F&I Management & Training

Warranties are becoming more important on older vehicles as the credit crunch leaves used car buyers at the lower end of the market feeling more vulnerable to unexpected bills. Ian Simpson, sales and marketing director at RAC Warranty said that dealers selling vehicles averaging more than five years old were finding demand for warranties increasing. He explained: "Buyers at this end of the market often have less flexibility in their personal finances than those spending more on a vehicle so, in many ways, a warranty is more important to them because they may not be able to afford an unexpected repair bill. "The credit crunch has emphasised this fact both because these buyers feel more vulnerable and also, in some cases, because their personal finances have actually deteriorated." (RAC Warranty)

DATED: 08.07.08

FEED: AW

Caffyns has been forced to defend the way it runs its business in response to a shareholder revolt.
Mark Bruce-Smith, who represents investment company New Fortress Holdings which owns 4.65% of Caffyns shares, has written a letter to the dealer group’s board and to shareholders calling for change to improve the business’s "dire performance".
Bruce-Smith said: "Unhappily, for the last decade Caffyns' performance has been dire. With amazing lack of forethought, the company has lurched from one so-called 'one-off crisis' to another. A pattern has now emerged and it is one of serious long term derogation of equity shareholder value."
Bruce-Smith is particularly unhappy about a class of preference shares he says gives the Caffyn family control to the detriment of other shareholders. He has written to Caffyns investors before its AGM next Wednesday to persuade them to back his campaign.
Bruce-Smith said: "At last year's AGM we put modest proposals to the incumbent management that would lay the foundation for a positive change in the company's fortunes. Sadly these were rejected, and, sadder still, the company seems to lack any invigorating ideas of its own to bring about change."
Caffyns said: "The board does not accept the comments in the letter to shareholders. “The board has a strategy which involves operational improvements and selective property disposals in order to generate value for shareholders. The board continues to work hard to execute its strategy in order to deliver value for all shareholders in an increasingly challenging economic environment for consumers."
Caffyns said it will be responding to questions put forward by New Fortress as part of its strategy to retain "constructive dialogue with its shareholders".
New Fortress has set up a blog called Driving Change at http://www.newfortress.net/, which will feature updates on its campaign against the Caffyns board.

DATED: 18.07.08

FEED: AM

The IMI, in conjunction with Hertfordshire Consortium, is offering motor industry businesses in Norfolk, Suffolk, Bedfordshire, Hertfordshire, Essex and Cambridgeshire the opportunity to attend a seminar on managing customer expectations.
If you are interested in this opportunity (limited places only) please contact Michelle Barrett at the IMI as soon as possible as she will need to arrange funding through Train to Gain.
Providing you have between 10 & 250 employees, the £500 will be paid.
"I know it's short notice,” said Barrett, “but the funding has only just become available and has to be spent by July 31."

DATED: 18.07.08

FEED: AM

Just 18 months ago, Carter & Carter was a successful training company, with a £62.2 million turnover, a growing portfolio of acquisitions and 28 training and support contracts of varying sizes with vehicle manufacturers.
But following a disastrous 2007, including the death of its founder Phil Carter in May and several large contracts deciding to move their programmes elsewhere, the company’s shares were frozen in October and it went into administration in March this year.
Its spectacular – and rapid – fall from grace revealed massive debts and a business which had become increasingly reliant on banks to continue. For manufacturers with large-scale training operations contracted to Carter & Carter, the company’s demise meant finding another provider at relatively short notice.
The company had already begun to lose clients during a troubled 2007.
But many of its biggest contracts were still in place in March as the company went into administration.
Although some manufacturers moved their training in-house, smaller training companies have grown after taking on former Carter & Carter schemes.
Several passed to VT Group, which picked up contracts for the large-scale Volkswagen Group training programme and Subaru, plus some business from Renault.
Changes have been minimal; training is provided by ex-Carter & Carter employees from the existing facility in Ruddington, Nottinghamshire. Volkswagen has around 800 apprentices on the VT course.
VW’s other Carter & Carter outsourced services have been transferred to Serco, a major provider of outsourced services and an existing supplier to the group both in the UK and in Germany.
The Ford Masters Apprenticeship Programme (FMAP) transferred to Skillnet Automotive Academy in May following a two-month tender.
During this time, other smaller providers covered for the workload formerly handled by Carter & Carter.

DATED: 18.07.08

FEED: AM

The Volkswagen Group is to acquire a majority voting stake in Swedish truck manufacturer Scania for €2.8 billion (£2.2bn).
The majority voting stake is expected to be acquired on July 22.
Volkswagen will increase its share of voting rights in Scania from 37.98% to 68.60%. Its equity interest will rise to 37.73% from 20.89%.
VW will fully consolidate Scania in the second half of the year.
Martin Winterkorn, VW Group chairman, said: "Scania will become the group's ninth strong brand under the roof of Europe's largest automobile manufacturer.
"As with all of our group brands, Scania will retain its own corporate headquarters, its own culture and its own profile."

DATED: 18.07.08

FEED: AM

Austin Allegro takes the accolade of worst car ever
The Austin Allegro has been named as the worst British car of all time.
The Allegro received 24 per cent of the vote in a poll by digital motoring magazine, iMotormag.co.uk, beating nine other widely disliked UK manufactured models.

Second in the worst car list was the Morris Ital, followed by the Talbot Sunbeam, the Austin Princess and the Hillman Imp.
The remaining top ten worst models included the Rover 200, Triumph Acclaim, Rover 800, Triumph TR7 and the Morris 1800.
The Allegro, which was also known as the All-Aggro due to its poor build quality and the ability for its rear window to pop out, featured a square steering wheel supposedly making steering easier and providing extra room for the driver's legs.
Mat Watson, editor of iMotormag.co.uk, said: “In the face of superior alternatives from Europe and the Far East, cars like the Austin Allegro were the final nail in the four-wheel coffin for the once dominant British motor industry - the game had moved on.
“The Allegro was full of promise and expectations, but ultimately failed to deliver.”

