Friday, August 22, 2008
NFDA warns dealers on insurance sale requirements
Car dealers that offer payment protection insurance (PPI) as part of finance packages must ensure they follow the rules on sale of these products or risk incurring heavy fines, warns the RMI National Franchised Dealers Association (NFDA). Sale of insurance products, such as PPI, is regulated by the Financial Services Authority (FSA). Businesses that sell or advise on insurance products such as credit protection insurance, warranties, GAP products, and general motor insurance must be accredited by the FSA. If businesses fail to meet the standards required they will be fined by the FSA. NFDA Director Sue Robinson commented: 'Dealers that offer finance packages, including PPI, must make sure that they follow the rules laid down by the FSA. This will involve training staff so they can provide the right advice on the various products, and having the right systems in place to ensure that customers are sold the correct product most suitable to their needs. 'The NFDA is working with the FSA to ensure that the regulations are as effective as possible, and that they benefit businesses and consumers alike.' Robinson continues: 'PPI is seen as a high risk product by the FSA, so requirements for businesses that offer it are more stringent than selling other insurance products. This has led to a number of dealers stopping PPI product sales, and concentrating on lower risk products, such as warranties and GAP. Robinson adds: 'NFDA members that require more advice on this issue should contact the NFDA.
DATED: 22.08.08
FEED: AW
DATED: 22.08.08
FEED: AW
Cash woes force closure
Family-run franchised dealership Moss Rose Motors in Macclesfield has been forced to close due to cash flow problems.
The business, which was owned by joint directors Barrie Singleton and his son Richard, represented Fiat, Nissan and MG Rover from one site.
Joint administrators Simon Wilson and Anne O’Keefe, from Kroll, were appointed on July 18.
The Singletons also ran the website www.better-deal.co.uk, which sourced new and used Fiats and Nissans through main dealers.
It is also in administration and has ceased trading, although the website was still online as AM went to press.
Moss Rose Motors continued to operate while Kroll tried to sell it as a going concern.
The showroom has now been put up for sale and the company’s seven employees have been made redundant.
Wilson said: “Having considered all options for the business, it became clear that a sale of the Macclesfield site would represent the best realisation of assets in the circumstances.
“So far, we have received a number of offers from interested parties and are hopeful of securing a sale of the site in the near future.”
Nissan said it was aware of the difficulties Moss Rose Motors was encountering.
A spokeswoman for the Japanese manufacturer said: “We are disappointed to lose them but have begun conversations with alternative representation.
DATED: 22.08.08
FEED: AM
The business, which was owned by joint directors Barrie Singleton and his son Richard, represented Fiat, Nissan and MG Rover from one site.
Joint administrators Simon Wilson and Anne O’Keefe, from Kroll, were appointed on July 18.
The Singletons also ran the website www.better-deal.co.uk, which sourced new and used Fiats and Nissans through main dealers.
It is also in administration and has ceased trading, although the website was still online as AM went to press.
Moss Rose Motors continued to operate while Kroll tried to sell it as a going concern.
The showroom has now been put up for sale and the company’s seven employees have been made redundant.
Wilson said: “Having considered all options for the business, it became clear that a sale of the Macclesfield site would represent the best realisation of assets in the circumstances.
“So far, we have received a number of offers from interested parties and are hopeful of securing a sale of the site in the near future.”
Nissan said it was aware of the difficulties Moss Rose Motors was encountering.
A spokeswoman for the Japanese manufacturer said: “We are disappointed to lose them but have begun conversations with alternative representation.
DATED: 22.08.08
FEED: AM
Citroen UK drafts new network look
Citroën UK will roll out a new corporate identity for its franchised dealer network from the start of 2009 which it describes as a “massive change” for the brand.
Xavier Duchemin, Citroën UK managing director, believes the time is right for the network to undergo an image overhaul because the carmaker is at the point of launching an “avalanche” of new vehicles.
The changes, which include new interior and exterior looks with a heavy focus on the Citroën chevrons, have already been discussed with the national dealer council.
Costs will be jointly absorbed by dealers and Citroën.
“We are conscious of dealer profits and it won’t be an extra burden for the network,” said Duchemin.
“We have plenty of dealers who want to be the first with the new corporate identity.” He said the roll-out would be gradual over the next two to three years, but that the first new-look dealers would be ready in the first half of 2009. Most will be able to upgrade existing facilities.
The news coincides with Citroën reiterating its intention to grow its retail network from 209 to 230-240 retailers over the next couple of years to fill high-profile open points in territories like London and Liverpool.
But Duchemin might be looking for some more dealers after telling AM that he is running out of patience with his worst performers.
Despite increasing dealer bonuses by 30%, based on sales volumes, and putting more cash behind the CSI scheme, there have been no improvements from the bottom-ranking dealers.
“The bottom 20 dealers have big difficulties and are losing money,” Duchemin said. “And it’s always the same dealers.”
A profit improvement taskforce was set up last year to support poorer performers, but Duchemin is now taking more direct action. He is writing to the 20 dealers giving them six months to show an improvement.
“We will work with them but they have to progress – it’s not good for them or for us,” he said.
“It has a negative impact on customer satisfaction so they have to dramatically improve and change.
“The way to sell cars in the 21st century is not the same as it was 20 years ago.”
DATED: 22.08.08
FEED: AM
Xavier Duchemin, Citroën UK managing director, believes the time is right for the network to undergo an image overhaul because the carmaker is at the point of launching an “avalanche” of new vehicles.
The changes, which include new interior and exterior looks with a heavy focus on the Citroën chevrons, have already been discussed with the national dealer council.
Costs will be jointly absorbed by dealers and Citroën.
“We are conscious of dealer profits and it won’t be an extra burden for the network,” said Duchemin.
“We have plenty of dealers who want to be the first with the new corporate identity.” He said the roll-out would be gradual over the next two to three years, but that the first new-look dealers would be ready in the first half of 2009. Most will be able to upgrade existing facilities.
The news coincides with Citroën reiterating its intention to grow its retail network from 209 to 230-240 retailers over the next couple of years to fill high-profile open points in territories like London and Liverpool.
But Duchemin might be looking for some more dealers after telling AM that he is running out of patience with his worst performers.
Despite increasing dealer bonuses by 30%, based on sales volumes, and putting more cash behind the CSI scheme, there have been no improvements from the bottom-ranking dealers.
“The bottom 20 dealers have big difficulties and are losing money,” Duchemin said. “And it’s always the same dealers.”
A profit improvement taskforce was set up last year to support poorer performers, but Duchemin is now taking more direct action. He is writing to the 20 dealers giving them six months to show an improvement.
“We will work with them but they have to progress – it’s not good for them or for us,” he said.
“It has a negative impact on customer satisfaction so they have to dramatically improve and change.
“The way to sell cars in the 21st century is not the same as it was 20 years ago.”
DATED: 22.08.08
FEED: AM
Dealer viability is key to Jaguar Land Rover
Jaguar Land Rover expects new products, improved customer service and revitalised staff to make its franchises more viable for dealers.
The Tata-owned carmaker said one of the key business metrics is the viability of the dealer network. Managers are working with the 97-strong Jaguar and 129-strong Land Rover networks to identify areas for improvement.
Retail strategy and customer services director Mike Wright told AM that customer service will be a key factor.
“The way we look after our customers is going to be the really critical element in moving forward.”
Pendragon, whose 26 Jaguar dealerships account for a quarter of the brand’s UK new car sales, is included in the carmaker’s focus.
“We enjoy a long association with Pendragon and the test of that is in the way we work together. We have had a very open relationship with regard to both of our brands for many years and Geoff Cousins and John Edwards, our respective managing directors, carry out regular reviews with them on opportunities as well as issues,” said Wright.
“People jump to assumptions about relationships with dealer groups, but at the end of the day, this is something that needs to be managed in an individual way.
“Pendragon has some outlets that turn in very good sales performances, but it has concerns over the performance of some others.
“We share their concerns and will work with them to tackle these on a branch-by-branch basis,” Wright said.
DATED: 22.08.08
FEED: AM
The Tata-owned carmaker said one of the key business metrics is the viability of the dealer network. Managers are working with the 97-strong Jaguar and 129-strong Land Rover networks to identify areas for improvement.
Retail strategy and customer services director Mike Wright told AM that customer service will be a key factor.
“The way we look after our customers is going to be the really critical element in moving forward.”
Pendragon, whose 26 Jaguar dealerships account for a quarter of the brand’s UK new car sales, is included in the carmaker’s focus.
“We enjoy a long association with Pendragon and the test of that is in the way we work together. We have had a very open relationship with regard to both of our brands for many years and Geoff Cousins and John Edwards, our respective managing directors, carry out regular reviews with them on opportunities as well as issues,” said Wright.
“People jump to assumptions about relationships with dealer groups, but at the end of the day, this is something that needs to be managed in an individual way.
“Pendragon has some outlets that turn in very good sales performances, but it has concerns over the performance of some others.
“We share their concerns and will work with them to tackle these on a branch-by-branch basis,” Wright said.
DATED: 22.08.08
FEED: AM
Dealers fined £175,000 by FSA
Five motor retailers have been fined more than £175,000 in total by the Financial Services Authority for serious breaches relating to sales of payment protection insurance (PPI).
