Friday, January 22, 2010
Unit sales fall as conversion rates increase
The average number of used car sales per month fell to 6.5 units in December from 9.8 in November, according to Manheim’s Dealer Dashboard figures.
Despite the drop in sales activity, conversion rates actually rose by nearly 3% on the back of strong figures from the small hatchback segment.
John Simpson,Manheim retail services managing director, said: “As we move into 2010, although there appears to be pockets of retail confidence as the scrappage scheme draws to an end, a spring or early summer General Election followed by inevitable tax increases and cuts to public spending are likely to force motor dealers to work harder than ever to drive as much opportunity out of marketing budgets.
“Ensuring that prospects are converted to customers at the earliest possible moment will be key.”
In the wholesale market, stock for retail fell by £473 in December and conversion rates rose 3% to 76%.
Manheim auctions and remarketing managing director Mike Pilkington said: “This suggests a sensible and pragmatic approach to vehicle pricing by vendors and healthy demand at a time of the year when, traditionally, the wholesale market is quiet.
“The strength of the dealer part- exchange disposal market continued unabated with prices up again in December by £73 compared with the previous month, albeit on the back of slightly younger product.”
Conversion rates rose to a very healthy 83%.
This brought to an end an extraordinary year in used vehicle remarketing which saw huge month-on-month price increases.
Pilkington said: “For what it’s worth, I would expect values in 2010 to return to much more seasonal patterns with modest increases in the early months of 2010, flattening out nearer spring and without the upward spirals that we have experienced in 2009.”
DATED: 21.01.10
FEED: AM
Sir Trevor Chinn joins carsite.co.uk as chairman
Carsite.co.uk, the online retailer of ex-fleet cars, has appointed Sir Trevor Chinn as chairman.
Chinn has also become an investor in carsite.co.uk.
Sir Trevor’s career began with Lex Service which became RAC, following its acquisition in 1999.
He is currently a senior adviser to CVC Capital Partners, chairman of ITIS and Streetcar. He is also chairman of the Mayor’s Fund for London and chair of the Government’s Motorists’ Forum.
Sir Trevor said: “Carsite.co.uk is at the forefront of a dynamic shift in the used car market from forecourt to online.
“The developing landscape and technological capabilities of the internet continue to create exciting new business opportunities for this sector.”
Carsite.co.uk managing director, Douglas Rotberg, said: “It goes without saying, Sir Trevor’s vast experience and understanding of both sides of our business will prove invaluable as we mature the Carsite brand.
"We have embarked on a significant new chapter in 2010 and Sir Trevor’s arrival helps signal our direction and intent."
Thursday, January 21, 2010
Motorists slam plans to reduce motorway speed limits
Motorists have put the brakes on Government plans to reduce motorway speed limits according to a new poll.
Over 82% of drivers quizzed voted against the prospect of facing permanent 60mph limits on up to 250 miles of the UK motorway network. Over 750 people took part in the snap poll. According to the Department of Transport, 60mph limits could become commonplace over the next few years. Average speed cameras and sensors buried in the road would regulate speed limits via overhead gantries.
DATED: 21.01.10
GM confirms Belgian plant closure
General Motors (GM) has confirmed it will close a Belgian plant at its European arm Opel, cutting 2,300 jobs.
The CSC metalworkers' union said the carmaker had told staff it would shut down its factory in Antwerp.
"It is the tough reality of the current business environment," Opel president Nick Reilly said.
GM also said 8,300 jobs would be cut across Europe - less than it had previously estimated - with 4,000 to be lost in Germany alone.
In November, GM had said that it would cut about 9,000 jobs in Europe, after cancelling its planned sale of Opel to Canadian car parts maker Magna.
Reduce capacity
The company said it needs to cut Opel's capacity by 20%.
"We have to take a plant out and unfortunately it is Antwerp," Mr Reilly said.
In its November announcement, GM had said that as well as the Belgian job cuts, some 5,425 jobs in Germany and 900 from its Zaragoza plant in Spain would also go.
In the UK, GM has cut 354 jobs at its Vauxhall plant in Luton, but has stated that there would be no cuts at its Ellesmere Port plant, which makes the Vauxhall Astra.
GM has also failed to sell its Swedish car brand Saab and is starting to wind down the operation, though some buyers have still expressed interest in it.
Helping dealers to make money proves profitable
""Almost all our growth has been winning market share from our competitors"" - Robert Jones, ASE
To most people it’s still just plain old Trevor Jones. But the 63-year-old footy referee and car dealer specialist accountant who founded the business is chairman of an organisation whose full Sunday title is ASE Ltd or Automotive Services Europe and has been for the last 20 years.
