Saturday, October 25, 2008
Peugeot to launch 'massive' cuts
French car company Peugeot Citroen has said it will cut its 2008 profitability outlook and start "massive" production cuts, in the wake of a global downturn.
The news came as figures showed third-quarter sales declined 5.2%, underlining slowing demand.
Separately, truck companies Scania and Volvo both saw orders in Western Europe slump for the quarter.
A day earlier, Chrysler said it would cut 1,825 jobs in the US, while Renault said production would be cut sharply.
Correctly positioned Peugeot chief executive Christian Streiff said the firm was reacting to the "collapse" in Europe's car market. By cutting production, it would avoid a surplus stock of cars building up.
Third-quarter sales dropped to 13.301bn euros (£10.7bn; $17.09bn), missing forecasts.
Shares in the car firm were 12% lower in Paris.
"Massive production cuts will be made in the fourth quarter, as it is vital that we are correctly positioned to face 2009," said Mr Streiff, although exact details were not available.
Meanwhile, both Scania and Volvo saw earnings miss forecasts.
Volvo pre-tax earnings dropped to 2.9bn Swedish kronor from 4.57bn Swedish kronor a year earlier, while Scania saw pre-tax profit of 2.51bn Swedish kronor from 2.38bn Swedish kronor the year before.
Other automotive firms to be hit by the downturn include Germany's Daimler, which has seen North American sales fall, while Italy's Fiat said sales could drop 20% in 2009.
Ford prepares to sell Mazda stake to raise cash
Ford is close to selling its 33.4% stake in Mazda as part of a desperate race to raise cash in a further sign of the crisis gripping the American automotive industry.
Ford is off-loading about 5% of its existing stake in the Japanese carmaker to Hiroshima Bank, but is also believes to have found buyers for much of its remaining shareholding.
Ford's $11 billion cash pile is thought to be fast running out as vehicle sales slump. However, selling about 5% in Mazda will probably only raise about $200 million, according to analysts.
Renault, Fiat and Daimler slash sales forecasts
 Renault, Daimler, and Fiat have scaled down their profits forecasts amid further signs of slowing economies and falling demand from car buyers.Having seen its third quarter revenue fall 2.2 per cent, Renault predicted a revised operating margin of around 3 per cent, down from the previous figure of 4.5 per cent. The carmaker also announced thenumber of vehicles sold will barely top last year's 2.49 million, confirming its original 5 per cent growth target would not be met. DATED: 25.10.08 FEED: MT |
Vertu Motors boss seeks expansion
Chief executive Robert Forester said the group is planning further growth by acquisition although this is not likely to happen until next year. "We don't want to be a group off 44 dealerships - it's not the right size for us in the medium term," said Forester. "Our focus has to be on the existing business and in six months time we'll have a better idea of when we are likely to be coming out of the recession - then we'll look at acquisition opportunities." Forrester would not say how many sites he wants to grow the group by but said the fall in freehold values over the coming months would provide the group with an opportunity to expand. Expansion into the north of England is of particular interest to Vertu but he said he is not currently talking to any dealers about future purchases. "The board is committed to an acquisition strategy to grow the market share of the group's operations in order to enhance shareholder value," added Forester. "The board believes that acquisition opportunities, and the value to be created from them, will increase as the current economic slowdown progresses." DATED: 25.10.08 FEED: MT |
Vertu Motors claims it has ambitious plans to grow its Bristol Street Motors business despite the downturn in the economy.Car dealers' future is under threat
PricewaterhouseCoopers said the severe drop would be a result ofvehicle manufacturers tightening control over dealership standards. Chris Kent, a director in the automotive team at the PricewaterhouseCoopers, said he expected many more dealers to fold than had already this year. "Manufacturers have introduced ever-stricter standards for those who hold franchise agreements in an effort to exercise closer control over their brand's corporate identity," he said. "Such restrictions will cause some dealers to resign the franchise while others will be forced out, leading to a smaller pool of businesses representing each marque. "With current economic conditions already a serious threat to the viability of some dealerships, further closures seem inevitable." Kent added that competition for sales will remain fierce, however, with a broader range of car brands chasing what could be a shrinking pool of prospective buyers. He said despite the factors of consumer and manufacturer demand, the wider economy was possibly the biggest influence at the moment. DATED: 25.10.08 FEED: MT |
Car companies look beyond recession
The car industry, which is often seen as a barometer of the world economy, is storming headfirst into a deep recession, with sales and profits tumbling.
Manufacturing plants are closing, production is being cut back, jobs are being axed and car company share prices are tumbling as a consequence.
"We didn't really expect the market to go down so quickly," says Toyota Motor Europe's head of sales and marketing, Thierry Dombreval. "The market has become increasingly competitive."
Nevertheless, while top executives at the top carmakers admit times are tough, they have told the BBC that they expect to emerge from the recession stronger than ever.
"To use motorcycling terminology, when you enter a corner you don't look into the corner, you look at where you want to be when you get out of that corner," says BMW's board member in charge of sales and marketing, Ian Robertson.
Immediate pain
But first, the automotive sector must prepare for 2009, which is expected to be even tougher than this year.
