Your All Auction Policy?,,,,, I Bet It Seemed Like A Good Idea At The Time?,,,,,, (UK Dealer Article)

We make no apologies for the confrontational tone in the heading of this article because this statement goes to the very heart of why so many franchise dealers struggle to grow successful used car operations, and worse than this the decisions of most to have all auction policies came down to two things, lack of trust in the staff employed and laziness! 

We remember very well being told that this was the brave new world when the big franchise dealer groups began implementing this policy in the mid to late 1990’s, but it is only during the last 5 – 10 years that the folly of this policy became apparent, in terms of the damage this was going to do to the long term success of the traditional franchise dealer network. 

But let’s go back to the mid 1990’s to try and understand what happened and how this policy was first sold to unsuspecting franchise dealers because in many ways, it was a disruption campaign of genius by the auction companies, who went right over the heads of the operational personnel at the businesses direct to the accountants and those who had little idea of how a business was run on a day to day basis; in fact we can imagine their pitch now, it would’ve gone something like this; 

• Listen, you don’t want all the hassle of employing people to dispose of all your horrible non-retail part exchanges and trade cars. 
• No! Why would you when we will send a transporter to your business once a week, collect all your non-retail part exchanges and trade vehicles for you, valet them and then put them in front of the trade and members of the public, to achieve a higher price for them than you would’ve achieved in the trade. 
• And on top of all this, you don’t need to entertain all these “Horrible Types” from our industry, these “Ruffians” from the used car market who bring the tone of the business down! Oh no, you are above all this as new car franchised dealers, do you really want to bring the tone of your business down in this way? 

Now this was very clever as it played directly into the conflict that raged in franchise dealer networks at this time, the rise of the used car market and the professionals required to deliver on this opportunity, who were, on the whole, not understood by the “Men in Suits” running franchise dealer groups at the time. So any policy that weakened the position of these unsavoury “Ruffians” was welcomed; after all they were all cashing in tax discs, retailing part exchanges from home and taking “Back Handers” from the trade, (allegedly!). 

And so it began, the exploiting of the lack of trust, (un-substantiated), by the auction companies and the selling of the one company fixes all problems solution by the auction companies; and unbelievably the “Men in Suits” fell for it and so the damage began and as we now review the trading landscape, I wonder whether everyone can survive in the new world, the world delivered to them on a plate by the previous misguided generation? 

The decisions made back in the mid to late 1990’s caused an exodus of talent from franchise dealer networks and now we live in a world where vast proportions of franchise dealer networks are completely reliant on a new car sales, service and parts business model that is being attacked by disruptors and independents, and is also running out of the “Steam” injected into the new car trading model during the financial crises, by low interest rates and the rush to purchase new cars on PCP agreements from consumers. 

Worse than this, we now live in a world where vast swathes of franchise dealer networks have no used car professionals employed within their businesses, so are totally reliant on auctions for the valuation of part exchanges and have no ability to begin to build the only business that can save them, in the world of fracturing new car markets and dwindling new car returns; a successful and profitable used car operation. And this point must not be lost, because expecting a manufacturer to increase new car margins to keep your business profitable and growing just isn’t going to happen, it would be naive in the extreme to expect otherwise. 

No the reality for most is that they are now in a battle to build successful used car operations and secure used car market share, as this is the only way that their financial security can be assured. But there is a major problem because to have a successful used car operation you need many skills, but first of these is the ability to be able to acquire a used car stock holding; and this is where the all auction policies of the past come back to haunt new car franchise dealer networks. 

Not only did they dispense with used car professionals and all used car training and development courses, (at both franchise dealer group and manufacturer level), thus leaving themselves bereft of genuinely capable used car professionals, (a subject we covered in our recent post Do Successful Used Car Professionals Exist For Franchised Dealers?), but they also cut ties with the trade and the ability to build reciprocal relationships of supply; and now that franchise dealers need both the expertise and the used car stock, the majority have no idea how to get the process of developing used car retailing strategies under way. 

And let’s take used car stock acquisition as a case in point, and by used car stock acquisition I don’t mean ringing the manufacturer, purchasing a hundred 6 month old cars and then putting your feet up, because that is not effective used car stock acquisition, that is purchasing, (en masse), a profile of used car stock in direct competition with your struggling new car business, which is fine in premium markets and those involving long new car lead times; not a trading environment being enjoyed by many reading this article. 