ASE makes a satisfying study for the Making Money series because its task is to ensure that dealers make as much money as they can from their trade on a daily basis.
But ASE is also in the business of turning itself into a successful international business with a tidy little profit of its own.
In 2009 it achieved a margin of 20% on worldwide turnover of £11 million.
The principal trick is sorting through monthly trading stats for car brands and their dealers and then selling the data back to them in a form that allows them to run the business more efficiently.
And with the business now managed by the younger son of the founder, there is more and more emphasis on getting the output down to such a concise summary that it can be retrieved as one page on a PDA.
Managing director Robert Jones (33) keeps in mind a vision of the zone manager pulling up outside today’s first dealer call and taking his gizmo out off his pocket for a refresher on the financial summary before he goes in.
That’s the snapshot of ASE at its most basic, but it is becoming much more than that.
“We have 169 bespoke management solutions across 31 countries and 29 languages. In the UK there are 350 clients for professional services and we work with 86% of the UK manufacturers.”
There are 110 employees in the UK, but there are also offices in Spain and Portugal, the Netherlands, Florida and Russia from March.
Other countries are covered by contractors while the business volume grows. Between them the country offices process 11,000 sets of business a month and ASE has just spent £1 million on a new computer system to crunch it all. All profit is being reinvested currently.
Robert Jones has taken on the task of bringing in the new business while elder brother Mike delivers the products.
Robert is a veteran of Arthur Anderson, where his specialisation became structured finance for large investment.
He joined the family firm as sales director in 2006 and took charge in March 2008. All the non-family shareholders have been bought out; a 3i heavy-weight has joined the board as a non-exec and in Robert’s judgement “in the last 12 months we have transformed the business into a dynamic commercial enterprise”.
The sales pitch to the manufacturers is a simple one: “Reduce the risk of having a dealer network.”
Robert Jones will also tell the clients that he has a better chance than other accountants and consultants of adding value for the carmakers because all the professionals he employs have car company experience.
Although he does not work for all 26 manufacturers in any market, he does work for all of them in one country or another.
Increasingly, OEMs want more than the raw data from their own network. They want some tailored market analysis as well.
Within the customer companies there is demand for different levels of data for different staff. The boss will want the simplified summary. Managers need the full detail on a small section.
Technology change is very demanding: “We have gone in only two or three years from 20-page documents to interactive web delivery.”
The business plan is simple enough. Every time they pick up a new OEM as a customer for one market they can pitch for business in other markets where those OEMs need data.
They can also go for OEMS in markets where they have not got them as clients. And they can add more services for the clients they have got. It’s methodical, successful and profitable.
There are still new markets to bring in. The US business has only been under development for three years. Africa and Asia are untouched.
There are competitors and in the UK the main players who also provide accountancy and tax services to the trade are BDO Stoy Hayward, Baker Tilly and Grant Thornton.
DATED: 21.01.10
FEED: AM
Nick Reilly letter to Vauxhall / Opel employees
Dear employees,
At the end of last week I was pleased to announce the members of the Opel/Vauxhall leadership Team that resides centrally in Rüsselsheim. We are joined, of course, by the leadership residing in our country operations. This team is diverse in nationality and expertise but is totally united in our determination to succeed.
Within the management team there will be no silos, there will be mutual trust and support, there will be complete transparency of activities and we will act as one team. We have already begun to define our objectives and the important priorities to move forward. We recognize that we are responsible for the future of our company, we have the necessary authority and we will be held fully accountable for all measures of performance.
Name of the Company:
We have decided that our face to the external world will simply be Vauxhall in the U.K. and Opel in the rest of the world. That will be reflected in the way we apply signage to our manufacturing and engineering facilities, our dealerships, our press events, our business cards etc. In internal communications we will use Opel/Vauxhall when dealing with our pan European activities.
Vision:
What do we want to be known as? What do we want to aspire to? I don’t want to hire an outside consultant to help us create our own vision statement. We can refine the wording ourselves later if we want to, but here is our working vision statement: “To be a leading European Manufacturer of high quality, desirable automotive products, based on German Engineering, driven by a united team of professionals and respected around the world.”
It is time for Opel/Vauxhall to be clear winners again and to be recognized as clear winners. We need to take bold decisions and be held accountable for those decisions. By taking the right decision, we will reverse the downward trend in market share, we will return to profitability, we will have a brand that people want to buy and be associated with and we will lay the foundations of sustainable success. That is winning.