"Customers are relying on financing, so the credit squeeze is affecting all markets," adds John Fleming, president and chief executive of Ford Europe. "Sales are going down and markets are softening".
In the US, Detroit's Big Three - General Motors (GM), Ford and Chrysler - recently secured a $25bn government cash injection into the industry and may soon return for more.
European policy makers are considering similar action to help an industry in crisis.
Prepared for a slump
But when in a more contemplative mood, many of the industry's top executives are looking beyond the recession, and there they see gold.
Leaning confidently back in his chair, Bentley Motors chief Franz-Josef Paefgen says he is "very optimistic", even though the Crewe-based luxury car maker has seen sales drop by about a third since spring.
"Although we are having difficult times and the market is in a terrible condition, we are prepared for it," he says, pointing out that, even following the sales slump, Bentley is producing many more cars than it did five years ago.
Bentley sales rose from about 1,000 cars a year to about 10,000 cars between 2003 and last year, and there is no telling when demand will be revived, Mr Paefgen points out.
"It will come back one way or another," he declares. "We continue to invest in new product. We are investing at the highest level since Volkswagen bought Bentley a decade ago."
Jim Wright, vice president of Nissan's luxury-subsidiary Infiniti, which has just entered Europe, is also eagerly looking beyond the recession.
Brand-building during a downturn should lead to strong sales growth once the economy recovers, he believes.
American bounce?
Weaker oil prices should help, according to both economists and industry officials.
Oil prices should average $60 a barrel in 2009 and slip towards $50 by the end of the year, Deutsche Bank's energy analysts predict.
This could provide some short-term relief for US automotive firms as lower prices at the pump might slow down the shift towards smaller, more fuel-efficient cars.
In the short-run, this might make it easier for companies such as GM, Chrysler and Ford to get rid of their backlog of gas-guzzling models, and thus give them more time to change both the way they make cars and the way they are structured.
Rolls-Royce Motor Cars' new chief executive Tom Purves, who headed up BMW's North America division for almost a decade, predicts that the world's largest car market could bounce back quickly.
"The US is a much more immediately responsive market," he says.
"It goes down and up simply faster and people react more instantaneously. The systems and structures are more organised."
Fast-growing demand
Mitsuo Kinoshita, executive vice-president of Toyota Motor Corporation, is also confident that demand will pick up in the medium- to long-term.
"Cars are indispensible anywhere in the world for people to move, and the current financial situation does not change that," he grins.
Dieter Zetsche, chairman of the management board at Daimler and head of Mercedes Cars, agrees.
"There are many studies that say it took 120 years to get to 800 million cars around the globe, and that it will take only another 30 years to double that volume," he says.
"If that is true, the best is still ahead of us."
Even Fritz Henderson, chief operating officer of loss-making GM, is optimistic.
"We certainly still think the long-term prospects are very attractive," he says.
Adds BMW's Mr Robertson: "This industry is very resilient. This industry has seen difficult times before.
"The change has occurred unbelievably quickly. What was seen as a one way track - 'you'd better get in quick' - has gone down," he observes.
"But we need to keep reminding ourselves that things can turn quickly once again."
New markets
Hence, rather than shrink, the global car industry is still expected to grow dramatically in the long-run - though this is unlikely to happen in an orderly fashion.
In the future, the strongest sales growth is unlikely to come in the US and Europe, where manufacturing is currently strong. Instead sales growth will come from the Middle East, Russia, China and India.
"Our basic philosophy is to manufacture where demand is and the major demand now is in emerging markets," says Toyota's Mr Kinoshita.
Hence, although the future may be bright for the car industry at large, it looks gloomier for those working in factories, for suppliers or in dealerships in the US and Western Europe.
Here, job cuts may well pick up pace and temporary closures of factories may become permanent.
In turn, some companies - and certainly some brands owned by large automotive groups - may fail and disappear during the downturn, with others being acquired by rivals.
But this, says Mr Zetsche, should not boost anyone's overall market power.
"Even though there might be more consolidation, and potentially even the demise of one or two companies of today, those will be replaced by new players from China and India," he says.
And in a decade or two, he predicts, there will be a "a relatively similar automotive landscape to today's".
Employment Law Changes
Motor trade bosses will have to take a softer approach to their employees from April next year, when new workplace legislation is likely to be introduced.
The proposed Employment Act will introduce a code of practice which encourages simple procedures for early resolution of workplace disagreements.
The proposed legislation is in response to the Gibbons Report on Workplace Dispute Resolution in the UK, which concluded that 2004 Dispute Resolution Regulations had failed.
While formal procedures such as written warnings and official meetings will continue, employers will have to take a more personal and softer approach when dealing with workers.
In particular, there will be a greater need for mediation, especially informal mediation carried out internally by human resources staff.
Melvin Rogers, Sytner Group head of HR, said the company already had provisions in place for the new law, which will includes an anonymous hotline for employees to air any unresolved problems and field-based HR managers who visit dealerships to deal with problems informally.
He said the legislation would certainly assist some motor industry businesses.
“It’s a better approach because issues can be resolved at an earlier stage. If problems are left, they can fester when the chances are that it could have been sorted out amicably.”