GK Group Limited, George White Motors Limited, Ringways Garages (Leeds) Limited, Ringways Garages (Doncaster) Limited and Park’s of Hamilton (Holdings) Limited sold PPI alongside loans for a car or motorbike.
Following investigations at each business, the FSA discovered a number of major issues:
Failing to gather enough information about each customer (including pre-existing medical conditions, existing insurance cover and benefits received from employers), creating the unacceptable risk of unsuitable sales of PPI;
Not monitoring the quality of the advice given by sales staff and to ensure that appropriate sales processes were followed;
And one dealer did not adequately assess whether customers were eligible to claim for benefits from the PPI policies they sold, and another did not assess complaints properly.
Margaret Cole, FSA Director of Enforcement, said: "Motor retailers that sell PPI have to meet the same standards as the rest of the financial services industry.
"All firms selling PPI must treat their customers fairly, including taking proper steps to make sure sales are suitable and customers are eligible to claim on the policy - PPI remains a top priority for the FSA in 2008 and beyond.
"Where we discover PPI failings, we will not hesitate to take tough action and impose higher penalties."
The FSA is committed to helping motor retailers better understand its rules, and is is holding a free roadshow for car and motorcycle traders on Thursday October 2, at the Craiglands Hotel, Ilkley, West Yorkshire.
The event, bookable through the FSA website, will look at the issues of FSA compliance that motor retailers want to know more about.
The Rulings:
Parks of Hamilton
Fined £61,600 for failures which exposed 714 customers to unacceptable risk of buying PPI policies that were not suitable.
The Scottish dealer group encouraged sales staff to sell the highest level of PPI cover available to eligible customers, and marked them down on monitoring checklists if they did not do so, no matter whether the policy was most suitable for the customer;
Sales staff were not required to gather and consider sufficient information about customers’ personal circumstances and needs, such as costs and health conditions, when making recommendations;
Parks of Hamilton did not provide customers with an adequate Statement of Demands and Needs (SODAN) to explain why it had recommended a particular PPI policy;
It failed to give customers a statement of price;
It had ineffective systems to monitor staff, using a purely quantitative check rather than checking the quality of the advice;
When its own monitoring had detected compliance failures, the dealer hadn’t taken adequate remedial action;
Parks of Hamilton did not assess customer complaints in a fair manner, and made unjustified and incorrect claims to complainants who suggested taking the matter to the Financial Ombudsman Service.
The FSA said Parks of Hamilton’s failings are view as particularly serious because the breaches occurred over an extended period, during which it had made changes to monitoring which encouraged staff to sell the most comprehensive cover, despite public reports and guidance by the FSA on the subject of PPI.
GK Group
Fined £51,100 for failures which exposed 734 customers to unacceptable risk of buying PPI policies that were not suitable.
The Chesterfield-based group failed to gather sufficient information about a customer’s circumstances;
Sales staff recommended the most comprehensive level of cover for which the customer was eligible rather than considering the most suitable level of cover for their needs;
GK produced a generic SODAN document which was not individually tailored to the customer, and did not record sufficient relevant information such as pre-existing medical conditions;
It had an inadequate structure and ineffective procedures for monitoring sales and had failed to routinely monitor sales;
It failed to produce sufficient management information to ensure that senior management was aware of risks associated with its regulated business activities;
The FSA said there were several mitigating factors taken into account.
GK proactively suspended sales of PPI and implemented a remediation programme to ensure all customers who have been disadvantaged will receive appropriate redress, without prompting by the FSA.
It had also engaged an external consultant prior to the FSA beginning enforcement action, to review its PPI sales process, and has since revised the process and the SODAN and overhauled staff training.
George White Motors
Fined £28,000 for failures which exposed 282 customers to unacceptable risk of buying PPI policies that were not suitable.
The Swindon-based dealer's SODAN was inadequate and did not demonstrate that eligibility or suitability of regular and single premium PPI policies had been fully assessed of considered;
It failed to ensure that SODANs were always appropriately completed or that recommendations made to customers matched their needs;
In some instances, customers were recommended a regular premium policy but were sold a single premium policy;
The dealer sold PPI without effective monitoring of its sales force, as the controls in place were not sufficiently robust to ensure staff sold PPI fairly;
George White Motors’ monitoring procedures did not identify that customers were at an unacceptable risk of being sold PPI policies that they were ineligible for.
The FSA said there were several mitigating factors taken into account.
After a visit from the FSA, George White Motors amended the wording of its SODAN, held one-to-one conversations with all staff about PPI sales procedures, and appointed an independent training company to supervise all managers responsible for supervising sales staff, and to review 10% of written PPI business each month.
Where the dealer had sold single premium PPI after having recommended regular premium PPI, without advising them of the difference between the policies, it reduced its commission to ensure there was no additional cost to the customer.
Ringways Garages (Leeds) and Ringways Garages (Doncaster)
Fined £35,000 for failures which exposed 445 customers to unacceptable risk of buying PPI policies that were not suitable.
The Yorkshire dealer group's sales staff were not required to gather and consider sufficient information about customers’ personal circumstances when making sales, and its processes consequently did not ensure that its recommendations were suitable;
It did not provide customers with information that set out their needs, nor explain why Ringways was recommending the policy;
Its systems for monitoring staff were ineffective, in failing to identify potentially unsuitable sales; Information provided to Ringways’ management was not sufficient to enable them to identify problems with PPI sales;
Record-keeping was insufficient;
Problems in its sales processes were identified by the FSA, and not by Ringways’ own systems and procedures.
The FSA said there were several mitigating factors taken into account.
Ringways suspended PPI sales, voluntarily changed its FSA permissions and has implemented a remedial action plan.
Its senior management team cooperated fully and willingly with the FSA’s investigation.
DATED: 22.08.08
FEED: AM
GK Group Limited, George White Motors Limited, Ringways Garages (Leeds) Limited, Ringways Garages (Doncaster) Limited and Park’s of Hamilton (Holdings) Limited sold PPI alongside loans for a car or motorbike.
Following investigations at each business, the FSA discovered a number of major issues:
Failing to gather enough information about each customer (including pre-existing medical conditions, existing insurance cover and benefits received from employers), creating the unacceptable risk of unsuitable sales of PPI;
Not monitoring the quality of the advice given by sales staff and to ensure that appropriate sales processes were followed;
And one dealer did not adequately assess whether customers were eligible to claim for benefits from the PPI policies they sold, and another did not assess complaints properly.
Margaret Cole, FSA Director of Enforcement, said: "Motor retailers that sell PPI have to meet the same standards as the rest of the financial services industry.
"All firms selling PPI must treat their customers fairly, including taking proper steps to make sure sales are suitable and customers are eligible to claim on the policy - PPI remains a top priority for the FSA in 2008 and beyond.
"Where we discover PPI failings, we will not hesitate to take tough action and impose higher penalties."
The FSA is committed to helping motor retailers better understand its rules, and is is holding a free roadshow for car and motorcycle traders on Thursday October 2, at the Craiglands Hotel, Ilkley, West Yorkshire.
The event, bookable through the FSA website, will look at the issues of FSA compliance that motor retailers want to know more about.
The Rulings:
Parks of Hamilton
Fined £61,600 for failures which exposed 714 customers to unacceptable risk of buying PPI policies that were not suitable.
The Scottish dealer group encouraged sales staff to sell the highest level of PPI cover available to eligible customers, and marked them down on monitoring checklists if they did not do so, no matter whether the policy was most suitable for the customer;
Sales staff were not required to gather and consider sufficient information about customers’ personal circumstances and needs, such as costs and health conditions, when making recommendations;
Parks of Hamilton did not provide customers with an adequate Statement of Demands and Needs (SODAN) to explain why it had recommended a particular PPI policy;
It failed to give customers a statement of price;
It had ineffective systems to monitor staff, using a purely quantitative check rather than checking the quality of the advice;
When its own monitoring had detected compliance failures, the dealer hadn’t taken adequate remedial action;
Parks of Hamilton did not assess customer complaints in a fair manner, and made unjustified and incorrect claims to complainants who suggested taking the matter to the Financial Ombudsman Service.
The FSA said Parks of Hamilton’s failings are view as particularly serious because the breaches occurred over an extended period, during which it had made changes to monitoring which encouraged staff to sell the most comprehensive cover, despite public reports and guidance by the FSA on the subject of PPI.
GK Group
Fined £51,100 for failures which exposed 734 customers to unacceptable risk of buying PPI policies that were not suitable.
The Chesterfield-based group failed to gather sufficient information about a customer’s circumstances;
Sales staff recommended the most comprehensive level of cover for which the customer was eligible rather than considering the most suitable level of cover for their needs;
GK produced a generic SODAN document which was not individually tailored to the customer, and did not record sufficient relevant information such as pre-existing medical conditions;
It had an inadequate structure and ineffective procedures for monitoring sales and had failed to routinely monitor sales;
It failed to produce sufficient management information to ensure that senior management was aware of risks associated with its regulated business activities;
The FSA said there were several mitigating factors taken into account.
GK proactively suspended sales of PPI and implemented a remediation programme to ensure all customers who have been disadvantaged will receive appropriate redress, without prompting by the FSA.
It had also engaged an external consultant prior to the FSA beginning enforcement action, to review its PPI sales process, and has since revised the process and the SODAN and overhauled staff training.
George White Motors
Fined £28,000 for failures which exposed 282 customers to unacceptable risk of buying PPI policies that were not suitable.
