13 January 2019

• SERVICE PLANS DOUBLE CUSTOMER RETENTION, SAYS KIA
• PROFITS STEADY AT AUTO RETAIL GROUP
• EVANS HALSHAW OPENS FOUR VAUXHALL VAN CENTRES
• SWANSWAY AND MG CONFIRMED FOR AUTO RETAIL Q1 BRIEFING
• BATCHELORS STRENGTHENS SUZUKI TIES
• LOOKERS HITS RIGHT NOTE WITH TV CAMPAIGN
• WORLD NEWS – CO2 targets favour saloons says JLR, Bentley given profit deadline
• STOCKWATCH – big gain for Inchcape
• COMING UP – Auto Retail Live Q1 Briefing, Commercial Show
• LAUNCH DIARY – Vauxhall Vivaro Life
• MONEY MATTERS – SME’s in good cash position for downturn
• OUR BLOG – can vans deliver profit as well as goods?

Service plans double customer retention, says Kia

Kia has claimed its retailers see customer retention figures double when a service plan is bought as it moves to expand its offer to cover the whole seven year/100,000 mile warranty period. A spokeswoman said: “The service plans include a comprehensive range of options including the original, traditional, first three and five services and those in between, but in addition a customer can now purchase services up to and including the seventh service which matches the full length of the warranty. The plans are available for all Kia owners and can be purchased at any point of ownership for cars up to five years old.

Talking exclusively to Auto Retail Agenda, she said: “From our experience customer retention has shown to double when a service plan has been purchased and we have extended the availability of Kia Care in response to demand from dealers and Kia owners so that owners can get great value fixed price servicing right through the warranty period.”

It currently has 550,000 cars within warranty.

Profits steady at auto retail group

Multi-franchise group Marubeni Auto Investment (UK), the parent company to Norton Way and RRG (which revealed its results last week), saw profits holding steady last year among its 27 dealerships with retail sales and aftersales both showing slight increases but fleet sales fell. The company made a pre-tax profit of £6.2 million (£6.3m in 2017) on turnover of £541m, up from £530m. Stronger performances at its Mazda and Kia sites helped Norton Way Motors boost turnover to £239m (£214m) and make a pre-tax profit of £3.1m (£3.0m) and as reported here last week, RRG Group made pre-tax profits of £4.6m against £4.3m 12 months before.

Evans Halshaw opens four Vauxhall van centres

Evans Halshaw, part of Pendragon, has opened four Vauxhall Van Business Centres providing specialist support for commercial customers. The VBCs in Plymouth, Portsmouth, Hull West and Cardiff offer a wider range of Vauxhall LCVs up to the heavier vehicles.

https://bit.ly/2FmV8Bp

Swansway and MG confirmed for Auto Retail Q1 Briefing

A retailer, a manufacturer and market analyst have been confirmed as our guest speakers for next month’s Auto Retail Q1 Briefing webinar which can be screened live to your PC or mobile.

David Smyth, director, Swansway Motor Group, Daniel Gregorious, head of sales and marketing, MG Motor UK, and Catherine Faiers, operations director, Auto Trader, will be talking about the challenges of 2019 and how to face them as well as taking questions. The 30-minute Briefing starts at 9.00 am on Thursday February 7. To register and join us online click here.

Batchelors strengthens Suzuki ties

Long-term Suzuki retailer Batchelors Motor Group has strengthened its ties with the manufacturer by opening a second site in York.  Earlier it launched the UK’s first Suzuki Buy Online Solution to contact customers via its video prospecting portal and the seven-car showroom will now join its existing Suzuki site 25 miles away in Ripon where Batchelors recently opened a used car centre. The group also has two Mitsubishi franchises.

Dale Wyatt, Director of Automobile at Suzuki GB PLC, said: “We are delighted to welcome Batchelors’ second Suzuki dealership to our network. With over three decades of experience of successful trading in the area they are very well versed with the needs of Suzuki customers. We look forward to continuing our strong relationship with the team at Batchelors.”

Lookers hits the right note with TV campaign

National retailer Lookers has launched its annual Big Sale TV advertising campaign featuring one of the UK’s most talked about music stars. The ad features ‘Be There’ by Fyfe, AKA Paul Dixon, whose mix of folk and electronic music has had more than one million streams across Apple Music and Spotify.