He added: “Mediation is a much stronger way of dealing with things.”
Cash-strapped Treasury looks to increase fuel duty
Motorists could face a 2p a litre rise in fuel duty by April with an announcement due before the end of the year, it has been claimed.
Motoring industry leaders who have met Treasury Minister Angela Eagle in the run-up to the autumn's Pre Budget Report say they have been left 'in no doubt' that a fuel duty rise is on the agenda.
They said their pleas to continue a seven-month-long duty freeze 'fell on deaf ears' as the Treasury looked to replenish depleted financial coffers.
Chancellor of the Exchequer Alistair Darling has already given a commitment not to change fuel duty until next April at the earliest - although an announcement could be made before that date.
Thursday, October 23, 2008
Car companies look beyond recession
The car industry, which is often seen as a barometer of the world economy, is storming headfirst into a deep recession, with sales and profits tumbling.
Manufacturing plants are closing, production is being cut back, jobs are being axed and car company share prices are tumbling as a consequence.
"We didn't really expect the market to go down so quickly," says Toyota Motor Europe's head of sales and marketing, Thierry Dombreval. "The market has become increasingly competitive."
Nevertheless, while top executives at the top carmakers admit times are tough, they have told the BBC that they expect to emerge from the recession stronger than ever.
"To use motorcycling terminology, when you enter a corner you don't look into the corner, you look at where you want to be when you get out of that corner," says BMW's board member in charge of sales and marketing, Ian Robertson.
Immediate pain
But first, the automotive sector must prepare for 2009, which is expected to be even tougher than this year.
"Customers are relying on financing, so the credit squeeze is affecting all markets," adds John Fleming, president and chief executive of Ford Europe. "Sales are going down and markets are softening".
In the US, Detroit's Big Three - General Motors (GM), Ford and Chrysler - recently secured a $25bn government cash injection into the industry and may soon return for more.
European policy makers are considering similar action to help an industry in crisis.
Prepared for a slump
But when in a more contemplative mood, many of the industry's top executives are looking beyond the recession, and there they see gold.
Leaning confidently back in his chair, Bentley Motors chief Franz-Josef Paefgen says he is "very optimistic", even though the Crewe-based luxury car maker has seen sales drop by about a third since spring.
"Although we are having difficult times and the market is in a terrible condition, we are prepared for it," he says, pointing out that, even following the sales slump, Bentley is producing many more cars than it did five years ago.
Bentley sales rose from about 1,000 cars a year to about 10,000 cars between 2003 and last year, and there is no telling when demand will be revived, Mr Paefgen points out.
"It will come back one way or another," he declares. "We continue to invest in new product. We are investing at the highest level since Volkswagen bought Bentley a decade ago."
Jim Wright, vice president of Nissan's luxury-subsidiary Infiniti, which has just entered Europe, is also eagerly looking beyond the recession.
Brand-building during a downturn should lead to strong sales growth once the economy recovers, he believes.
American bounce?
Weaker oil prices should help, according to both economists and industry officials.
Oil prices should average $60 a barrel in 2009 and slip towards $50 by the end of the year, Deutsche Bank's energy analysts predict.
This could provide some short-term relief for US automotive firms as lower prices at the pump might slow down the shift towards smaller, more fuel-efficient cars.
In the short-run, this might make it easier for companies such as GM, Chrysler and Ford to get rid of their backlog of gas-guzzling models, and thus give them more time to change both the way they make cars and the way they are structured.
Rolls-Royce Motor Cars' new chief executive Tom Purves, who headed up BMW's North America division for almost a decade, predicts that the world's largest car market could bounce back quickly.
"The US is a much more immediately responsive market," he says.
"It goes down and up simply faster and people react more instantaneously. The systems and structures are more organised."
Fast-growing demand
Mitsuo Kinoshita, executive vice-president of Toyota Motor Corporation, is also confident that demand will pick up in the medium- to long-term.
"Cars are indispensible anywhere in the world for people to move, and the current financial situation does not change that," he grins.
Dieter Zetsche, chairman of the management board at Daimler and head of Mercedes Cars, agrees.
"There are many studies that say it took 120 years to get to 800 million cars around the globe, and that it will take only another 30 years to double that volume," he says.
"If that is true, the best is still ahead of us."
Even Fritz Henderson, chief operating officer of loss-making GM, is optimistic.
"We certainly still think the long-term prospects are very attractive," he says.
Adds BMW's Mr Robertson: "This industry is very resilient. This industry has seen difficult times before.
"The change has occurred unbelievably quickly. What was seen as a one way track - 'you'd better get in quick' - has gone down," he observes.
"But we need to keep reminding ourselves that things can turn quickly once again."
New markets
Hence, rather than shrink, the global car industry is still expected to grow dramatically in the long-run - though this is unlikely to happen in an orderly fashion.
In the future, the strongest sales growth is unlikely to come in the US and Europe, where manufacturing is currently strong. Instead sales growth will come from the Middle East, Russia, China and India.
"Our basic philosophy is to manufacture where demand is and the major demand now is in emerging markets," says Toyota's Mr Kinoshita.
Hence, although the future may be bright for the car industry at large, it looks gloomier for those working in factories, for suppliers or in dealerships in the US and Western Europe.