The Swindon-based dealer's SODAN was inadequate and did not demonstrate that eligibility or suitability of regular and single premium PPI policies had been fully assessed of considered;
It failed to ensure that SODANs were always appropriately completed or that recommendations made to customers matched their needs;
In some instances, customers were recommended a regular premium policy but were sold a single premium policy;
The dealer sold PPI without effective monitoring of its sales force, as the controls in place were not sufficiently robust to ensure staff sold PPI fairly;
George White Motors’ monitoring procedures did not identify that customers were at an unacceptable risk of being sold PPI policies that they were ineligible for.
The FSA said there were several mitigating factors taken into account.
After a visit from the FSA, George White Motors amended the wording of its SODAN, held one-to-one conversations with all staff about PPI sales procedures, and appointed an independent training company to supervise all managers responsible for supervising sales staff, and to review 10% of written PPI business each month.
Where the dealer had sold single premium PPI after having recommended regular premium PPI, without advising them of the difference between the policies, it reduced its commission to ensure there was no additional cost to the customer.
Ringways Garages (Leeds) and Ringways Garages (Doncaster)
Fined £35,000 for failures which exposed 445 customers to unacceptable risk of buying PPI policies that were not suitable.
The Yorkshire dealer group's sales staff were not required to gather and consider sufficient information about customers’ personal circumstances when making sales, and its processes consequently did not ensure that its recommendations were suitable;
It did not provide customers with information that set out their needs, nor explain why Ringways was recommending the policy;
Its systems for monitoring staff were ineffective, in failing to identify potentially unsuitable sales; Information provided to Ringways’ management was not sufficient to enable them to identify problems with PPI sales;
Record-keeping was insufficient;
Problems in its sales processes were identified by the FSA, and not by Ringways’ own systems and procedures.
The FSA said there were several mitigating factors taken into account.
Ringways suspended PPI sales, voluntarily changed its FSA permissions and has implemented a remedial action plan.
Its senior management team cooperated fully and willingly with the FSA’s investigation.
DATED: 22.08.08
FEED: AM
Vertu to perform as expected
Vertu Motors management believes the company will perform within expectations at its interim results for the half year ended August 31, despite a challenging used car sector.
The dealer group said "significant used car value depreciation" has had the effect of placing continued pressure on its used car margins.
However, Vertu said its sales volumes for new and used cars still remained ahead of targets on a like for like basis.
Vertu said: "The board believe the trading result for the six months ended August 31, 2008 will be in line with management expectations."
Vertu's interim results will be announced on October 22.
DATED: 22.08.08
FEED: AM
The dealer group said "significant used car value depreciation" has had the effect of placing continued pressure on its used car margins.
However, Vertu said its sales volumes for new and used cars still remained ahead of targets on a like for like basis.
Vertu said: "The board believe the trading result for the six months ended August 31, 2008 will be in line with management expectations."
Vertu's interim results will be announced on October 22.
DATED: 22.08.08
FEED: AM
Pendragon hurt by tough market conditions
Analyst predicts threat of 5p share price
Pendragon is less well equipped than its rivals to cope with the tough market conditions due to its heavy reliance on debt and sales and leaseback deals.
Michael Vassallo, an analyst at stockbroker Brewin Dolphin, said the company’s specific risk outweighed market pressures.
Brewin Dolphin predicted Pendragon’s stock price could drop to 5 pence a share if it announces a poor set of results for the interim period next week.
“We believe Pendragon’s equity has little remaining value,” said Vassallo.
He said the group was “perilously close” to being unable to cover its interest and lease payments with its earnings.
“The company appears to be at the behest of the banks and we expect the dividend to come under significant pressure,” Vassallo said.
Pendragon’s market value dropped ahead of the results announcement.
The dealer group, the largest in the UK with a turnover of £5bn, saw its share price fall 5.5 per cent to 9.2 pence as analysts forecast its profits would be hit by rising fuel costs and weakening used car values.
Brewin Dolphin forecast Pendragon’s pre-tax profit for 2008 could plunge 35 % to £23M
DATED: 22.08.08
FEED: MT
Pendragon is less well equipped than its rivals to cope with the tough market conditions due to its heavy reliance on debt and sales and leaseback deals.
Michael Vassallo, an analyst at stockbroker Brewin Dolphin, said the company’s specific risk outweighed market pressures.
Brewin Dolphin predicted Pendragon’s stock price could drop to 5 pence a share if it announces a poor set of results for the interim period next week.
“We believe Pendragon’s equity has little remaining value,” said Vassallo.
He said the group was “perilously close” to being unable to cover its interest and lease payments with its earnings.
“The company appears to be at the behest of the banks and we expect the dividend to come under significant pressure,” Vassallo said.
Pendragon’s market value dropped ahead of the results announcement.
The dealer group, the largest in the UK with a turnover of £5bn, saw its share price fall 5.5 per cent to 9.2 pence as analysts forecast its profits would be hit by rising fuel costs and weakening used car values.
Brewin Dolphin forecast Pendragon’s pre-tax profit for 2008 could plunge 35 % to £23M
DATED: 22.08.08
FEED: MT
Car owners admit servicing ignorance
Poor consumer knowledge could boost demand for workshops with ATA accredited technicians
Most car owners do not know when their next service is due while only a small percentage carry out the most basic maintenance, according to a new survey.
The findings showed that 52 per cent of private car owners did not know when their next service was due; while just nine per cent admitted they didn't carry out any basic maintenance or safety checks such as monitoring tyre pressures and oil levels between service intervals.
The research, carried out on behalf of the Institute of the Motor Industry's Automotive Technician Accreditation programme, also revealed confusion amongst motorists about the increasing number of standard fit items. When asked about various acronyms, nearly a third of all respondents said they had no idea what EBD (Electronic Brakeforce Distribution), VVT (Variable Valve Timing), TCS (Traction Control System) actually mean.
The advanced technology now included on most cars has also made DIY servicing a thing of the past, with 45 per cent of respondents saying that, unlike their parents' generation, they know next to nothing about maintaining their car.
“Motorists need to get more service savvy now that cars have become so complex,” said Sarah Sillars, chief executive of the IMI.
“This means making sure cars are well looked after at the right time. The ATA scheme recognises technicians who have put their skills on the line voluntarily to show customers they are professionals who you can rely on.
Garages with ATA accredited technicians could be in a position to benefit from increased work following the July launch of the IMI's You're OK with the ATA campaign which aims to raise consumer awareness of the accreditation scheme.
The research was carried out in July amongst a nationally representative sample of 1,338 car owners.
DATED: 22.08.08
FEED: MT
Most car owners do not know when their next service is due while only a small percentage carry out the most basic maintenance, according to a new survey.
The findings showed that 52 per cent of private car owners did not know when their next service was due; while just nine per cent admitted they didn't carry out any basic maintenance or safety checks such as monitoring tyre pressures and oil levels between service intervals.
The research, carried out on behalf of the Institute of the Motor Industry's Automotive Technician Accreditation programme, also revealed confusion amongst motorists about the increasing number of standard fit items. When asked about various acronyms, nearly a third of all respondents said they had no idea what EBD (Electronic Brakeforce Distribution), VVT (Variable Valve Timing), TCS (Traction Control System) actually mean.
The advanced technology now included on most cars has also made DIY servicing a thing of the past, with 45 per cent of respondents saying that, unlike their parents' generation, they know next to nothing about maintaining their car.
“Motorists need to get more service savvy now that cars have become so complex,” said Sarah Sillars, chief executive of the IMI.
“This means making sure cars are well looked after at the right time. The ATA scheme recognises technicians who have put their skills on the line voluntarily to show customers they are professionals who you can rely on.
Garages with ATA accredited technicians could be in a position to benefit from increased work following the July launch of the IMI's You're OK with the ATA campaign which aims to raise consumer awareness of the accreditation scheme.
The research was carried out in July amongst a nationally representative sample of 1,338 car owners.
DATED: 22.08.08
FEED: MT
Thursday, August 21, 2008
Used car prices in downward spiral
Analyst predicts slump ahead of plate-change
Used car residual values look set to weaken further as dealers move to cut down on stock ahead of the September plate-change.
According to Michael Vassallo, an analyst form stockbroker Brewin Dolphin, the used car sector downturn is one of the most “significant market adjustments for years” and has “yet to run its course”.
Vassallo said used values dropped 5 per cent in June compared to May – exceeding a norm of 3 per cent.
He said this represented the steepest fall in the value of three-year-old cars for more than five years.
Prices of executive and 4x4 models plummeted 8 per cent in June – emphasising the waning consumer demand for higher fuel consumption cars.
Used values are historically weakest in the second quarter but Vassallo warned that BCA data suggested the market was unlikely to recover in Q3 this year.
“Unit sales have been largely maintained at levels not too far short of forecasts but this has come at the cost of much lower margins,” he said.
“However, lower margins are seen as a necessary evil to clear ageing stock.”
DATED: 21.08.08
FEED: MT
Used car residual values look set to weaken further as dealers move to cut down on stock ahead of the September plate-change.
According to Michael Vassallo, an analyst form stockbroker Brewin Dolphin, the used car sector downturn is one of the most “significant market adjustments for years” and has “yet to run its course”.
Vassallo said used values dropped 5 per cent in June compared to May – exceeding a norm of 3 per cent.
He said this represented the steepest fall in the value of three-year-old cars for more than five years.
