufacturers choose to pay lip service to the used car business and/or offer no programmes of used car business development to franchise holders and/or training for their personnel.
So we wonder why any manufacturer would ignore the market that is most beneficial to their new car aspirations and the financial wellbeing of their franchise partners, and what’s worse, your franchise holders are beginning to ask this question as well. Your business partners with huge costs of investment in buildings meeting the manufacturer’s satisfaction and numerous unprofitable “Cost Of Franchise” issues and product lines to deal with on a daily basis.
Your franchise partners are beginning to understand the need for investment in the used car market, after all they are the ones paying the bills on the building and seeing new car margins and overall profits decline and of course, (and this may be wrong), it is understandable that having built both their business and their personnel structure around what was required over the last 10 years, (in terms of the new car market and remaining profitable), that they will now look to you as the manufacturer to provide the solution.
So what’s the answer? Well for most reading this article there is much work to do and the dangers of doing nothing now have been explored in many of our articles, most recently the article below;
Will Your UK New Car Franchise Model Be The First To Fail?
We also appreciate that used car professionals do not grow on trees and that growing successful used car businesses is a highly complex and specific skill-set, but would ask all manufacturers, where do you expect these professionals to come from, those capable of delivering the results both you and your franchise partners require? We also appreciate that finding genuinely successful used car professionals is very difficult for both manufacturers and their franchised dealer networks, we discussed this very same operational problem in our articles below;
Do Successful Used Car Professionals Exist For Manufacturers?
Do Successful Used Car Professionals Exist For Franchised Dealers?
So something has got to change; as the manufacturer you must make a decision, do you want to secure your long term new car success and ensure that you enjoy a financially resilient franchise dealer network, the one that will be required to support your new car warranty programme and service your vehicle park? Because if you do, then this will only be achieved via successful used car retailing, and luckily help is at hand.
If this post has resonated with you and you would like to know more about our used car business development consultancy and training programmes, because you would like to partner 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. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, or to discuss any part of this article in greater detail, please do not hesitate to contact one of our Used Car Business Development Directors in the strictest confidence;
Andrew Banning at ajb@autoformance.com or Malcolm Thomas at mgt@autoformance.com
Alternatively please feel free to call me on 07796 260261.
For more information about our services please visit our website at www.autoformance.com
Andrew Banning.
Used Car Business Development Director.
Well the state of the new car market in the UK has been laid bare by the SMMT registration figures for the 1st Quarter in 2019; for some there are extremely positive signs yet for others? Well some of you appear to be stuck in a continual downward trend but for some we are sure that the downward trend will be temporary. However in truth the warning signs are there for everyone delivering business models to the UK new car market, so we thought this article should be shared with our European subscribers and contacts, so you can avoid making the mistakes of your UK counterparts, as your used car markets continue to grow and evolve.
There is no doubt that the new car market has been challenging over the past 12 months in the UK and for a myriad or reasons; on top of that confusion over Brexit, and all that Brexit entails for the Automotive Sector, hasn’t helped businesses to plan and no doubt affected consumer sentiment. But in truth and just like any other retail market, there are always pressures and trading challenges in new car markets and it is also true that all manufacturers have the ability to protect their business models from any turmoil affecting new car markets, providing their trading model encompasses a broad enough selection of business opportunities.
Unfortunately the narrow and extremely vulnerable new car – parts –servicing franchise model is now never going to be broad enough to survive the challenging and evolving new car trading conditions we are likely to see over the next 2-5 years and there is a danger for manufacturers that soon many of their franchise holders will give up on the franchise model, the model where 2-4% returns are trumpeted as success.
Now we speak to a lot of senior personnel owning and running your franchise models and delivering on their investment via their dealer operations; thus we have an insight perhaps not enjoyed by yourself, (as the manufacturer and master franchise holder), and we promise you all that the question posed in the title of this article is a question you should all be pondering, because for some of you, desire to invest in your franchise model is dwindling amongst your franchise partners and many are questioning the financial returns being enjoyed and those that are likely in the future, should your business model not change.