Here, job cuts may well pick up pace and temporary closures of factories may become permanent.
In turn, some companies - and certainly some brands owned by large automotive groups - may fail and disappear during the downturn, with others being acquired by rivals.
But this, says Mr Zetsche, should not boost anyone's overall market power.
"Even though there might be more consolidation, and potentially even the demise of one or two companies of today, those will be replaced by new players from China and India," he says.
And in a decade or two, he predicts, there will be a "a relatively similar automotive landscape to today's".
Carmakers to crackdown on companies who sell-on discounted cars
Vehicle leasing companies and brokers have been warned that their contracts will be terminated immediately if they are caught selling on discounted new cars.
There are industry-wide fears that pseudo contract hire companies and brokers are posing as buying vehicles for fleet customers and then immediately selling the cars on websites for cash.
Ford says it is monitoring websites that advertise heavily-discounted cars in a bid to discover the sources of the vehicles.
The company says that 'in a handful of cases we have terminated dealers' and rival General Motors says it has also 'taken action' against brokers who have breached their agreements.
The practice is illegal, but Ford said it had decided not to take legal action. The manufacturer said it had recovered the cars and ended the contracts.
Nissan and Volkswagen are among other manufacturers that say they would take 'very seriously' any action that resulted in their brands being damaged as a consequence of cars being disposed of before the required retention period.
The British Vehicle Rental and Leasing Association's broker committee says it has established compulsory standards for members.
BVRLA director general John Lewis said: "We will do everything in our power to stop people posing as leasing brokers or contract hire companies in order to obtain discounted cars that they can sell on at a profit."
Experts predict UK will have fewer car dealers
There will be significantly fewer car retailers operating in the UK in the years to come, as a result of vehicle manufacturers tightening control over dealership standards, according to analysts PricewaterhouseCoopers.
Chris Kent, a director in the automotive team at PricewaterhouseCoopers, will be presenting at the forthcoming EurotaxGlass's conference entitled 'Driving Business - opportunities for profit and growth in an uncertain market'. Speaking ahead of the event, he said that many more dealers are expected to follow those that have already closed their doors this year. The theme will be explored in greater detail at the event, being staged on 13 November at the National Motorcycle Museum in Birmingham.
"Manufacturers have introduced ever-stricter standards for those who hold franchise agreements, in an effort to exercise closer control over their brand's corporate identity," said Kent. "Such restrictions will cause some dealers to resign the franchise while others will be forced out, leading to a smaller pool of businesses representing each marque. Competition for sales will remain fierce, however, with a broader range of car brands chasing what may well be a dwindling number of prospective buyers.
"With current economic conditions already a serious threat to the viability of some dealerships, further closures seem inevitable."
Kent will speak at the conference alongside representatives from some of the biggest companies in the world, including Google and YouTube.
"Input from PricewaterhouseCoopers will give our conference a real sense of relevance, at a time when dealers are under greater pressure than ever," said David Burdett, Managing Director at EurotaxGlass's.
"The demands of consumers, manufacturers and legislators all shape a dealer's business, but the wider economy is possibly the greatest influence at present. Delegates will receive constructive advice on maximising profitability during these challenging times."
Carmakers fear hard times ahead
Carmakers have forecast a tough year ahead, as the financial crisis takes its toll on the car industry.
Italian carmaker Fiat said in a worst-case scenario its 2009 profits could fall by 65%, while global demand for its products could drop 10 to 20%.
South Korea's Hyundai reported a fall in third-quarter profits of 38%, but said it should meet most of its targets, though conditions were tough.
Daimler posted a profit for the quarter but said vehicle sales had fallen 3%.
As the global economy slows, consumers are shying away from making major purchases.
Italian gloom
Even though Fiat made clear that its forecasts were a worst-case scenario, analysts took them as a profit warning.
The Italian company added that it believed the "erratic" conditions in financial markets were temporary and insisted they would not affect the "overall substance" of its turnaround target for 2010.
In recent years, Fiat has successfully turned around its business, helped by the revival of the cult Fiat 500 car.
Fiat's third-quarter earnings were better than expected, with profit 8% higher at 802m euros (£632m), a performance it attributed to strong sales of farm machinery.
Korean realism
Hyundai Motor Company reported a 38% fall in third-quarter net profit, which was slightly better than expected.
It expects to sell slightly fewer vehicles - 3.02 million versus an earlier forecast of 3.11 million - this year, but said it should meet other sales and operating targets, in part because of increased demand for more compact cars.
"Demand for smaller cars is rising, although global auto demand is shrinking," said Park Dong-wook, a director at Hyundai's treasury division.
"The market situation in emerging countries is much worse than expected," he added.
Daimler
German carmaker Daimler reported a 213m-euro profit for the quarter, a dramatic turnaround from the 1.5bn-euro loss it saw in the same period a year ago.
Last year's loss reflected "special effects from the Chrysler transaction", the statement said, alluding to Daimler's sale of 80% of Chrysler to Cerberus, a US private equity group, in May 2007.
But Daimler saw plenty of evidence of the impact of the banking crisis on consumer confidence, as sales fell.