Prices of executive and 4x4 models plummeted 8 per cent in June – emphasising the waning consumer demand for higher fuel consumption cars.
Used values are historically weakest in the second quarter but Vassallo warned that BCA data suggested the market was unlikely to recover in Q3 this year.
“Unit sales have been largely maintained at levels not too far short of forecasts but this has come at the cost of much lower margins,” he said.
“However, lower margins are seen as a necessary evil to clear ageing stock.”
DATED: 21.08.08
FEED: MT
Car dealers face auction house price rises
RMI issues warning over higher selling charges
Car dealers and fleet companies face a significant increase in auction house charges the RMI has warned.
The trade body said auction houses were facing greater economic pressures and were unable to hold selling charges as they have done in recent years.
“The vehicle remarketing industry is a low margin, high turnover business, which is only sustainable from a low cost base,” said Louise Wallis, head of the organisation's Society of Motor Auctions.
“Auctions are an integral and ever-more important part of the distribution chain for used vehicles. Auction charges need to be viable in order to provide the expanding range of services increasingly demanded by both auction buyers and sellers.'
She added that rising energy and business rates, coupled with increased fuel and energy prices, were the primary reasons for the increases.
DATED: 21.08.08
FEED: MT
Car dealers and fleet companies face a significant increase in auction house charges the RMI has warned.
The trade body said auction houses were facing greater economic pressures and were unable to hold selling charges as they have done in recent years.
“The vehicle remarketing industry is a low margin, high turnover business, which is only sustainable from a low cost base,” said Louise Wallis, head of the organisation's Society of Motor Auctions.
“Auctions are an integral and ever-more important part of the distribution chain for used vehicles. Auction charges need to be viable in order to provide the expanding range of services increasingly demanded by both auction buyers and sellers.'
She added that rising energy and business rates, coupled with increased fuel and energy prices, were the primary reasons for the increases.
DATED: 21.08.08
FEED: MT
uSwitch slams car dealer finance
Car buyers set to waste £168m on showroom offers
Buyers of new ‘58’ registration cars on 1 September are set to waste nearly £168m by signing up for car dealer finance, according to a price comparison website.
uSwitch.com has said car buyers could save an average of £826 in interest payments over three years by opting for a personal loan instead of dealership finance.
Simeon Linstead, head of personal finance at uSwitch.com said: “Shopping around for competitive loan before shopping around for the car is essential.”
“Buying a brand new car is a big expense which can be seriously inflated if the financial arrangements are not researched thoroughly.”
“Trusting consumers may think that purchasing a vehicle from a reputable dealer also means they will be offered the most competitive finance deal – but this is certainly not the case.”
Linstead said unsecured personal loans can start from just 7.4 per cent typical APR, 2.77 per cent lower than the average car dealer finance at 10.17 per cent typical APR.
DATED: 21.08.08
FEED: MT
Buyers of new ‘58’ registration cars on 1 September are set to waste nearly £168m by signing up for car dealer finance, according to a price comparison website.
uSwitch.com has said car buyers could save an average of £826 in interest payments over three years by opting for a personal loan instead of dealership finance.
Simeon Linstead, head of personal finance at uSwitch.com said: “Shopping around for competitive loan before shopping around for the car is essential.”
“Buying a brand new car is a big expense which can be seriously inflated if the financial arrangements are not researched thoroughly.”
“Trusting consumers may think that purchasing a vehicle from a reputable dealer also means they will be offered the most competitive finance deal – but this is certainly not the case.”
Linstead said unsecured personal loans can start from just 7.4 per cent typical APR, 2.77 per cent lower than the average car dealer finance at 10.17 per cent typical APR.
DATED: 21.08.08
FEED: MT
Wednesday, August 20, 2008
Alfa rapped for misleading advert
An advert for an Alfa Romeo 147 limited edition variant which emphasised its £13,950 price has been labelled "misleading" by the advertising watchdog for using an image of a higher specified car.
The vehicle shown actually cost £14,450, with an optional ebony coloured roof.
The ASA noted the headline price of £13,950 did not correspond to the car in the accompanying photograph.
Alfa Romeo offered to add the word "from" to the headline price, but the ASA considered that would not go far enough, because the CAP Code for advertising stated that prices quoted should correspond to the vehicles illustrated.
The ASA said: "We acknowledged that the price of the model featured was given in small print at the bottom of the ad but considered that was likely to contradict the impression given by the headline and photograph that the model featured could be purchased for £13,950.
"We told Alfa Romeo to ensure that headline prices were preceded by "from" if they were starting prices for a range, and that quoted prices corresponded to vehicles illustrated.
"We advised them that it would be acceptable to quote both a "from" starting price and the price of the model featured, providing both prices were given equal prominence."
DATED: 20.08.08
FEED: AM
The vehicle shown actually cost £14,450, with an optional ebony coloured roof.
The ASA noted the headline price of £13,950 did not correspond to the car in the accompanying photograph.
Alfa Romeo offered to add the word "from" to the headline price, but the ASA considered that would not go far enough, because the CAP Code for advertising stated that prices quoted should correspond to the vehicles illustrated.
The ASA said: "We acknowledged that the price of the model featured was given in small print at the bottom of the ad but considered that was likely to contradict the impression given by the headline and photograph that the model featured could be purchased for £13,950.
"We told Alfa Romeo to ensure that headline prices were preceded by "from" if they were starting prices for a range, and that quoted prices corresponded to vehicles illustrated.
"We advised them that it would be acceptable to quote both a "from" starting price and the price of the model featured, providing both prices were given equal prominence."
DATED: 20.08.08
FEED: AM
Aston Martin DBS owners to get watch gadget
Aston Martin has created a watch for its DBS owners which will double as a key transponder to lock and unlock the car.
The watch, which will be showcased before the Paris Motor Show on October 3, was designed by Aston and its watch partner Jaeger-LeCoultre.
Only Aston Martin dealerships will be able to authorise the watch to 'read' and communicate with the owner's specific DBS.
Dr Ulrich Bez, chief executive officer of Aston Martin said: “I’m delighted we have been able to premiere this technology in such an elegant solution. It is the first time horology and automotive engineering have been combined in this way.”
The DBS Transponder watch has a miniature transmitter system. As the driver nears the car, all they need do is press the open position on the watch glass to activate the door opening system and press the close position to close the vehicle.
Despite driving the DBS in the next James Bond film Quantum of Solace, Daniel Craig won't be wearing the DBS Transponder watch.
DATED: 20.08.08
FEED: AM
The watch, which will be showcased before the Paris Motor Show on October 3, was designed by Aston and its watch partner Jaeger-LeCoultre.
Only Aston Martin dealerships will be able to authorise the watch to 'read' and communicate with the owner's specific DBS.
Dr Ulrich Bez, chief executive officer of Aston Martin said: “I’m delighted we have been able to premiere this technology in such an elegant solution. It is the first time horology and automotive engineering have been combined in this way.”
The DBS Transponder watch has a miniature transmitter system. As the driver nears the car, all they need do is press the open position on the watch glass to activate the door opening system and press the close position to close the vehicle.
Despite driving the DBS in the next James Bond film Quantum of Solace, Daniel Craig won't be wearing the DBS Transponder watch.
DATED: 20.08.08
FEED: AM
The Economy: We’re Doomed, I tell ye, doomed….
Anyone remember Private James Frazer the eternally pessimistic undertaker from Dads Army? OK, nor do I, but his strapline as above rings lots of bells for the moment, so lets just put this in perspective.
Without a doubt, the western economy is undergoing a substantial correction. The fallout from any market correction is often, but not always, sustained inflationary pressure, economic uncertainty and some job losses.
Right, now lets’ see who is feeding us this information. In the UK the press are doing their job properly. Now you might think that their job is to report the news accurately – sorry, but their job is to attract attention, justify their expense accounts and sell news. Whether that’s newspapers, magazine articles, radio interviews or the telly. At the moment they are doing their jobs very well indeed using the subject of “The Credit Crunch”
At this moment, the Big Banks are suffering financial fallout due to their own greed, and now they are realising their potential losses, they are pulling back from lending money to each other. This makes corporate debt harder to secure, and more expensive. If any business has to pay more for its debt, it has to make more from its sales, by either increasing sales or increasing margins on those sales, or both.
Now its hard to increase sales when the media are using words like 'Recession' regularly, it undermines consumer confidence, they stop buying, which means the only route for businesses to survive is by increasing margins, which means raising prices, which puts up inflation, which the media latch onto as further proof of the 'impending recession', which undermines confidence even further etc etc. The net effect is that newspaper and magazine sales go up, well done to the journos, shame about the economy eh?
In business, there are two types of people, those that listen to the hype and get sucked in, and those that crack on with the job at hand. It is no coincidence that those that crack on, get on, make money and succeed. It is a sad shame that those that get sucked into doom-mongering and down-talking, are usually the ones to go, usually because their sales figures are bad, usually because they have convinced themselves that the situation is hopeless, these are the sales people that are truly 'doomed' in the words of Pte Frazer.
In the abbreviated words of Mr Kipling (the poet, not the cake manufacturer )
“If you can keep your wits about you while all others are losing theirs, and blaming you. The world will be yours and everything in it”.
Wise words, but these are wiser:
“Never look backwards or you'll fall down the stairs”.