I believe we already have many of the elements in place to be a winner. We have proven our technical capabilities through our latest products, we have a strong dealer network, we have the skills of our people, we have a great heritage and we have the goodwill of many outside the company who want to see us succeed. We will lead through our products and bring to life “Wir leben Autos”. We will lower our cost levels so that we can be profitable in a weaker market and we will use that profit to reinvest in new products, new technology and new facilities.
How do we get there?
I have said already that we will lead with our products. We know that Insignia was Car of the Year. Have you had the opportunity to drive a 4-wheel-drive Insignia in the snow and ice? I did that this weekend and it was so impressive. I doubt there is another car better. I have already been driving the new Astra in the last two weeks and it is not surprising that it won the Golden Steering Wheel Award. As you all know, we launch the important new Meriva shortly.
But it is also important to recognize where we don’t lead and where we have missing products in our portfolio. The management team has looked at this and, to start with, we are missing an entry in the “mini” segment, we don’t have an identified successor for the Combo, we are not leading in hybrids or pure electric vehicles and our traditional powertrains have mixed performance in fuel economy, CO2 and drive-ability. We intend to address these as quickly as we can.
Having said that, it doesn’t matter how good a product is, if potential customers don’t have a positive image of the company. That positive image comes from a variety of elements as well as the product.
First, we need a workforce that is seen to be working as one team, which is highly motivated and proud to be part of Opel/Vauxhall. This has been damaged by weakening performance and significant losses over the past years, as well as the uncertain future during the past 12 months. I hope that period is now ended.
In relation to the point of working as one team, I very much include the Trade Unions and Works Councils around Europe. During my career, I believe I have always paid particular attention to this very important aspect; I fully respect the role of a responsible union and its leaders. Indeed, I believe unions play a necessary role in any large company. Without the counterbalance of a union voice, there is a serious risk of irresponsible or abusive management. The key here is mutual respect, searching for a win-win outcome, with both parties recognizing the situation facing a company, keeping our open dialogue and then taking responsible actions to move the company forward and grow for the sake of employees and stakeholders.
We must not forget the stakeholders as we build our strong image. Dealers are the front window of Opel/Vauxhall to our customers. Suppliers provide us technology, competitive and high quality components and responsive service. Relations with local and national governments as well as the media are also critical to our reputation. Finally, customers are our most important stakeholders since they keep us in business. They talk to their friends and they can give us their loyalty, so their experiences with Opel/Vauxhall need to be first class.
Also, to help maintain a high image, we should use the long and successful heritage of Opel and Vauxhall and talk about our proven technical expertise which is based in Rüsselsheim, but which also has access to technologies from around the world.
Finally, in our strategies of “How do we get there?” I mentioned in the Vision Statement that we should be respected around the world. This means we need to look for opportunities to sell Opel products outside Europe as well. In the past, Opel has not been able to make money selling outside Europe and the current strong euro will not help. However, I am convinced that with the right product, a strong image in Europe, and enough money to build the business in other countries, we can and will grow our exports outside Europe profitably over time.
What’s next?
We don’t just have to turn our operating results around in normal circumstances. We must deal with a very difficult market environment. In 2010 we expect the Western European market to be 1.5 million units lower than an already weak 2009. So, we need to move fast.
On the reverse side, we will shortly introduce a new campaign based on “Wir leben Autos.” We have a working group putting into words and pictures the definition of the Opel/Vauxhall “DNA” so that all our products, our advertising and our face to the outside world clearly come from the same home. We will share that with you shortly. We will maximize the strength of our new products, we will be innovative in our concept cars at auto shows and we will address the issues of image that I mentioned above. Aftersales must contribute strongly to the results and our dealers need to feel a new confidence in the brand.
On the cost side, as you know, we are working to restructure our manufacturing operations to reduce our break-even point. But we also need to be very cost conscious in all areas, especially in this difficult year of 2010. So, expenditures that can be deferred should be and I have specifically tasked our leadership to reduce bureaucracy all around the company. Examples are to delegate authority for spending decisions lower down the organization, with an emphasis on trust rather than control, and to reduce the amount of time spent in meetings and preparing reports by 50 percent. Also, I want to see the encouragement of ideas from all levels of the organization. Nobody knows better how to assemble a quality car efficiently than the person on the assembly line. Nobody knows better what the customer is really experiencing than our dealers, our sales and our aftersales people in the field.