DATED: 18.07.08

FEED: MT

Pendragon’s £375m property joint venture has breached its banking covenants, leading to demands on the dealer group for a multi-million-pound cash injection.
The group and its joint venture partner - property fund manager aAIM,, have been asked to put £20m into the scheme that owns 115 of Pendragon’s assets, including dealerships, vehicle-repair depots and the head office in Nottingham.


The joint venture has breached tight loan-to-value covenants on £330m of debt, which was supplied by the Royal Bank of Scotland.
This means Pendragon has borrowed the money for longer than the bank will allow.
“Pendragon didn’t pay anything into the venture in cash, but it contributed a share of its leases,” said Toby Proctor, an analyst with independent consultancy Trend Tracker.
“It may be that the property value has sunk too far for it to pay back what it borrowed.
“I’m sure it did that in order to raise some cash but now there’s nothing backing up their borrowing.”
This most recent development is further bad news for the group, which recently announced it will be cutting 500 jobs.

DATED: 18.07.08

FEED: MT

General Motors has disclosed it may sell as much as $4bn(£1.9bn) of its assets and borrow around $2bn to aid its suffering finances.
The US giant has also said it will cut white collar employment costs by 20 per cent.

“We are responding aggressively to the challenges of today's US auto market,” said GM chairman and CEO, Rick Wagoner.“We will continue to take the steps necessary to align our business structure with the lower vehicle sales volumes and shifts in sales mix.”Wagoner said the company was pinning its hopes on areas of potential growth such as more fuel-efficient vehicles.“We remain committed to bringing to market great products that target changing consumer preferences for more fuel-efficient vehicles,” he said.The CEO noted that 11 of GM's 13 most recent major product launches in the USA, as well as 18 of its next 19 launches, are cars and crossovers, which are key growth areas and he remains confident.“The actions announced are difficult decisions, but necessary to respond to the current auto market conditions,” said Wagoner.“Even under conservative planning scenarios, GM is well-positioned to withstand the US market downturn and emerge a stronger company.”

DATED: 18.07.08

FEED: MT

Skoda predicts the rapid decline in sales in the upper-medium sector is set to level off with 4X4 and MPV fleet drivers returning to the traditional family car.
The brand hopes to exploit a resurgent D-sector with its latest generation Superb flagship model which it is pitching against a number of new models including the Mondeo, C5, Laguna and forthcoming Vauxhall Insignia.

Until the turn of the decade the upper-medium sector was one of the best performing segments in the new car market with sales powered by fleet demand.
Total sales in 1998 hit 549,747, accounting for 24.5 per cent of the market. Since then they have dropped in each successive year with 2007 seeing 386,414 units sold, accounting for a 16 per cent market share.
“The upper-medium sector has been in decline for several years as buyers have moved to MPVs and SUVs. We’ve also seen the exit of MG Rover and Nissan pulling out of the sector, “said Chris Horrell, Skoda’s product marketing manager for the Superb.
“However, there are now a lot of new models in the sector and customers with MPVs and SUVs are finding them expensive to run with high C02 levels and fuel consumption. We expect buyers to come back to this sector and for sales to increase,” he said.
The brand expects its new Superb, launched in September, to appeal predominantly to fleet buyers looking to squeeze the most out of their C02 based benefit-in-kind payments. It expects to sell up to 4,000 units a year.
Cap also believes the rapid decline in the sector will ease off as buyers look to reduce their running costs.
“The upper-medium sector is principally maintained by company car drivers and has been in decline for several years in the used market subject to the trend of downsizing,” said Mark Norman, Cap’s operational development manager.
However, Norman believes any movement back to the sector will stem the decline rather than create significant growth.
“The upper-medium sector is also subject to the drift toward compact prestige cars among those who do have money to spend on image. We suspect that, rather than spelling a resurgence, any drift from SUVs and 4x4s will only slow the decline,” he said.


DATED: 14.07.08

FEED: AM

Pendragon has lost four of its BMW sites following the German manufacturer’s review of its UK network.
Pendragon's Strastone business will dispose of dealerships in Tring, Taplow and Milton Keynes, as well as closing its Windsor site. Specialist Cars has bought the Tring site.
There are 12 other UK dealers which are believed to be affected by BMW's review.

Meanwhile, Pendragon is believed to have breached its banking covenants on its property joint-venture, leading to demands for a £20 million cash-injection, according to the Daily Telegraph.
Pendragon, together with joint venture partner Aaim, a property fund manager, have been asked to put millions into the venture that owns the vast bulk of the company's car showrooms. It is understood the joint venture has breached loan-to-value covenants on £330m of debt supplied by Royal Bank of Scotland.
Pendragon set up the sale and leaseback joint-venture in 2007.

DATED: 14.07.08

FEED: AM

Manchester-based dealer group Horners has ceased trading, following its entering receivership on Friday.
That followed reports on Thursday that the £38m turnover business, headed by managing director Richard Haytack, was in financial difficulties.
On Friday, Dermot Power and Matthew Dunham, business restructuring partners at BDO Stoy Hayward, conducted an immediate review and concluded there was no option but to close its two site in Manchester and Rochdale.
The receivers hope to be able to secure the sale of the two properties.
Mitsubishi and Skoda were Horners only franchise partners, after a significant downsizing project following the collapse of MG Rover.

DATED: 14.07.08

FEED: AM