So stop worrying about what you can’t change, concentrate your efforts on what you can change, focus on each and every opportunity that comes your way, talk to prospects, listen to them, help them get what they want, and in turn watch what happens to your sales and profitability.
DATED: 20.08.08
FEED: PTL
Without a doubt, the western economy is undergoing a substantial correction. The fallout from any market correction is often, but not always, sustained inflationary pressure, economic uncertainty and some job losses.
Right, now lets’ see who is feeding us this information. In the UK the press are doing their job properly. Now you might think that their job is to report the news accurately – sorry, but their job is to attract attention, justify their expense accounts and sell news. Whether that’s newspapers, magazine articles, radio interviews or the telly. At the moment they are doing their jobs very well indeed using the subject of “The Credit Crunch”
At this moment, the Big Banks are suffering financial fallout due to their own greed, and now they are realising their potential losses, they are pulling back from lending money to each other. This makes corporate debt harder to secure, and more expensive. If any business has to pay more for its debt, it has to make more from its sales, by either increasing sales or increasing margins on those sales, or both.
Now its hard to increase sales when the media are using words like 'Recession' regularly, it undermines consumer confidence, they stop buying, which means the only route for businesses to survive is by increasing margins, which means raising prices, which puts up inflation, which the media latch onto as further proof of the 'impending recession', which undermines confidence even further etc etc. The net effect is that newspaper and magazine sales go up, well done to the journos, shame about the economy eh?
In business, there are two types of people, those that listen to the hype and get sucked in, and those that crack on with the job at hand. It is no coincidence that those that crack on, get on, make money and succeed. It is a sad shame that those that get sucked into doom-mongering and down-talking, are usually the ones to go, usually because their sales figures are bad, usually because they have convinced themselves that the situation is hopeless, these are the sales people that are truly 'doomed' in the words of Pte Frazer.
In the abbreviated words of Mr Kipling (the poet, not the cake manufacturer )
“If you can keep your wits about you while all others are losing theirs, and blaming you. The world will be yours and everything in it”.
Wise words, but these are wiser:
“Never look backwards or you'll fall down the stairs”.
So stop worrying about what you can’t change, concentrate your efforts on what you can change, focus on each and every opportunity that comes your way, talk to prospects, listen to them, help them get what they want, and in turn watch what happens to your sales and profitability.
DATED: 20.08.08
FEED: PTL
Finance Conversion Tips
OK, so you’ve read the headline story, but how to put that into practice?
First off, if you have any doubts, fears or concerns about asking customers how they are going to fund their car purchase, then you have a problem. To get over this hurdle, remember that after a house purchase, this is typically the second biggest, and some would argue most emotive financial transaction that your customer will undertake, and the customer needs to have confidence in your ability to help them.
If your customer was buying a house, the first sensible question they will be asked is “have you got the money?” The question is the same for all other substantial purchases, caravan, motorhome, boat, briefcase full of illegal substances ( so I am led to believe anyway…).
So, short of doing a Jerry Maguire and shouting “Show me the money” at your prospects, remember why you took a job in sales in the first place. Spend a little time building that rapport, be confident, and then become their money doctor. Like any doctor, you need to see the problem before you prescribe a solution, but in this case you have a head start, you already know the problem – they want to change their car and they will need money to do it.
Ask the customer how they intend to fund the balance, and from now on in the conversation avoid all jargon and Three letter abbreviations (TLA’s) like the plague.
Ask the customer if they know about the Consumer Credit Act, and whether they would like the protection it offers. Tell them about Data Protection, and how your funding options give them full coverage, so their private information stays that way.
Explain what you can offer, the downsides, and the upsides of the products you have in your toolbox, and don’t be afraid to discuss insurance from the outset. So many customers are lost to the direct lenders because “ I can get payment insurance with the Bank”.
Confirm with them that your rate is fixed, no matter what happens to rates in the next few years, and at any time if they want to settle early, then they have the benefit of law demanding they get a rebate of charges yet to be paid on the agreement.
Finally, before you rush headlong into all of that, grab hold of your finance reps and rattle them for information on the other products you have access to, but don’t currently use. I have a dealer client who sells used cars only, currently enjoying a 54% finance pen, but almost 80% of all cases are leases, the reason why? He now understands the product, which has one key feature for him in particular – no APR on the doc.
If you or your team would like to know more, get in touch, we would be delighted to help you lift your finance pen. And your profitability.
DATED: 20.08.08
FEED: PTL
First off, if you have any doubts, fears or concerns about asking customers how they are going to fund their car purchase, then you have a problem. To get over this hurdle, remember that after a house purchase, this is typically the second biggest, and some would argue most emotive financial transaction that your customer will undertake, and the customer needs to have confidence in your ability to help them.
If your customer was buying a house, the first sensible question they will be asked is “have you got the money?” The question is the same for all other substantial purchases, caravan, motorhome, boat, briefcase full of illegal substances ( so I am led to believe anyway…).
So, short of doing a Jerry Maguire and shouting “Show me the money” at your prospects, remember why you took a job in sales in the first place. Spend a little time building that rapport, be confident, and then become their money doctor. Like any doctor, you need to see the problem before you prescribe a solution, but in this case you have a head start, you already know the problem – they want to change their car and they will need money to do it.
Ask the customer how they intend to fund the balance, and from now on in the conversation avoid all jargon and Three letter abbreviations (TLA’s) like the plague.
Ask the customer if they know about the Consumer Credit Act, and whether they would like the protection it offers. Tell them about Data Protection, and how your funding options give them full coverage, so their private information stays that way.
Explain what you can offer, the downsides, and the upsides of the products you have in your toolbox, and don’t be afraid to discuss insurance from the outset. So many customers are lost to the direct lenders because “ I can get payment insurance with the Bank”.
Confirm with them that your rate is fixed, no matter what happens to rates in the next few years, and at any time if they want to settle early, then they have the benefit of law demanding they get a rebate of charges yet to be paid on the agreement.
Finally, before you rush headlong into all of that, grab hold of your finance reps and rattle them for information on the other products you have access to, but don’t currently use. I have a dealer client who sells used cars only, currently enjoying a 54% finance pen, but almost 80% of all cases are leases, the reason why? He now understands the product, which has one key feature for him in particular – no APR on the doc.
If you or your team would like to know more, get in touch, we would be delighted to help you lift your finance pen. And your profitability.
DATED: 20.08.08
FEED: PTL
Rate for Risk
1998. Personal lenders such as Egg and First Direct incepted a policy of ‘rate for risk’, the impact to the retail car buyer was fairly substantial. This policy, ratified by the OFT, bent the rules of the Consumer Credit Act to almost breaking point in relation to advertising of personal loan rates and terms, and it didn’t take too long for the big banking names to follow suit.
The lenders could advertise their ‘best rate’, which would be used in all their hard and soft copy marketing. Customers, on application would be told that their loan had been agreed, but with a slightly higher repayment based on a rate for risk lending policy.
Customers, feeling obliged to continue after the application process and loan approval, and not wanting to ‘jeopardise their relationship with the bank’, would roll over and accept the rate chip without question. Often the revised rate would not be conveyed to the customer until the ‘documentation’ arrived a few days after the balance had been spent or committed. Clever.
Thus began a rate war which we in the Motor Trade could not begin to compete with, due to our doc. fees, admin fees, option to purchase fees, retrospective Volume Bonuses and a whole host of other financial knobs and twiddly bits.
The Direct Lenders have had it away for almost a decade, but now it is time we took that business back. Rate for risk pricing is still around, but lenders operating under the new regime of compliant reporting have to advertise a fair market rate, blended from a sample of deals written within a specified period. This mechanism is far from perfect, but the OFT has had enough and is clamping down on what it sees as unfair market manipulation.
The FSA is also taking a keen interest in some of these practices, under the basic tenet of ‘treating customers fairly’, and I expect there will be an announcement of a hefty fine of a large operator in this field to come soon.
So where does this leave us? Well, we still can’t truly compete in an APR war, but the customer is with you so far, so ask the questions that count, be interested in them, listen to their answers, and be prepared to be tenacious.
During a mystery shopping exercise recently undertaken for an FSA authorised dealer group, I found that the sales process for moving the metal was superb, but as soon as we got on to the financial aspects, all the good work went into meltdown. The results were as follows;
Cars Bought – 16
F&I Offered – 7
F&I asked for – 9
HP offered – 16 (eventually)
PCP offered – 2
Leasing discussed - 0
Insurances offered – 0*
*Gap, CPI, MBi, Motor
OK, so this doesn’t look too bad on the surface, but of the 7 that offered Finance to me for the purchase, 4 of those offered it almost apologetically, and two of those actually told me that the Banks would be cheaper!
If I went to see my GP for some ailment, and without any discussion or qualification on her behalf she wrote me a prescription for penicillin, I would have little faith in her abilities – but this is almost exactly what we do for a high proportion of our customers when it comes to selecting and quoting funding products.
We have so many tools in our toolbox to offer to customers, not just HP. Customers buy from us because we are specialists in our industry, but we still need to prove our expertise. We need to understand the products we sell, and the process behind those products. If we prove ourselves as knowledgeable, and we use all the funding products we have at our disposal, then our customers have faith and confidence in our words and recommendations, the process to buy becomes much easier, and retained deal profit is exactly that, retained.
If you would like some help for your sales teams to make the most of the current market conditions, please drop us an email, or give us a call, we would be delighted to help you reduce the big Banks net profits a little.