Everyone reading this article and/or returning to expanding their used car stock acquisition initiatives, should be in no doubt just how challenging building and retaining used car stock levels is going to be; it is the challenge that will never go away, as nothing can be taken for granted year on year, when it comes to your used car stock holding. 

In fact this element of used car retailing strategy has become so important and challenging that it prompted our decision to make our Used Car Stock Acquisition Master Class And Mentoring Programme, (from our complete programme of used car business development and consultancy), available as a standalone consultancy offering, something we launched earlier this month. 

But we warn everyone now; this is not a one trick fix that will last forever, we are building these programmes now and the competition continues the raise the bar; with more time and expertise being devoted to this area of the used car business than any other, because without used car stock, you will have no business. This process is already a full time job and for those relying on an increasing level of part exchanges and ex demos to fuel your used car growth, well those days are over, because suddenly part exchanges will not be appearing, because we can show one of your competitors, someone maybe already on our Used Car Stock Acquisition Master Class And Mentoring Programme, how to ensure that the part exchange you were expecting never arrives at your dealership, on the day the new car is to be collected. 

Those wanting to discuss our Used Car Stock Acquisition Master Class And Mentoring Programme and how we can build the used car stock acquisition programmes required, to ensure that you survive whilst others don’t, please feel free 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.

The All Auction Policy Of Your Franchise Partners?,,,,, I Bet It Seemed Like A Good Idea At The Time?,,,,,, (UK Manufacturers Article)

We make no apologies for the confrontational tone in the heading of this article because this statement goes to the very heart of why so many franchise dealers struggle to grow successful used car operations, and just at the time when they are most needed to support both the new car business model of the manufacturer as well as to secure the financial resilience of their franchise dealership; and worse than this, the decisions of most to have all auction policies came down to two things, lack of trust in their staff employed and laziness! 

We remember very well being told that this was the brave new world when the big franchise dealer groups began implementing this policy in the mid to late 1990’s, but it is only during the last 5 – 10 years that the folly of this policy became apparent, in terms of the damage this was going to do to the long term success of the traditional franchise dealer network. 

But let’s go back to the mid 1990’s to try and understand what happened and how this policy was first sold to unsuspecting franchise dealers because in many ways, it was a disruption campaign of genius by the auction companies, who went right over the heads of the operational personnel at the businesses direct to the accountants and those who had little idea of how a business was run on a day to day basis; in fact we can imagine their pitch now, it would’ve gone something like this; 

• Listen, you don’t want all the hassle of employing people to dispose of all your horrible non-retail part exchanges and trade cars. 
• No! Why would you when we will send a transporter to your business once a week, collect all your non-retail part exchanges and trade vehicles for you, valet them and then put them in front of the trade and members of the public, to achieve a higher price for them than you would’ve achieved in the trade. 
• And on top of all this, you don’t need to entertain all these “Horrible Types” from our industry, these “Ruffians” from the used car market who bring the tone of the business down! Oh no, you are above all this as new car franchised dealers, do you really want to bring the tone of your business down in this way? 

Now this was very clever as it played directly into the conflict that raged in franchise dealer networks at this time, (and with manufacturers), the rise of the used car market and the professionals required to deliver on this opportunity, who were, (on the whole), not understood by the “Men in Suits” running franchise dealer groups at the time. So any policy that weakened the position of these unsavoury “Ruffians” was welcomed; after all they were all cashing in tax discs, retailing part exchanges from home and taking “Back Handers” from the trade, (allegedly!). 

And so it began, the exploiting of the lack of trust, (un-substantiated), by the auction companies and the selling of the one company fixes all problems solution by the auction companies; and unbelievably the “Men in Suits” fell for it and so the damage began and as we now review the trading landscape, I wonder whether everyone can survive in the new world, the world delivered to them on a plate by the previous misguided generation? 

The decisions made back in the mid to late 1990’s caused an exodus of talent from franchise dealer networks and now we live in a world where vast proportions of franchise dealer networks are completely reliant on a new car sales, service and parts business model that is being attacked by disruptors and independents, and is also running out of the “Steam” injected into the new car trading model during the financial crises, by low interest rates and the rush to purchase new cars on PCP agreements from consumers. 