Daimler sold 522,500 passenger cars and commercial vehicles in the third quarter, down 3% from the 537,000 sold in the same period last year. Its revenues were 23.8bn euros, down from 25.7bn euros.
"We recognise that the situation is very challenging indeed," said Dieter Zetsche, chairman of Daimler's board of management.
Car prices are slashed online
Simon Empson, managing director of dealer intermediary website Broadspeed.com, said dealers were offering heavily discounted cars through his site. "I can't name the make or manufacturer, but I've had £20,000 knocked off one car this week," he claimed. "I've had more than a few under half-price cars as well. He said Mercedes models were the most heavily discounted from the prestige sector while Vauxhall dealers were offering the biggest cuts among volume brands. Empson said this situation complicated matters for brands such as Toyota and Honda, which were steering a comparatively steady course through the economic storm. "I've had Toyota and Honda dealers asking, ‘Why aren't my cars selling on Broadspeed.com?' It's because they're just not offering the competitive prices that some brands are out of desperation," he said. According to Empson, Broadspeed was attracting three types of buyers. They include former executives who have lost their jobs and are looking to replace their company car, usually by downgrading; those changing their vehicles due to changes to tax disc costs coming up in March and those he calls "deep-sea fishermen", who are out for a bargain in a buyers' market. Most other customers had withdrawn from the market, he said. Empson said many dealers had complained of being pressured by manufacturers who refused to be flexible about sales targets, despite the economic downturn and warned some could be forced out of business. "In my view there are going to be a lot of dealer failures because manufacturers aren't being flexible," he said. "They're asking dealers to meet boom-time levels and it's certainly not boom-time at the moment." Sue Robinson, director of the RMI National Franchised Dealers Association, said: "While we are aware some manufacturers have re-negotiated sales targets with their dealer networks in view of the more difficult trading conditions, dealers still face financial pressure from all angles, including manufacturers, due to the fragility of the current economic climate." DATED: 23.10.08 FEED: MT |
Car dealers are being forced to make loss-leading sales in an attempt to move slow-selling stock through their showrooms.Nissan backs return of large car sales
The Japanese carmaker's vice president for product planning Pierre Loing said long term demand for bigger cars would endure the current economic conditions. Loing maintained that supermini and smaller sized cars couldn't meet all buyers' needs. "There is a debate in the industry whether it (downsizing) is a fundamental trend," he said. "My belief is that sentiment explains the collapse of the market. Cars are about individual mobility, and not everybody can have individual mobility in a car like the Nissan Pixo." He said that established technologies were already in place to bring down CO2 for bigger models, and that in the longer term sales would be driven by customer needs. "The volume decreases are very much due to economic conditions. If the economy rebounds they will improve." Despite a precipitous decline in sales, he suggested that the British market would not become as polarised as Spain, where new car sales have dropped dramatically, and "you don't sell big cars". DATED: 23.10.08 FEED: MT |
Nissan believes the demand for larger cars will return and the sector will survive the economic downturn.Wednesday, October 22, 2008
Ford shares hit after Kerkorian cuts stake
The decline follows billionaire investor Kirk Kerkorian's decision tosell 6.5 per cent of his stake in the US carmaker. Kerkorian still holds 1.33.5 million shares but may yet dispose of more after talks of a merger between General Motors and Chrysler intensified. He has a long association with GM and for a time Kerkorian's investment vehicle, the Tracinda Corporation, was its biggest shareholder. In April Kerkorian bought 140.8 million Ford shares for around $7 each for around $1bn. Yesterday, Kerkorian sold 7.3 million of those shares for about $2.43 each - an immediate $17m loss. DATED: 22.10.08 FEED: MT |
Ford's share price fell more than 6 per cent to close at $2.17 (£1.33) in New York yesterday.Vertu boosts profits and stays on acquisition trail
The group, which trades as Bristol Street Motors and is rated 11 in the Motor Trader Top 200, posted a £1.9m pre-tax profit on revenues of £423m. Both figures were significantly up on its inaugural reporting period which spanned the 10 months from 1 November 2006 - when Vertu was formed as a buying vehicle - and included the period from 27 March when trading commenced with the acquisition of Bristol Street, through to 31 August 2007. Revenues for that period were £290.3m with a loss of £0.4m. The group saw new retail car sales rise by 13.5 per cent on a like-for-like basis in a market which fell by 7.3 per cent. While used volumes rose by 15.1 per cent in its franchised dealerships they fell by 8.8 per cent in its Motor Nation car supermarket outlets. Here operating profit fell from breakeven to a loss of £0.1m and resulted in the group closing the "significantly loss making" Coventry Motor Nation site at the beginning of September. "The group has delivered a performance which is above last year's profit level on a pro-forma basis and the group has continued to gain market share with strong new and used like-for-like volume growth," said chief executive Robert Forrester. Forrester also said the group had performed well during last month's plate change when the market fell by 21.2 per cent. "The UK economic environment is increasingly challenging for the motor industry as a whole, however, despite this economic backdrop, we have maintained tight cost control over the business and continued to outperform the market in September. "We continue to anticipate further market weakness as the consumer adjusts to the economic environment," he said. Forester confirmed the group is planning further growth by acquisition. "The board is committed to an acquisition strategy to grow the market share of the group's operations in order to enhance shareholder value. "The board believes that acquisition opportunities, and the value to be created from them, will increase as the current economic slowdown progresses," he said. DATED: 22.10.08 FEED: MT |