DATED: 20.08.08
FEED: PTL
The lenders could advertise their ‘best rate’, which would be used in all their hard and soft copy marketing. Customers, on application would be told that their loan had been agreed, but with a slightly higher repayment based on a rate for risk lending policy.
Customers, feeling obliged to continue after the application process and loan approval, and not wanting to ‘jeopardise their relationship with the bank’, would roll over and accept the rate chip without question. Often the revised rate would not be conveyed to the customer until the ‘documentation’ arrived a few days after the balance had been spent or committed. Clever.
Thus began a rate war which we in the Motor Trade could not begin to compete with, due to our doc. fees, admin fees, option to purchase fees, retrospective Volume Bonuses and a whole host of other financial knobs and twiddly bits.
The Direct Lenders have had it away for almost a decade, but now it is time we took that business back. Rate for risk pricing is still around, but lenders operating under the new regime of compliant reporting have to advertise a fair market rate, blended from a sample of deals written within a specified period. This mechanism is far from perfect, but the OFT has had enough and is clamping down on what it sees as unfair market manipulation.
The FSA is also taking a keen interest in some of these practices, under the basic tenet of ‘treating customers fairly’, and I expect there will be an announcement of a hefty fine of a large operator in this field to come soon.
So where does this leave us? Well, we still can’t truly compete in an APR war, but the customer is with you so far, so ask the questions that count, be interested in them, listen to their answers, and be prepared to be tenacious.
During a mystery shopping exercise recently undertaken for an FSA authorised dealer group, I found that the sales process for moving the metal was superb, but as soon as we got on to the financial aspects, all the good work went into meltdown. The results were as follows;
Cars Bought – 16
F&I Offered – 7
F&I asked for – 9
HP offered – 16 (eventually)
PCP offered – 2
Leasing discussed - 0
Insurances offered – 0*
*Gap, CPI, MBi, Motor
OK, so this doesn’t look too bad on the surface, but of the 7 that offered Finance to me for the purchase, 4 of those offered it almost apologetically, and two of those actually told me that the Banks would be cheaper!
If I went to see my GP for some ailment, and without any discussion or qualification on her behalf she wrote me a prescription for penicillin, I would have little faith in her abilities – but this is almost exactly what we do for a high proportion of our customers when it comes to selecting and quoting funding products.
We have so many tools in our toolbox to offer to customers, not just HP. Customers buy from us because we are specialists in our industry, but we still need to prove our expertise. We need to understand the products we sell, and the process behind those products. If we prove ourselves as knowledgeable, and we use all the funding products we have at our disposal, then our customers have faith and confidence in our words and recommendations, the process to buy becomes much easier, and retained deal profit is exactly that, retained.
If you would like some help for your sales teams to make the most of the current market conditions, please drop us an email, or give us a call, we would be delighted to help you reduce the big Banks net profits a little.
DATED: 20.08.08
FEED: PTL
Tuesday, August 19, 2008
Higher acceptance rates are a benefit
Like its television namesake, The Cooke report is a no-nonsense hard-hitting piece of research.
While it leaves dealers in no doubt about the severity of current trends, it also suggests that real profit opportunities exist with F&I in the future.
New rate-for-risk products could increase profits and should help to increase finance acceptance rates, securing more vehicle sales.
The twin approach of a rate for risk pricing model and dealers ensuring that every single customer is offered finance is the basis for this future confidence.
Certainly, the ongoing fall in finance penetration should have all concerned.
The current economic downturn means fewer sales so it’s even more critical that dealers maximise the income from every opportunity – that’s why finance should be discussed with each customer.
The current credit crunch scenario means customers now have fewer low-cost loans to choose from and they are possibly more open to accept higher rates.
Black Horse firmly believes that point-of-sale finance needs to follow other lending institutions and take a risk-based approach to selling its products.
Overall, when finance houses enjoyed higher margins it wasn’t such a concern that some cases were unprofitable.
But as margins come under pressure it makes no sense to accept loss-makers.
As a result Black Horse has piloted a risk-based pricing approach which has seen a significant level of incremental risk-based business captured, giving dealers higher acceptance rates and profit and a return for the finance house.
Ask yourself which direction you are going to take and consider these options.
DATED: 19.08.08
FEED: AM
While it leaves dealers in no doubt about the severity of current trends, it also suggests that real profit opportunities exist with F&I in the future.
New rate-for-risk products could increase profits and should help to increase finance acceptance rates, securing more vehicle sales.
The twin approach of a rate for risk pricing model and dealers ensuring that every single customer is offered finance is the basis for this future confidence.
Certainly, the ongoing fall in finance penetration should have all concerned.
The current economic downturn means fewer sales so it’s even more critical that dealers maximise the income from every opportunity – that’s why finance should be discussed with each customer.
The current credit crunch scenario means customers now have fewer low-cost loans to choose from and they are possibly more open to accept higher rates.
Black Horse firmly believes that point-of-sale finance needs to follow other lending institutions and take a risk-based approach to selling its products.
Overall, when finance houses enjoyed higher margins it wasn’t such a concern that some cases were unprofitable.
But as margins come under pressure it makes no sense to accept loss-makers.
As a result Black Horse has piloted a risk-based pricing approach which has seen a significant level of incremental risk-based business captured, giving dealers higher acceptance rates and profit and a return for the finance house.
Ask yourself which direction you are going to take and consider these options.
DATED: 19.08.08
FEED: AM
BMW and Jaguar push training standard
BMW, Jaguar Land Rover and Scania are pioneering efforts to develop a UK-wide quality standard for training in the motor industry.
All three manufacturers along with Thatcham’s accident repair research centre recently received the new national Training Quality Standard (TQS) from skills minister David Lammy, at its launch.
Bristol-based S & B Automotive Academy has since also achieved the standard.
TQS has been introduced to recognise the best organisations delivering training and development to employers and customers.
Dr Adrian Birch, technical training delivery manager at Jaguar Land Rover technical academy, said the assessment process was “very robust”.
He added: “It is too easy to continue what you are doing and assume that it is the right thing to do without an external measure.”
DATED: 19.08.08
FEED: AM
All three manufacturers along with Thatcham’s accident repair research centre recently received the new national Training Quality Standard (TQS) from skills minister David Lammy, at its launch.
Bristol-based S & B Automotive Academy has since also achieved the standard.
TQS has been introduced to recognise the best organisations delivering training and development to employers and customers.
Dr Adrian Birch, technical training delivery manager at Jaguar Land Rover technical academy, said the assessment process was “very robust”.
He added: “It is too easy to continue what you are doing and assume that it is the right thing to do without an external measure.”
DATED: 19.08.08
FEED: AM
POS finance must adopt ‘third way’
Fundamental rethinking of point-of-sale motor finance is needed so that dealers can reclaim their lost independence, says Peter Cooke, University of Buckingham professor of automotive management, in a comprehensive study published this month.
Prof Cooke goes further in his review of the reasons for the decline in POS finance, brought about mainly by the growth and aggressive promotion of alternative methods of funding.
In the report, commissioned by Black Horse Finance, he says: “There is also a real risk that finance may increasingly come under the direct control of the car manufacturers’ finance houses, with their objective of selling their own cars, and of banks and building societies, where the agenda is lending finance rather than tailoring a loan to satisfy a would-be car buyer’s exact requirements.”
This is why Prof Cooke calls for the retail motor industry to have a total review of the way it sells POS finance and the structure of the teams selling it.
He thinks it is possible for POS to become a preferred first choice of finance method once more, rather than it being offered as a “reactive product of last resort”.
One of Prof Cooke’s radical conclusions is that finance rates should be focused on ability of the lender to repay the loan, rather than the age of the car.
He reckons the historic ‘one size fits all’ approach is fundamentally flawed.
Prof Cooke writes: “The future success of the rejuvenated finance process now rests firmly but equally with dealers, their sales force and the POS finance sector.
“In the same way that POS finance providers have been through a fund- amental rethink, there is a need for dealers, and dealer sales consultants, to adopt a new and positive mindset.”
He wants POS put “firmly alongside alternatives in terms of rates and customers’ needs”. The company car, he says, has become a financial services product in the way it is financed.
“The private car is moving the same way and POS finance can be a catalyst in that change, creating a ‘third way’ for finance with the real possibility of being the ‘first choice’,” he says.
Historically, POS finance has had “an unjustifiably poor image” and has been seen by many buyers as uncompetitive. This, he says, must change.
DATED: 19.08.08
FEED: AM
Prof Cooke goes further in his review of the reasons for the decline in POS finance, brought about mainly by the growth and aggressive promotion of alternative methods of funding.
In the report, commissioned by Black Horse Finance, he says: “There is also a real risk that finance may increasingly come under the direct control of the car manufacturers’ finance houses, with their objective of selling their own cars, and of banks and building societies, where the agenda is lending finance rather than tailoring a loan to satisfy a would-be car buyer’s exact requirements.”
This is why Prof Cooke calls for the retail motor industry to have a total review of the way it sells POS finance and the structure of the teams selling it.
He thinks it is possible for POS to become a preferred first choice of finance method once more, rather than it being offered as a “reactive product of last resort”.
One of Prof Cooke’s radical conclusions is that finance rates should be focused on ability of the lender to repay the loan, rather than the age of the car.
He reckons the historic ‘one size fits all’ approach is fundamentally flawed.