Worse than this, we now live in a world where vast swathes of franchise dealer networks have no used car professionals employed within their businesses, so they are totally reliant on auctions for the valuation of part exchanges and have no ability to begin to build the only business that can save them, in the world of fracturing new car markets and dwindling new car returns; a successful and profitable used car operation. And this point must not be lost, because expecting you, as the manufacturer, to increase new car margins to keep the businesses of your franchise partners both profitable and growing just isn’t going to happen, it would be naive in the extreme to expect otherwise. 

No the reality for most is that they are now in a battle to build successful used car operations and secure used car market share, as this is the only way that your new car trading model and their financial security can be assured. But there is a major problem because to have a successful used car operation you need many skills, but first of these is the ability to be able to acquire a used car stock holding; and this is where the all auction policies of the past come back to haunt franchise dealer networks. 

Not only did they dispense with used car professionals and all used car training and development courses, (at both franchise dealer group and manufacturer level), thus leaving themselves bereft of genuinely capable used car professionals, (a subject we covered in our recent post Do Successful Used Car Professionals Exist For Franchised Dealers?) but they also cut ties with the trade and the ability to build reciprocal relationships of supply; and now that franchise dealers need both the expertise and the used car stock, the majority have no idea how to get the process of developing used car retailing strategies under way. 

And let’s take used car stock acquisition as a case in point, and by used car stock acquisition I don’t mean your franchise partners ringing you, (as the manufacturer), purchasing a hundred 6 month old cars and then putting their feet up, because that is not effective used car stock acquisition, that is purchasing, en masse, a profile of used car stock in direct competition with their struggling new car business, which is fine in premium markets and those involving long new car lead times; not a trading environment being enjoyed by many reading this article. 

Everyone reading this article and/or returning to expanding their used car stock acquisition initiatives, should be in no doubt just how challenging building and retaining used car stock levels is going to be; it is the challenge that will never go away, as nothing can be taken for granted year on year, when it comes to your used car stock holding. 

In fact this element of used car retailing strategy has become so important and challenging that it prompted our decision to make our Used Car Stock Acquisition Master Class And Mentoring Programme, (from our complete programme of used car business development and consultancy), available as a standalone consultancy offering, something we launched last month.  

But we warn everyone now; this is not a one trick fix that will last forever, we are building these programmes now and, (to keep ahead of the competition), we will continue to push boundaries and to raise the bar. With more time and expertise being devoted to this area of the used car business than any other, (because without used car stock, you will have no business), this will be the “White Heat” area of the used car business for years to come. 

This process is already a full time job and for those relying on an increasing level of part exchanges and ex demos to fuel your used car growth, well those days are over, because suddenly part exchanges will not be appearing, because we can show one of your competitors, someone who maybe on our Used Car Stock Acquisition Master Class And Mentoring Programme, how to ensure that the part exchange you were expecting never arrives at your dealership, on the day the new car is to be collected. 

Those wanting to discuss our Used Car Stock Acquisition Master Class And Mentoring Programme and how we can build the used car stock acquisition programmes required, to ensure that you survive whilst others don’t, please feel free 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.

Used Car Retailing?,,,, The Truth Is That Your Franchise Partners Can’t Handle The Truth!,,,,(UK Manufacturers Article)

We’ve been reading a lot of articles and statements from senior professionals in the automotive sector recently, the last of which was in This Is Money and concerned one of the country’s largest dealer groups and their associated businesses. 

It was an interesting and an alarming article from a manufacturers’ perspective, (after all, this is likely to be effecting the financial resilience of some of your franchise partners), because it highlighted 25% drops in the share value in a single morning, due to a myriad of reasons and across all of its businesses, which interestingly does include an independent used car supermarket operation, which by all accounts is suffering significant and mounting losses. 

More significantly the article quoted those responsible for the running of this motoring goliath as saying that they now expect to make just a small annual loss during 2019, hoping to have turned round the dire performance in the first half of this year; blaming this on a combination of internal operational challenges and tough market conditions! 

This comes off the back of many announcements by senior Automotive Sector professionals to cover over the cracks of under achievement and failure, many of which have blamed tough market conditions and “Uncertainty Regarding Brexit;” Honda aside who went out of their way to state that the reasons for closing their plant in Swindon had nothing to do with Brexit. 