Now franchise networks questioning their long term commitment to the manufacturer is about as serious as it gets for manufacturers. Although this delicate balance of power in the franchisor/franchisee relationship is different for all manufacturers, it is important to remember that, (as the manufacturer), you get the franchise dealer networks you deserve, and for many of you right now the tail might be about to wag the dog, because we wonder who has the most to lose in any future “Mexican Stand-Off” between you and your franchise dealer networks; you as the manufacturer or your franchise partners?
There is a genuine threat here to some manufacturers, those who, (like all of you), need a franchise dealer network to sell their new car products, support the ever lengthening warranty programmes/servicing packs and to service their vehicle park, but with an increasing lack of control over, (and reducing), new car margins, lengthening warranty/servicing packages to support and vehicle parks that are too small to ensure continual 100% overhead absorbency in the service department, your franchise model is beginning to not stack up on a financial investment basis.
And the ramifications of this are already beginning to play out with many of the, what we call “Up And Coming” marques, now beginning to run out of investors putting their franchise business into standalone showroom sites and now only finding representation under a dual franchise model within one facility. Even in affluent parts of the country it is staggering to see how some of these “Up And Coming” marques are beginning to struggle to secure standalone investment and having to then share showroom facilities with a competitor marque, not associated with their marque whatsoever, and this is not ideal, not when they represent their competition and when some of their cars are now costing in excess of 40,000 Euros, so let’s explore why.
Well firstly this is not a picture of success in the customer’s eyes, for either marque being represented under the one roof; the perception of the marque that was already there and in situ is that it is not successful enough to stand alone, and you as the incoming marque get tarred with the same brush. Let’s not kid ourselves, as a franchise holder, if you had a site that was running at full speed, containing a successful used car operation, the last thing you would do is muddy the waters and inhibit further growth at an already successful site, (by adding another franchise), so the perception to the customer is that this long standing business is seen as not being successful.
So why of why would you as the incoming marque looking to share the single facility want to be associated with this? In all likelihood you are going to be the second class citizen in this relationship and in the eyes of the customer you have a business that can’t support a standalone operation either; this is not the ideal foundations from which to then try to convince the customer that they should spend over 40,000 Euros on one of your new cars?
Now we are not sure that this can be pulled off and It is no coincidence to us that some of the manufacturers now having to adopt this dual franchise per site model are now, (despite growing over the last 5-10 years), reporting double digit declines in year on year new car registrations for the first quarter of 2019.
And worse than this, under this model, you also have no ability to then invest in the business so overlooked by some manufacturers; the used car business, the business that you, (as the manufacturer), are going to need in the coming years to provide the foundations for your new car trading model and the financial resilience of your franchise dealer network. Just because you move your franchise model into an existing site, does not mean the site grows in size and if there is already a used car operation in situ, and let’s face it there probably will be, how are you going to ensure that there is a used car presence for your product?
Either way there can only be one winner here so one of the manufacturers represented here will have no used car business to represent and support the new car trading model and this will have only one eventuality, the slow demise of one of the businesses associated with the site, so we are also just as surprised that the existing manufacturer at the site will allow another competitor franchise to share the same building.
But the problem for the franchise holder and thus the question posed in the title of the article, is that you as the manufacturer are not providing genuine business solutions that will provide the long term solution, and this is also true of some manufacturers seeing growth in new car registrations during the first quarter of this year, although the reasons may be different.
We would advise these manufacturers, don’t be fooled by success this year, maybe off the back of new model launches taking you into new markets and therefore increased demand from loyal customer bases; this can be a warm glow of Summer, with Autumn and Winter just around the trading corner. If there is no expanding business model to support your expanded new car model range and trading model, (and over the term of the new models production life), this will take your franchise holders into new and unchartered territory with many of them needing business development and personnel training provision to adapt and survive.
