On the flip side, we will not be afraid to tackle the issues which might damage profitability if dealership management teams do not address them. Our posts should act as a digest for busy executives that do not have enough time to plough through AM, ARB, MTN and a myriad of other online trade titles which we will draw from. I hope you like it. If you do please spread the word and sign up at the top of this page to receive future posts.
I was reading through the 2012-3 financial results of some of the biggest names in the car dealership world and what strikes you is that - for many of these firms - scale continues to be all-important for progressing in the UK market.
For example Inchcape was able to continue growing this year even while margins and profitability fell away. Its H1 2013 financials revealed an increase in sales in its UK retail division of 4.8% to £1.12bn but a trading profit drop by 0.9% to £33.5m. Inchcape sold its Ford businesses to Group 1 Automotive in February and invested in facility upgrades. For more on this go to ARN at: http://www.auto-retail.co.uk/public/02-08-2013/record-first-half-inchcape?utm_source=Inchcape+H1+2013&utm_medium=News+Alert&utm_campaign=Inchcape+H1+2013
Inchcape is preparing for the installation of BMW sub-brand ‘ibrand’ infrastructure at five UK BMW locations for a Q4 launch and completed major VW corporate identity upgrades at Wirral and at Swindon. Before the end of 2013 it will complete enlargement of its BMW, Mini and Motorrad retail centre in Sunderland and a full upgrade at BMW Norwich.
Size and heavy exposure to less mature markets – most notably China and the Asia Pacific Rim down to Australia – are clearly bolstering Inchcape Retail’s financials and enabling it to continue investing in the UK market, even as margins do come under pressure.
And UK dealers that are investing in discrete parts of the market - and principally those operating at the prestige-end of the market - are enjoying real growth. Perhaps is should be no surprise that HR Owen has set up a new Lamborghini dealership: http://www.motortrader.com/latest-news/hr-owen-lamborghini-dealership/ in Pangbourne recently. Almost simultaneously it turned in strong interim profits - up 23% on the previous year - and also picked up Motor Trader Dealership Group of the Year Award this summer: http://www.motortrader.com/industry-news/hr-owen-profits-surge/ . At the prestige end, other groups have also been investing in growing their BMW estates: http://www.am-online.com/news/2013/8/6/bowker-bmw-reveals-750-000-expansion-plans/33389/
So what has HR Owen been up to apart from cashing in on the growing luxury market and increasing its used car sales by 24%? Areas hinted at in the piece including improving procurement systems and other ‘business processes’ and adopting a ‘multi-channel approach to advertising’ (for this read heavier investment in building its online presence and securing online sales).
Perhaps HR Owen’s directors have been reading one resource I regularly turn to for new ideas in our market – US online title DealerMarketing which recently detailed how one US Chrysler Jeep Dodge dealership had benefitted from ‘video SEO’: http://www.dealermarketing.com/internet-marketing/search/3106-dealership-profile-branhaven-chrysler-jeep-dodge-ram?utm_source=DM+Weekly+2013-06-20&utm_medium=email&utm_campaign=DM+Weekly
There is no doubt that for top UK dealerships, scale is only part of the equation for securing continuous and profitable growth in a highly competitive market. Other keys to profitable growth appear to be knowing your market intimately; looking for new brands and vehicles to help serve that market better; as well as engaging more deeply with customers and prospects (at whatever stage of the buying cycle they are in, see: http://www.dealermarketing.com/bizdev/crm-solutions/3107-four-tips-for-turning-be-backs-into-sales?utm_source=DM+Weekly+2013-06-20&utm_medium=email&utm_campaign=DM+Weekly ) and through whichever channel they prefer to use. Deeper engagement through social media, ‘video SEO’ as well as investment in other online marketing activities, is also becoming crucial to help the customer find their way to your door.
We will return to many of these themes in more detail in future posts so please sign up for our blog or check back to our site for the latest thoughts and tips on finding routes to increased profitability.