These activities are not only about one country. Every function and every entity around Europe needs a fierce commitment to make a contribution. We cannot afford to have any country or any product losing money in the long term. We will shortly introduce metrics to show profitability by product and by market and we will then track them regularly.
Relationship with GM North America:
Much has been said about the problems in the relationship between Opel/Vauxhall and our parent headquarters. A greater level of autonomy has been called for. In some ways I agree with this and the pendulum swung too far to the side of a global communality, not respecting local or regional needs and differences of customer preferences. That is why we are stressing the need to have our design and engineering people, together with marketing, ensure the Opel/Vauxhall DNA is in every car we sell and all our external communications.
However, I disagree that we can blame our difficulties on this relationship. This is just an excuse to take the responsibility away from ourselves. It displays a weak victim mentality. While we need the authority and autonomy to make the right decisions for Opel/Vauxhall, we also need to recognize the huge benefits we derive from being part of the GM family. We benefit from the leverage of our global technology, our global architectures, our global purchasing volumes, our global manufacturing process, our global IT systems and so on. We should also not forget that we have been, and continue to be, kept alive during this long period of losses by financial support from Detroit. So, please remember that while we are responsible and accountable for the performance of Opel/Vauxhall, we should also take maximum advantage of being a member of a leading global automotive family. We are better for being part of GM and GM is better for having Opel/Vauxhall.
In closing, I have been impressed since I returned to Europe by how many people outside the company want to see Opel/Vauxhall succeed. There is a lot of goodwill for us and many people will show their support. Now it’s up to us. We have the talents and the capabilities in Design, Engineering, Purchasing, Manufacturing, Sales, Aftersales and all the supporting functions. We need to combine all those skills, head in the same direction, support each other, be good ambassadors for Opel/Vauxhall and work hard.
Best regards,
Nick Reilly
Reilly named chief of Opel/Vauxhall
General Motors has named Nick Reilly chief executive of Vauxhall/Opel, as part of a new management board that will run operations worldwide.
The move effectively dissolves GM Europe.
Reilly wrote to all employees of GM Europe (the letter has been produced in full below) and highlights how dealers are the front window of the company and needed to feel like they can have confidence in the brand.
He said: “Nobody knows better what the customer is really experiencing than our dealers, our sales and our aftersales people in the field.”
DATED: 21.01.10
FEED: AM
Wednesday, January 20, 2010
November surge in cars bought on finance
VAT increase
In a race to beat the VAT rise, new car buyers took out motor finance deals worth more than £500m in November. Overall, in the 12 months to November, 45.8 per cent of all private new car sales were financed through dealerships. The FLA said there was "further indication of new-found consumer confidence" in that motor finance providers reported the first growth in the number of used or cars bought using dealer finance since March 2009.
In November, consumers bought 4 per cent more used cars this way than in the same month a year earlier. FLA head of research and chief economist Geraldine Kilkelly said: "Today's figures are encouraging, especially as there was also growth in the used car market.
Consumer confidence
"Buying a new car is a sign of consumer confidence, as replacing an older car is usually a discretionary, rather than an essential purchase."
But it warned the rise of 82 per cent in November needed to be treated with caution because it compares last November with a particularly weak November 2008, the height of the slump in business volumes.
In November 2008 22,402 new cars were bought by consumers using dealer finance, which was 40% down on November 2007
"We expect December's new car finance figures also to show strong growth as consumers scramble to beat the VAT increase," said Kilkelly.
DATED: 20.01.10
FEED: MT
GM pumps $930m more into Vauxhall/Opel
General Motors has injected 650 million euros into Vauxhall/Opel while it negotiates a 4.3 billion euros financing package from European governments for its struggling European division.
The carmaker said that the support included acceleration of payments owed to Vauxhall/Opel for engineering services. The payments would normally have been made in April and July.
GM said: "The payment accelerations serve as a temporary funding source for the Vauxhall/Opel group's operations until more permanent financing can be arranged."
JLR recovery continues as sales soar
Jaguar and Land Rover (JLR) sales rose by a third last month driving hopes that the car brands may have turned a corner following the turmoil of the financial crisis.
New figures from JLR owners Tata show that Jaguar sales increased by 5% to 4,794 while Land Rover soared by 45% to 16,340 last month.
The sharp increases will come as a relief to Tata, which has been forced to endure the worst premium car market for decades since it bought the two manufacturers from Ford on 2008.
Since March, global sales of JLR models have been down 26%, but last month's figures suggest a 'stabilisation' in the market, according to a company spokesman.
The UK was one of JLR's best performing markets with retail sales gaining 73% for Land Rover and 68% for Jaguar.