We think we can all agree that the pace of evolution in the new car market is dizzying and we sympathise with manufacturers trying to come up with more and more answers to the questions posed by the new car market, but in truth many of you are looking in the wrong place. Remember you can only expect so much from one area of your business and for many of you reading this the new car market has evolved beyond all recognition. Disruptors and technology entrepreneurs targeting our established markets have changed the new car market forever, so although you must adapt to the challenges of an evolving new car market, you must also look to add and/or expand other income revenue streams if your new car trading model is to be protected, and you are to also to attract investment from the franchise partners you require.
But whilst doing this you must also appreciate that for many franchise networks, they have become a new car sale via PCP agreement “One Trick Pony” business over the last 10 years, a time when new car retailing has experienced some tremendous success. But the “High” of these new trading environments is over; for sure they are here to stay but we have allowed third parties to target our consumers and we have the spectre of a new car customer with declining confidence and questioning personal debt levels to contend with over the next few years.
Now the new car market will peak again, it always performs in peaks and troughs so it always will, but surviving the troughs is becoming more challenging and it is changing the face of franchise dealer networks, and unfortunately the last 10 years of this trading environment has left many dealer networks and manufacturer organisations missing the professionals now required for the challenges that lie ahead.
If you want a bullet proof franchise business model, one that can protect new car trading models and the financial resilience of your franchise dealer network, it must contain and business with genuine “Barriers Of Entry!” A business that cannot be targeted by market disruptors from outside the Automotive Sector, (businesses like the technology based platforms), and this is the used car business. Why? Well the answer to that question is an article in itself and a subject we will return to for our next article but just ponder this; in a market where 2 – 4% returns are lauded as success a successful used car operation is returning 7.5-10% returns and is the most successful and profitable operation contained within the franchise dealership.
On top of that the benefits that a successful used car operation delivers to the new car business are immeasurable, yet many manufacturers choose to pay lip service to the used car business and/or offer no programmes of used car business development to franchise holders and/or training for their personnel.
So we wonder why any manufacturer would ignore the market that is most beneficial to their new car aspirations and the financial wellbeing of their franchise partners, and what’s worse, your franchise holders are beginning to ask this question as well. Your business partners with huge costs of investment in buildings meeting the manufacturer’s satisfaction and numerous unprofitable “Cost Of Franchise” issues and product lines to deal with on a daily basis.
Your franchise partners are beginning to understand the need for investment in the used car market, after all they are the ones paying the bills on the building and seeing new car margins and overall profits decline and of course, (and this may be wrong), it is understandable that having built both their business and their personnel structure around what was required over the last 10 years, (in terms of the new car market and remaining profitable), that they will now look to you as the manufacturer to provide the solution.
So what’s the answer? Well for most reading this article there is much work to do and the dangers of doing nothing now have been explored in many of our articles, most recently the article below;
Will Your New Car Franchise Model Be The First To Fail?
We also appreciate that used car professionals do not grow on trees and that growing successful used car businesses is a highly complex and specific skill-set, but would ask all manufacturers, where do you expect these professionals to come from, those capable of delivering the results both you and your franchise partners require? We also appreciate that finding genuinely successful used car professionals is very difficult for both manufacturers and their franchised dealer networks, we discussed this very same operational problem in our articles below;
Do Successful Used Car Professionals Exist For European Manufacturers?
Do Successful Used Car Professionals Exist For Franchised Dealers?
So something has got to change; as the manufacturer you must make a decision, do you want to secure your long term new car success and ensure that you enjoy a financially resilient franchise dealer network, the one that will be required to support your new car warranty programme and service your vehicle park? Because if you do, then this will only be achieved via successful used car retailing, and luckily help is at hand.
If this post has resonated with you and you would like to know more about our used car business development consultancy and training programmes, because you would like to partner 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 both in the UK and in Continental Europe. For an exploratory conversation regarding our services and how we can develop bespoke used car business development and consultancy programmes on your behalf, or to discuss any part of this article in greater detail, please do not hesitate to contact one of our Used Car Business Development Directors in the strictest confidence; 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.
https://autoformance.comUsed Car Business Development Director.