Vertu Motors defied the downturn in the car retailing sector with a rise in profits for the six months to the end of August and restated its intention to grow by further acquisitions.Skoda and Lookers scoop best website honours
Skoda's website has taken the top car manufacturer honours in Auto Trader's Click Awards 2008. The annual awards also named Lookers as the Motor Dealer Website of the Year while The Car People won the inaugural Car Supermarket of the Year honours. The Click Awards are based on the views of over 600 car buyers who were questioned about their web usage in August as part of Auto Trader's Website Usability Study, carried out by eDigitalResearch. The awards cover 18 categories recognising best practice across manufacturer, dealer and car supermarket sites. The research, claimed to be the largest of its kind in the UK, polled the views of motorists thinking about buying a new or used car. The websites were judged on a range of criteria, measuring the quality of customer service online; design; the use of animation and engagement with the customer; ease of navigation; as well as the search tools and features available. Click Awards 2008 winners: Manufacturers: •Best Motor Manufacturer Home Page...........Renault •Best Motor Manufacturer Customer Service: .....Jaguar •Best Motor Manufacturer for Purchase Intent.........Audi •Best Motor Manufacturer New Car Configurator: .......Saab •Best Motor Manufacturer Used Car Locator: ........Jaguar •Best Motor Manufacturer Communication Of Environmental Credentials: ........Renault •Most Improved Motor Manufacturer Website: ...............Renault •Motor Manufacturer Website Of The Year 2008:..............Skoda •Best Motor Dealer Homepage: ................Lookers •Best Motor Dealer Customer Service: .............Mercedes-Benz Direct •Best Motor Dealer For Purchase Intent: .............Hartwell •Best Motor Dealer Used Car Locator: .............Arnold Clark •Most Improved Motor Dealer Website: .............Ford Retail •Motor Dealer Website Of The Year 2008: ..................Lookers •Best Car Supermarket Used Car Locator: ...............Available Car •Best Car Supermarket Customer Service: ..................Motorhouse •Best Car Supermarket For Purchase Intent: ................Car Giant •Car Supermarket Website Of The Year 2008: ................The Car People DATED: 22.10.08 FEED: MT |
Vertu posts £3m half year profits
Vertu Motors this morning reported a swing from a £100,000 operating loss to a £3m operating profit.
The dealer group's half-year results show turnover up to £423.5m, compared to the £290.3m sales in its first five months of trading.
Although much of that growth was through acquisitions, £26m of organic growth was achieved at its Bristol Street Motors dealerships.
Chief executive Robert Forrester reported that new car registrations at the franchised dealerships increased 13.5% on a like for like basis, and used car volumes rose 15.1%.
Coventry closure
In contrast, its Motor Nation used car outlets have been hit by the challenging market, with volumes down 8.8% and the operation slipping from breakeven to a £100,000 loss in the period.
Following a review, Vertu closed its Coventry Motor Nation site at the start of September due to significant losses.
It also closed a used van centre in Birmingham, and said cost review programmes are in place across the group.
Improvements have been made to stock turn, and Vertu has improved fleet sales profitability, although seen a 3.4% drop in fleet volumes, due to a shift away from lower margin fleet volume.
DATED: 22.10.08
FEED: AM
HR Owen to stay in profit
HR Owen said last night that it still expects to post a trading profit at the end of the year, despite difficult market conditions.
The listed dealer group told investors that the outlook for the remainder of the year remains difficult to predict, but its board is satisfied the group will remain profitable.
It reported its recent proposal to surrender and lease back its Bentley aftersales site at Nine Elms has received support from 74% of shareholders, and, if passed at a forthcoming EGM, will net £1m this year for the group and up to a further £9m in future.
DATED: 22.10.08
FEED: AM
Tuesday, October 21, 2008
Independent Training Values
But luckily for us at Profit Training we consider the ups outweigh the downs. As an independent training company when we meet with a dealer client we have to introduce ourselves and our offering, qualify, sell the benefits, trial close, handle objections and close the deal. We then have to do what we promised to do, ensure the client is happy with the results and their return on investment, and then we have to make sure we get paid. I am sure every one of you reading this article will recognise the similarity of our sales process to your own on the sales floor.
But these aren't the advantages of being an independent training company. The real advantages are the simple, uncluttered ability to offer unbiased recommendations without evasion or reservation of any kind. We can offer our dealer clients a cast iron guarantee that any recommendations made or advice given is delivered without any politics or third-party agenda.
Our aims are to deliver a measurable return on investment for clients, to improve their businesses profitability, to improve their income per retail unit, to improve their sales processes, and to ensure that everybody in their sales function has a clear understanding of the businesses objectives, aims and aspirations.
At Profit Training we tend to summarise this process with two important key words:
Confident Competence.