To listen and download ‘Be There’ click here

WORLD NEWS

CO2 cuts breathe new life into saloon cars says JLR chief

Slower selling saloons could remain part of JLR’s model mix as they are more suited for the fast-developing EV market, said its CEO Ralf Speth. Talking to Automotive News Europe, he said the focus on reducing CO2 limits in Europe and China will see renewed interest in saloons which are lighter and more aero efficient than SUVs.

https://bit.ly/2H4Lshd

Make profit in two years, VW warns Bentley

Bentley has been told by the two main shareholders of parent company VW to make profits within two years. The ultimatum came from its main shareholders, the Piech and Porsche families. Wolfgang Porsche said: “The important thing is for every [VW Group] brand to generate a reasonable contribution margin. That is not currently the case at Bentley and we are not satisfied.”

Adrian Hallmark, Bentley CEO, has said he is confident of a full-year profit in 2019.

https://bit.ly/2D3viRr

STOCKWATCH

Closing prices at 11 January and weekly movement

BCA 210.0p (n/c)

Cambria 56.0p (+1.0p)

Caffyns 375.0p (n/c)

Inchcape 584.0p (+29.0p)

Lookers 100.0p (+7.2p)

Marshall Motor Holdings 155.0p (n/c)

Motorpoint 204.0p (+4.0p)

Pendragon 22.3p (n/c)

Vertu 35.9p (-0.2p)

COMING UP

Auto Retail Live: Q1 Briefing 7 February. Register here

April 30/May 2. The Commercial Vehicle Show, NEC Birmingham in association with SMMT.

LAUNCH DIARY

February: Vauxhall Vivaro Life. MPV up to nine seats. Prices tbc.

MONEY MATTERS

SMEs have healthy finances for any downturn

Small and medium sized businesses have good liquidity with deposits double outstanding debts to weather any downturn according to the independent SME Finance Monitor, funded by major business banks. Invoice finance and asset based lending is growing and advances against them are comparable to total outstanding overdraft balances but fast growth businesses may need some equity finance too.

https://www.ukfinance.org.uk/the-state-of-smes-in-2019/

UK current account deficit worse than first thought

The UK’s Q3 current account deficit was slightly worse than previously stated at 5% of GDP instead of 4.9% after the Office for National Statistics corrected an error in its calculations. The ONS said: “A minor processing error has been identified and corrected in the current account balance as a percentage of GDP data. The error affected 2017 and 2018 quarters up to and including 2018 Q3.”

https://reut.rs/2H7oLJy

OUR BLOG

Can vans deliver profit as well as goods?

It’s a bit more than a few straws in the wind when Vertu buys a £35 million-a-year online van dealer, when Evans Halshaw puts more emphasis on its Vauxhall Van Business Centres, when the SMMT, NFDA and others are queuing up to say how strong the 2018 van market was and when auction reports show LCVs fetching good money.

That’s all happened in the past week or so and underlines the belief that vans are strong business at the moment, have been for a while in fact; last year was the fourth best on record which is impressive going against the otherwise gloomy economic backdrop of UK plc.

There is demand there and there is money to be made, perhaps more so than cars in many cases.

Vertu certainly thinks so. Speaking of the Vans Direct buy-out, chief executive, Robert Forrester, said: “We expect Vans Direct to generate an earnings stream with higher gross and net margins than those typically earned by the group, and we believe that the future growth prospects for this new business are significant.”

Tradespeople, fleets, smaller businesses, home deliveries and parcel drops from Amazon etc are powering the 2.5 to 3.5 tonne sector, the biggest of any in the overall LCV market with about two-thirds of total sales, but pick-ups have accelerated into the fast lane too and it is worth keeping an eye on these as well.

Asking around this week, few people seemed willing to tell me what the profit per unit is on a van relative to a similarly priced car. The manufacturers say there is substantially less money in fact, because the volumes aren’t there to generate the economies of scale which is why so many vans are done collaboratively between a few makers. At the retail end of the business the picture is rather different.

Or as one used sector retailer said to me the other day: “It’s not the ppu that’s the attraction, it’s the demand which means we can turn stock around faster. Put a good van or pick-up on a pitch and chances are it will be sold quicker than the car next to it so we can fill it with another one. After all, we live by dealing and you can’t deal on stock which sticks. Vans don’t and to us that’s the attraction.”

John Swift

Tags: CDK, Evans Halshaw, Kia, Lookers, Marubeni, service plans, Suzuki, Swansway