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.
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