Way too many training providers deliver training courses to dealer delegates that only satisfies the competence aspect of development. The vast majority of these training providers are manufacturer or finance house linked. Critically, their primary agenda is the transfer of knowledge to prove competence in a specific area, an example of which would be a manufacturer running a training course on a particular model roll out or event, or a dealer group buying half a dozen CD-ROMs to ensure their staff have provable technical competence within the guidelines of the FSA to sell general insurance products.
The section that is missing from most of these training courses is confidence, and sadly all too many delegates leave training courses with new knowledge, skills, or abilities that through a lack of confidence they will never use. It is this sort of training which presents independent training companies with an unfair negative image, and a clear and open marketplace.
It is no coincidence that the dealerships or dealer groups that are most profitable have a clear focus on delivering professional independent training to their selling teams, ensuring that all delegates that attend regular training programmes are confidently competent in the areas in which they are expected to sell.
We have recently delivered a training programme for a large dealer group that was a rerun of a failed programme delivered by another provider. When we interviewed the sales staff at one of the group’s dealerships it immediately became apparent that the training had been 100% effective at imparting knowledge, and 0% effective at imparting skills or confidence in delivering that knowledge to clients.
In a nutshell, the delegates knew their stuff, they just weren't sharing it with customers, and the impact on the businesses F&I profitability was clear to see. We were able to enthuse, energise and encourage the sales teams to use their knowledge to sell products, and improve their income per retail unit from ancillary sales.
I remember when I first came into the motor industry, and F&I profits were often considered to be the icing on the cake, but times have changed and this revenue stream is no longer an option, but a ‘must have’ to ensure ongoing business viability and profitability.
The inordinate amount of regulation via the consumer credit act, the data protection act and the insurance mediation directive (FSA), along with a whole host of associated bureaucracy and red tape has all but suffocated that traditional revenue stream. But those dealers and dealer groups that understand, value and deliver professional independent training are still enjoying a healthy return, good finance profitability, FSA compliance and happy F&I provider partners.
So, in summary if you want your sales teams to understand the products they sell then get those product providers into your business to deliver training. But if you want to profit from your business, and you want your sales teams to have the skills and confidence to work around regulation, understand the requirements and deliver profitable product sales compliantly, then get in touch, we will be delighted to help.
Do you know what your customers think they know?
Do you know what your customers think they know?
Ahh the age old chestnut, you know what you know about finance and loans, but your customers tell you that they know what you know because they’ve ‘got the internet at home’
Let me tell you, the vast majority of your customers don’t have a clue about the difference between finance and a personal loan, the burning question is, do you?
I have spoken to a few sales execs in the last few days, and conducted my own straw poll based on the differences between finance and direct lending, and I have to tell you the results were totally unsurprising – the lack of knowledge in our own industry never ceases to amaze me.
Firstly, your customers are being educated by your competitors, the Banks and direct lenders. The common theme they use is that of APR. Honestly now, how many of you in the last month have had to counter and sell against an APR objection proffered by a customer? I suspect quite a few of you at the coal face would say yes, and its pretty bloody difficult to sell against when you’re on the back foot from the off.
The reason that your finance competitors educate customers to use APR is really simple; they know you can’t compete on rate. Ah well, might as well switch off the lights and go home eh?
NO.
Your F&I products are streets ahead of the generic, bland and flaccid loans that your customers are offered by the big boys in the high street, here’s why;
APR: Finance APR is calculated after assessing all fees, charges, interest, admin & documentation costs that COULD be charged to the loan, IF the loan was to run, unblemished and on time every month without fail, until the LAST payment is made. The Banks APR only reflects the INTEREST levied on the amount of money borrowed, on an annualised basis. Hence the acronym – Annual Percentage Rate – what is annual about your APR’s?
We all know that a Finance APR incorporates the Maximum cost to the client – the direct lenders APR reflects the Minimum. We all knew that, we just didn’t know that we knew it.
SECURITY: We all know that personal loans are unsecured right ? WRONG.
Personal loans remain unsecured whilst repayments are made at the agreed amount on the agreed date, deviate from that schedule and the loan can be converted within minutes to being secured on your home, property or assets. FAIL to pay your ‘unsecured personal loan’ and your goods and chattels to the value of the outstanding loan plus any additional fees or disbursements (translation – massive profit opportunities) are forfeit.
Finance is secured on the car, fail to pay and we take the car, block it, redeem the loan from the proceeds that were the best that could be secured, and reschedule a loan to repay any outstanding balance.
UNDERWRITING: If your customers borrow £10k from the Bank, then they are the security on the loan; accordingly the principal sum borrowed plus interest will be listed on their credit report. Experian, Equifax, Call Credit, CDMS, and other credit bureaux will show this as them owing £14,000 to the direct lender, enough to scare off future sources of credit, as the balance often stays constant until the loan is repaid.
Finance houses do not as a rule show the balance, some may show the original loan amount, but most just record £250 per month going out of your clients bank, with a series of 0’s and 1’s for on-time or late payments.
So, by offering your clients secured finance on the vehicle, you are helping them preserve their credit rating for the next few years, absolutely critical for the future.