Now as business owners ourselves we wonder about these statements and the excuses for getting things so catastrophically wrong; for sure trading conditions are challenging across our many business interests, which include used car business development consultancy and training, specialist used car stock acquisitions companies and used car retailing, but in reality if your franchise partners are blaming Brexit or the challenging conditions for failure, then they are more than likely hiding from the unpalatable truth. 

And to be blunt, the truth is the failure to prepare for challenging conditions and to invest in their staff, in order to ensure that they can take advantage of market challenges, not be beaten down by them. The truth is that if your franchise partners, (those who are looking to build the successful used car businesses that will be required to protect both their financial resilience and your new car trading model), have no prospecting plan, no initiatives to ensure that their sales professionals are driving used car customers to their used car businesses, no initiatives to ensure that their staff and therefore their used car businesses are always finding the answers to overcome the trading challenges, then they have NO STRATEGY. 

In truth the problem for the industry is not the challenging trading conditions, because in reality this is when the opportunities are at their greatest, no it is in the lack of investment in staff and a lack of awareness/experience required for the new businesses being opened up. Having read that the used car supermarket operation was really struggling, we were surprised at first reading that a business that has a continual opportunity to grow, if run effectively, was proving to be such a negative drag for the PLC concerned. 

But statements like this go to the very heart of the problems for many in the Automotive Sector and although we were not present when the strategy and investment decisions were made, we bet it went something like this;

• Why are we sending all our part exchanges to auction, we should be retailing them ourselves! 
• OK, well let’s open up some used car centres across the country and send all the part exchanges there to retail them! 
• Great!,,, Agreed!,,, Ker Ching! 

Now these statements and the rationale behind them are correct in principal, the only reason why this will not be working, is a lack of experience and ability in the target market place. There can be a misguided perception that if you put cars on display and under the roof of a specialist used car centre, then the customers will come running into the arms of the waiting sales team, and this is where the strategy comes falling down! 

It’s not that this used car trading model doesn’t work, it is that it is a very specialist business, very different to the new car franchise business, and the challenge of getting customers to the business is never ending; the ethos of “Build It And They Will Come” is over and this business can only survive, (just like any other business), if the right people are in the pivotal roles within the business. 

If they are not available and few are, (as covered in our recent article; Do Successful Used Car Professionals Exist For Franchised Dealers), then there must be the training and development programmes within both manufacturer organisations and the PLC’s themselves, to ensure that used car professionals can be developed, otherwise there is a danger that those running the sectors big PLC’s will continue to close businesses like this, (businesses that should be both delivering fantastic returns and securing the future of your new car trading model), instead of training and developing the professionals required and ensuring that the business model succeeds. 

Dare we say it? We think the real problem here is one of arrogance and not realising just how far the competition have driven forward some automotive business models, whilst your franchise partners weren’t looking. There is no doubt that the idea was, and remains sound, it is in the execution that it has all gone wrong and, as much as we have no insight into the internal workings of this business, we would caution that now is the time to be investing in the right people, not cutting costs and seeing what happens; more of the same will only deliver more of the same! 

But we are guessing that time will probably be of the essence here; once the beast is built it can be become unwieldy and impossible to control very quickly, but one thing we do know is that the staff employed will be at the very heart of the performance of these businesses, from those at the bottom to those at the very top. To succeed from here they will need to be developed and have an in-depth understanding of a market place that bares no relation to the new car business, from where they have probably come. 

But for those considering a move into the lucrative and profitable used car business model, or indeed any used car retailing model, do not let the mistakes of others put you off from entering the most profitable of market opportunities. However, it would be our recommendation that you avoid the mistakes of others and never underestimate the challenges involved. 

Whether it be a standalone used car business or one attached to an existing new car franchise operation,(both will support your new car trading model), the financial benefits of a successful used car business are unparalleled, as are the operational challenges that must be met, if your franchise partners are to succeed, but 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 dealer network programme on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you. 

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

Alternatively please feel free to call 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.

Used Car Retailing?,,,, The Truth Is That You Can’t Handle The Truth!,,,,(UK Dealers Article)

We’ve been reading a lot of articles and statements from senior professionals in the automotive sector recently, the last of which was in This Is Money and concerned one of the country’s largest dealer groups and their associated businesses. 

It was an interesting article as it highlighted 25% drops in the share value in a single morning, due to a myriad of reasons and across all of its businesses, which interestingly does include an independent used car supermarket operation, which by all accounts is suffering significant and mounting losses. 