Prof Cooke writes: “The future success of the rejuvenated finance process now rests firmly but equally with dealers, their sales force and the POS finance sector.
“In the same way that POS finance providers have been through a fund- amental rethink, there is a need for dealers, and dealer sales consultants, to adopt a new and positive mindset.”
He wants POS put “firmly alongside alternatives in terms of rates and customers’ needs”. The company car, he says, has become a financial services product in the way it is financed.
“The private car is moving the same way and POS finance can be a catalyst in that change, creating a ‘third way’ for finance with the real possibility of being the ‘first choice’,” he says.
Historically, POS finance has had “an unjustifiably poor image” and has been seen by many buyers as uncompetitive. This, he says, must change.
DATED: 19.08.08
FEED: AM
Carmakers axe new launch plans
Credit crunch hits the launch of new products
Economic constraints are forcing carmakers to cut back on plans to launch new models.
Renault, BMW and Vauxhall are among those to have delayed introducing new products to market because of the credit crunch, according to Automotive News Europe.
It claimed Renault had axed plans to build a Megane-based crossover and delayed work on a replacement for the Espace MPV and a new flagship to replace the Vel Satis.
General Motors Europe has paused plans to introduce a range topping Opel/Vauxhall model and is reconsidering the production of a small SUV and BMW has reportedly dropped plans to launch its Range Rover rival, the X7 SUV.
Speculation has also surfaced that Volvo has shelved plans to extend its C30 line-up.The production slowdown is in sharp contrast to the trend in recent years when record numbers of new models have come to market.
Eurotaxglass’s said the number of model derivatives available in the UK increased from 4,000 to 7,000 between 2000 to 2008.
New car launches are crucial to manufacturers in driving up sales. Toyota has blamed a lack of new product for a fall in its sales in Europe this year.
In the UK the brand’s new sales were down 7 per cent to 69,000 in the year to the end of July.
DATED: 19.08.08
FEED: MT
Economic constraints are forcing carmakers to cut back on plans to launch new models.
Renault, BMW and Vauxhall are among those to have delayed introducing new products to market because of the credit crunch, according to Automotive News Europe.
It claimed Renault had axed plans to build a Megane-based crossover and delayed work on a replacement for the Espace MPV and a new flagship to replace the Vel Satis.
General Motors Europe has paused plans to introduce a range topping Opel/Vauxhall model and is reconsidering the production of a small SUV and BMW has reportedly dropped plans to launch its Range Rover rival, the X7 SUV.
Speculation has also surfaced that Volvo has shelved plans to extend its C30 line-up.The production slowdown is in sharp contrast to the trend in recent years when record numbers of new models have come to market.
Eurotaxglass’s said the number of model derivatives available in the UK increased from 4,000 to 7,000 between 2000 to 2008.
New car launches are crucial to manufacturers in driving up sales. Toyota has blamed a lack of new product for a fall in its sales in Europe this year.
In the UK the brand’s new sales were down 7 per cent to 69,000 in the year to the end of July.
DATED: 19.08.08
FEED: MT
European new car sales suffer from economic uncertainty
Volumes slide 5.3 per cent in July
Economic uncertainty across Europe is continuing to influence the new car market.
Registrations in July fell 5.3 per cent year-on-year to almost 1.26 million units and are now 2.5 per cent down over the year-to-date at 9.46 million sales, according to latest industry sales figures from Jato.
While sales in the mature European markets slowed, volumes in the emerging regions in central and eastern Europe remained robust.
Nasir Shah, global business development director at Jato, said: “Most countries are feeling the pinch as a combination of high fuel prices and economic uncertainty across Europe filter down to the consumer.
“Yet while markets including the UK and Spain show negative growth, Central and Eastern Europe has reported healthy sales virtually across the board.
“There is cause for optimism in Western Europe as well as new models defy overall trends by posting healthy sales.”
Volkswagen was again Europe’s bestselling brand in July, followed by Ford, Opel/Vauxhall, Renault and Peugeot.
The German carmaker was also top in the bestellers list with the Golf, which racked up sales of almost 40,000 units.
The Peugeot 207 was second, followed by the Ford Focus and the Vauxhall Astra and Corsa.
DATED: 19.08.08
FEED: MT
Economic uncertainty across Europe is continuing to influence the new car market.
Registrations in July fell 5.3 per cent year-on-year to almost 1.26 million units and are now 2.5 per cent down over the year-to-date at 9.46 million sales, according to latest industry sales figures from Jato.
While sales in the mature European markets slowed, volumes in the emerging regions in central and eastern Europe remained robust.
Nasir Shah, global business development director at Jato, said: “Most countries are feeling the pinch as a combination of high fuel prices and economic uncertainty across Europe filter down to the consumer.
“Yet while markets including the UK and Spain show negative growth, Central and Eastern Europe has reported healthy sales virtually across the board.
“There is cause for optimism in Western Europe as well as new models defy overall trends by posting healthy sales.”
Volkswagen was again Europe’s bestselling brand in July, followed by Ford, Opel/Vauxhall, Renault and Peugeot.
The German carmaker was also top in the bestellers list with the Golf, which racked up sales of almost 40,000 units.
The Peugeot 207 was second, followed by the Ford Focus and the Vauxhall Astra and Corsa.
DATED: 19.08.08
FEED: MT
Dodge Journey hits UK showrooms
Updated model goes on sale this month
Dodge has confirmed that its new Journey people carrier will arrive in UK showrooms later this month.
Prices will start from £16,995, which the carmaker claims offers 10 per cent better value than key competitors when comparing similarly equipped models.
The new model comes with a choice of a 2.4-litre petrol engine or a 2.0-litre diesel engine and features split 2+5 seating.
Federico Goretti, managing director of Chrysler UK, said: “The Dodge Journey is aimed at families that need the functionality and utility of an MPV but don't want the look of a traditional people carrier.”
DATED: 19.08.08
FEED: MT
Dodge has confirmed that its new Journey people carrier will arrive in UK showrooms later this month.
Prices will start from £16,995, which the carmaker claims offers 10 per cent better value than key competitors when comparing similarly equipped models.
The new model comes with a choice of a 2.4-litre petrol engine or a 2.0-litre diesel engine and features split 2+5 seating.
Federico Goretti, managing director of Chrysler UK, said: “The Dodge Journey is aimed at families that need the functionality and utility of an MPV but don't want the look of a traditional people carrier.”
DATED: 19.08.08
FEED: MT
Spotlight on schools
The IMI is introducing a car launch competition for school students in September this year.
While many initiatives have targeted young people interested in the more technical side of the motor trade, Headlight is aimed at those looking into the business side.
Students aged 14-16 will be teamed up with dealers in their local areas and asked to design a theoretical launch programme for a new car.
They will have to come up with a name for the vehicle, a target audience and ideas for the launch itself.
So far Headlight has signed up Sytner, Arnold Clark and Trainer BMW to the initiative.
Fiona Fraser Bell, who is heading up the development of the programme within the IMI, said: “We want the students to understand how a dealership works.
“We also hope the programme will get young people who haven’t thought of a career in the motor industry interested in that possibility.”
Organisers hope winners of Headlight will be rewarded with a dealer-sponsored trip to a manufacturing plant in Europe or one of the European motor shows.
“That would be great because they could see a launch on a global scale,” said Fraser Bell.
DATED: 19.08.08
FEED: MT
While many initiatives have targeted young people interested in the more technical side of the motor trade, Headlight is aimed at those looking into the business side.
Students aged 14-16 will be teamed up with dealers in their local areas and asked to design a theoretical launch programme for a new car.
They will have to come up with a name for the vehicle, a target audience and ideas for the launch itself.
So far Headlight has signed up Sytner, Arnold Clark and Trainer BMW to the initiative.
Fiona Fraser Bell, who is heading up the development of the programme within the IMI, said: “We want the students to understand how a dealership works.
“We also hope the programme will get young people who haven’t thought of a career in the motor industry interested in that possibility.”
Organisers hope winners of Headlight will be rewarded with a dealer-sponsored trip to a manufacturing plant in Europe or one of the European motor shows.
“That would be great because they could see a launch on a global scale,” said Fraser Bell.
DATED: 19.08.08
FEED: MT
Hammonds signs up with IM Group
Hammond Group has taken on IM Group's Subaru and Daihatsu franchises at a new dealership in Halesworth following the closure of John Grose’s Subaru site in Ipswich.
AM revealed in May that John Grose disposed of its Subaru and Isuzu business due to lack of demand, after only selling 50 Subarus in a year.
Subaru said it is now "well ahead" of its goal to reach 100 dealers in the UK, with 11 new appointments so far this year and a further eight potential representatives in the pipeline, which would take its total network to 88.
Daihatsu has added eight new dealers this year which takes its network to 103 and wants to reach a maximum of 140. IM Group says it has 16 potential new dealers waiting to sign up with Daihatsu.
Derek Hammond, managing director, Hammond Group, said: "We believe we are opening the business from a position of strength.
"Our revamped website will be up and running by the end of the year and will encompass the new brands, plus on-line parts shops."
Hammond already sells Isuzu, also an IM Group brand, plus Ford, Land Rover and Nissan.
DATED: 19.08.08
FEED: AM
AM revealed in May that John Grose disposed of its Subaru and Isuzu business due to lack of demand, after only selling 50 Subarus in a year.