EARLY SETTLEMENT: We have all done it, some of us a million times, contacting a lender for an early settlement quote, and then it pops through the PC / Email / Fax / Local Rep, the customer owes us £xxxx, but for early settlement before such a date, we will accept the reduced figure of £xxx. Ahh, isn’t that nice of the Finance company to do that, knocking off the remaining interest from the loan as an incentive to repay early.
NO.
It is the law, they have to do it. The Law is the Consumer Credit Act, which clearly stipulates that in the event of a request for early settlement, all outstanding fees and charges be rebated off the agreement, as the client no longer wishes to borrow the money. This calculation used to be called the ‘rule of 78’, the new calculation method is Actuarial. The commercial reality is that you can ask your customers if they would like the remaining unpaid interest knocked of if they want to settle early, if they say yes, sell ‘em finance, because this protection does NOT COVER PERSONAL LOANS.
Please have a look back at the APR paragraph, does it make sense now?
Oh, one final point, a number of you may write to me, as has been done before, questioning my claim that the CCA doesn’t cover Personal Loans, so in anticipation ask yourselves the following questions,
Do PL documents claim to give coverage under the CCA ? (answer – yes )
Do Direct lenders take security in the asset?
Do Direct lenders need a dealer invoice?
Do Direct lenders offer halves and thirds?
Do you seriously believe that a Bank would give away loan profit on an early settlement if they don’t have to ?
The Banks wrote the Consumer Credit Act in 1974, it took 10 years to gain statute, it was a piece of regulation that they engineered to regulate all lenders but themselves, don’t you think that’s a little unfair ?
To close, give your customers the peace of mind that comes with a secured finance agreement, protect their rights, protect their credit ratings, guarantee them an early settlement for the future if they need it, and in doing all of these things for them, make additional profits for yourself and your dealership.
BUSINESS OWNERS & DIRECTORS; If you would like me to help your team make the most of every profit opportunity, please give me a call, or drop me a line, I guarantee to add value and confidence to your team, and I’m not as expensive as I appear.
DATED: 21.10.08
FEED: PTL
Recession, what Recession ?
If I hear another “expert” telling me that the UK is in recession, shows signs of Incremental Inflation or whatever buzz phrase the financial gods deign to spit at us, I am highly likely to lamp someone.
Can we perhaps grab these people by the throats and explain to them in words of few syllables the idea of a self fulfilling prophecy, and how much damage they are causing by proclaiming how dire the situation is?
These difficult trading conditions are created 50% by actual events and the other 50% by those whose sole agenda is to sell their story or to get their 5 minutes of fame on the telly.
This morning I had to stop and watch ( with mouth gaping open ) at some young woman from a top flight Accountants firm telling us that the economy will shrink, job losses will be substantial, and we are all in deep dirt until 2011.
Firstly, can I point out that I’ve been getting dirty in the motor trade long before she was soiling her nappies, and I am by no means a veteran in the business, there are many more of us out there proud of our industry, but watching it stall due to the comments made by academically brilliant young people who have absolutely no perception of the damage of their words. Not surprising really, as I suspect most of these experts have never experienced ‘work’.
Secondly, if the media hold someone out to be an ‘expert’ in a particular field, and that person proclaims doom and disaster, the effect that has on this and other industries can be profound, and not just the core deliverers, but all the ancillary industries that feed into our Motor Trade. Our customers and prospects listen to these ‘experts’, and their response is to stall buying decisions.
Here are some wise words for us all;
“If you think you can do a thing, or you think you can’t do a thing, you’re right”. (Henry Ford)
Here’s a quote that comes from my first DP, Tom Booth (evenin’ guv..).
“Improve what you can, don’t waste time on what you can’t change”.
It doesn’t matter whether you’re a Steve Archer, driving a group the size of Inchcape, or a Sales Exec at a small independent dealer – we have a choice right now to look at each and every opportunity to do business. Now is the time to be creative in the ways we do business, and now is the time to stop believing the hype of the media – reality makes it hard enough to deal profitably, lets not get sucked into the mire of attention grabbing headlines.
The stark reality is this, people are less confident about making a choice purchase right now, such as a car, boat, caravan or motorbike. In the same way that we are seeing the Banking fraternity’s reluctance to lend to each other, the domestic customer is doing exactly the same, hoarding their cash ‘just in case’.
So here’s the deal:
If you’re a Director or Manager of your business, lift your team, stop them worrying about things they can’t change. Get your team charged up and positive about your stock, model mix, location, prospect database and opportunities to do business.
Explain to them that every single walk in is a potential customer, get their chins lifted, dust their best smiles off and get them back into selling themselves, the dealership and the products.
If you’re in Sales, be proud of what you do, expect every customer to be real and genuine, take a few knocks on the chin, knowing that each time you swallow a no, you are one step closer to a deal.
If you believe the industry is on its bum, it is.
If you believe that each customer is a timewaster, they are.
And if you believe that you can sell, now is the time to prove it.
Look after each customer as if they were your Granny, listen to what they need, and give it to them. They are in your showroom for two reasons, they want to change their car, and they want your help to do it.
To close, a final quote from Our ‘Enry:
“It is not the employer that pays the wages, they only handle the money, It’s the customer who pays the wages”.
DATED: 21.10.08
FEED: PTL