More significantly the article quoted those responsible for the running of this motoring goliath as saying that they now expect to make just a small annual loss during 2019, hoping to have turned round the dire performance in the first half of this year; blaming this on a combination of internal operational challenges and tough market conditions! 

This comes off the back of many announcements by senior Automotive Sector professionals to cover over the cracks of under achievement and failure, many of which have blamed tough market conditions and “Uncertainty Regarding Brexit;” Honda aside who went out of their way to state that the reasons for closing their plant in Swindon had nothing to do with Brexit. 

Now as business owners ourselves we wonder about these statements and the excuses for getting things so catastrophically wrong; for sure trading conditions are challenging across our many business interests, which include used car business development consultancy and training, specialist used car stock acquisitions companies and used car retailing, but in reality if you are blaming Brexit or the challenging conditions for failure, then you are more than likely hiding from the unpalatable truth. 

And to be blunt, the truth is the failure to prepare for challenging conditions and to invest in your staff, in order to ensure that you can take advantage of market challenges, not be beaten down by them. The truth is that if you have no prospecting plan, no initiatives to ensure that your sales professionals are driving customers to the business, no initiatives to ensure that your staff and therefore your businesses are always finding the answers to overcome the trading challenges, then you have NO STRATEGY. 

The problem for the industry is not the challenging trading conditions, because in reality this is when the opportunities are at their greatest, no it is in the lack of investment in staff and a lack of awareness/experience required for the new businesses being opened up. Having read that the used car supermarket operation was really struggling, we were surprised at first reading that a business that has a continual opportunity to grow, if run effectively, was proving to be such a negative drag. 

But statements like this go to the very heart of the problems for many in the Automotive Sector and although we were not present when the strategy and investment decisions were made, we bet it went something like this; 

• Why are we sending all our part exchanges to auction, we should be retailing them ourselves! 
• OK, well let’s open up some used car centres across the country and send all the part exchanges there to retail them! 
• Great!,,, Agreed!,,, Ker Ching! 

Now these statements and the rationale behind them are correct in principal, the only reason why this will not be working, is a lack of experience and ability in the target market place. There can be a misguided perception that if you put cars on display and under the roof of a specialist used car centre, then the customers will come running into the arms of the waiting sales team, and this is where the strategy comes falling down! 

It’s not that this used car trading model doesn’t work, it is that it is a very specialist business, very different to the new car franchise business, and the challenge of getting customers to the business is never ending; the ethos of “Build It And They Will Come” is over and this business can only survive, (just like any other business), if the right people are in the pivotal roles within the business. 

If they are not available and few are, (as covered in our recent article; Do Successful Used Car Professionals Exist For Franchised Dealers), then there must be the training and development programmes within PLC’s to ensure that used car professionals can be developed, otherwise there is a danger that those running the sectors big PLC’s will continue to close businesses like this, (businesses that should be working and delivering fantastic returns), instead of training and developing the professionals required and ensuring that the business model succeeds. 

Dare we say it? We think the real problem here is one of arrogance and not realising just how far the competition have driven forward some automotive business models, whilst you weren’t looking. There is no doubt that the idea was, and remains sound, it is in the execution that it has all gone wrong and, as much as we have no insight into the internal workings of this business, we would caution that now is the time to be investing in the right people, not cutting costs and seeing what happens; more of the same will only deliver more of the same! 

But we are guessing that time will probably be of the essence here; once the beast is built it can be become unwieldy and impossible to control very quickly, but one thing we do know is that the staff employed will be at the very heart of the performance of this business, from those at the bottom to those at the very top. To succeed from here they will need to be developed and have an in-depth understanding of a market place that bares no relation to the new car business, from where they have probably come. 

But for those considering a move into the lucrative and profitable used car business model, or indeed any used car retailing model, do not let the mistakes of others put you off from entering the most profitable of market opportunities. However, it would be our recommendation that you avoid the mistakes of others and never underestimate the challenges involved. 

Whether it be a standalone used car business or one to support your new car trading model, the financial benefits of a successful used car business are unparalleled, as are the operational challenges that must be met, if you are to succeed, but 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 business on your behalf, (in order to keep your new car and total business objectives growing and on track), then we would very much like to hear from you. 

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

Alternatively please feel free to call 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.