Subaru said it is now "well ahead" of its goal to reach 100 dealers in the UK, with 11 new appointments so far this year and a further eight potential representatives in the pipeline, which would take its total network to 88.
Daihatsu has added eight new dealers this year which takes its network to 103 and wants to reach a maximum of 140. IM Group says it has 16 potential new dealers waiting to sign up with Daihatsu.
Derek Hammond, managing director, Hammond Group, said: "We believe we are opening the business from a position of strength.
"Our revamped website will be up and running by the end of the year and will encompass the new brands, plus on-line parts shops."
Hammond already sells Isuzu, also an IM Group brand, plus Ford, Land Rover and Nissan.
DATED: 19.08.08
FEED: AM
Infiniti reveals luxury convertible
Infiniti has revealed the first pictures of its G37 convertible which will be launched early next year.
Based on the G37 coupé, the G37 convertible will feature a three-piece automatic retracting hardtop.
So far sales are confirmed just for the US but the model could make it over to the UK if Infiniti takes off over here.
Infiniti will launch across Europe with new dealerships in October. The UK launch won't be until April next year, with four points of sale shared between five or six partners, with one holding more sites than the rest.
DATED: 19.08.08
FEED: AM
Based on the G37 coupé, the G37 convertible will feature a three-piece automatic retracting hardtop.
So far sales are confirmed just for the US but the model could make it over to the UK if Infiniti takes off over here.
Infiniti will launch across Europe with new dealerships in October. The UK launch won't be until April next year, with four points of sale shared between five or six partners, with one holding more sites than the rest.
DATED: 19.08.08
FEED: AM
GM’s Volt to be badged as Vauxhall in UK
General Motors is planning to rebadged its battery powered Chevrolet Volt as Vauxhall in the UK.
The report come from the Financial Times, which also said the Volt will be rebadged as an Opel in European markets.
Almost 37,000 people worldwide have already shown an interest in buying the electric powered Volt when it becomes available in 2010.
The figure doesn't come from General Motors but from New York neurologist and electric car enthusiast Lyle Dennis.
Dennis has a website - www.gm-volt.com - where prospective Volt buyers can register.
California, Florida, Michigan and Texas boast the highest number of interested buyers but the list also includes people from 46 countries outside the US.
There is a problem, though. The average price buyers are willing to pay for the Volt is $31,261 (£16,800). GM reckons it will cost about $40,000 (£21,430) to build the Volt which is equipped with a lithium-ion battery pack.
The Volt will run for 40 miles on a single charge and can be recharged at a standard power outlet. It will also capture energy from braking, like a conventional hybrid, and feature an on-board engine that will be used to power the battery on longer trips.
DATED: 19.08.08
FEED: AM
The report come from the Financial Times, which also said the Volt will be rebadged as an Opel in European markets.
Almost 37,000 people worldwide have already shown an interest in buying the electric powered Volt when it becomes available in 2010.
The figure doesn't come from General Motors but from New York neurologist and electric car enthusiast Lyle Dennis.
Dennis has a website - www.gm-volt.com - where prospective Volt buyers can register.
California, Florida, Michigan and Texas boast the highest number of interested buyers but the list also includes people from 46 countries outside the US.
There is a problem, though. The average price buyers are willing to pay for the Volt is $31,261 (£16,800). GM reckons it will cost about $40,000 (£21,430) to build the Volt which is equipped with a lithium-ion battery pack.
The Volt will run for 40 miles on a single charge and can be recharged at a standard power outlet. It will also capture energy from braking, like a conventional hybrid, and feature an on-board engine that will be used to power the battery on longer trips.
DATED: 19.08.08
FEED: AM
LPG cars are 'hot property'
LPG is booming - that's the word from both car dealers and LPG convertors, according to Car Dealer Magazine. One convertor claimed a tenfold increase in enquiries, and a quadrupling of sales, while dealers are claiming that LPG cars are hot property at the moment with one saying: "It's the only thing that's really shifting." Vehicle auction giant BCA recently reported a groundswell of interest in alternative fuelled vehicles with strong prices being paid at sales. So what's causing it? Fuel prices. Motorists converting their cars from petrol to LPG can save up to 60p per litre, claim Autogas. LPG currently costs 51% less than petrol - and 56% less than diesel. It represents quite a turnaround for the LPG car, which spent a few morose years in the doldrums following the Government's decision to end grants under its PowerShift programme. The publication commented: "It's certainly an area you should be investigating. You can either join the rush for the few LPG cars at auctions - or consider converting models yourself, with the help of a specialist. This generally costs £1,800 to customers, but we're sure you can strike a deal with a local convertor (approved, of course; customers are wary of non-approved conversions)." There are now over 1,400 refuelling sites across the UK.
DATED: 19.08.08
FEED: AW
DATED: 19.08.08
FEED: AW
Monday, August 18, 2008
General Motors will bring the Volt to Europe
Electric car could arrive in 2010
General Motors is planning to bring its Chevrolet Volt to Europe and will rebadge the electric car as an Opel.
A production version of the Volt is due to come out in America 2010 and GM has said a follow-up version will head for sale in Europe.
A production version of the Volt is due to come out in America 2010 and GM has said a follow-up version will head for sale in Europe.
The Volt’s lithium-ion battery will have a range of at least 40 miles and a minimum life of 10 years.
The American carmaker’s rival, Toyota, also plans to unveil a plug-in car in 2010.
DATED: 18.08.08
FEED: MT
General Motors is planning to bring its Chevrolet Volt to Europe and will rebadge the electric car as an Opel.
A production version of the Volt is due to come out in America 2010 and GM has said a follow-up version will head for sale in Europe.
A production version of the Volt is due to come out in America 2010 and GM has said a follow-up version will head for sale in Europe.
The Volt’s lithium-ion battery will have a range of at least 40 miles and a minimum life of 10 years.
The American carmaker’s rival, Toyota, also plans to unveil a plug-in car in 2010.
DATED: 18.08.08
FEED: MT
Used car market continues to suffer
Small car sector bucks downward price trend
Values of larger, less fuel-efficient cars have continued to fall as drivers opt for smaller vehicles with lower running costs.
According to EurotaxGlass's, the value of vehicles subject to higher road tax and fuel costs have fallen by as much as 8 per cent in a single month this summer.
“The current economic climate has accelerated a trend of downsizing in all but the smallest used car segments,” said Adrian Rushmore, managing editor at EurotaxGlass's.
“Dealers have reported that significant numbers of customers feel coerced into a change of car because their current mode of transport had become a financial drain on their incomes.
“Others were opting for a change because they feared that the major costs of fuel and VED would become a greater financial burden in the short to medium term.”
Rushmore said the desire to downsize has come as a mixed blessing for dealers.
“With demand across the used car market as a whole continuing to ease back, it is some small consolation to retailers that the current economic turmoil is at least driving sales of smaller models,” he said.
DATED: 18.08.08
FEED: MT
Values of larger, less fuel-efficient cars have continued to fall as drivers opt for smaller vehicles with lower running costs.
According to EurotaxGlass's, the value of vehicles subject to higher road tax and fuel costs have fallen by as much as 8 per cent in a single month this summer.
“The current economic climate has accelerated a trend of downsizing in all but the smallest used car segments,” said Adrian Rushmore, managing editor at EurotaxGlass's.
“Dealers have reported that significant numbers of customers feel coerced into a change of car because their current mode of transport had become a financial drain on their incomes.
“Others were opting for a change because they feared that the major costs of fuel and VED would become a greater financial burden in the short to medium term.”
Rushmore said the desire to downsize has come as a mixed blessing for dealers.
“With demand across the used car market as a whole continuing to ease back, it is some small consolation to retailers that the current economic turmoil is at least driving sales of smaller models,” he said.
DATED: 18.08.08
FEED: MT
NFDA lobbies for BER renewal
Trade body wants to retain key elements in 2010
The RMI’s National Franchised Dealer Association has called for key elements in the existing block exemption regulations to be retained by the European Commission in the 2010 legislation.
It said the BER should enable dealer independence and called on the government to maintain dealers' rights to sell and service competing brands and to separate retail and aftersales activities.
The NFDA said dealers should be allowed to sell their franchises to other dealers within the brand's network and that a level of dealer job security should be guaranteed.
The association said manufacturers should be obliged to give detailed and objective reasons for dealer terminations and that retailers should have the right to refer disputes to an independent arbitrator and be given a minimum of two years' notice of termination.
NFDA director Sue Robinson said: “The NFDA believes that the Commission's Evaluation Report does not provide a sufficiently compelling case for the removal of sector-specific regulation.”
DATED: 18.08.08
FEED: MT
The RMI’s National Franchised Dealer Association has called for key elements in the existing block exemption regulations to be retained by the European Commission in the 2010 legislation.
It said the BER should enable dealer independence and called on the government to maintain dealers' rights to sell and service competing brands and to separate retail and aftersales activities.
The NFDA said dealers should be allowed to sell their franchises to other dealers within the brand's network and that a level of dealer job security should be guaranteed.
The association said manufacturers should be obliged to give detailed and objective reasons for dealer terminations and that retailers should have the right to refer disputes to an independent arbitrator and be given a minimum of two years' notice of termination.
NFDA director Sue Robinson said: “The NFDA believes that the Commission's Evaluation Report does not provide a sufficiently compelling case for the removal of sector-specific regulation.”
DATED: 18.08.08
FEED: MT