27 May 2019

• HONDA TO CUT 30 RETAILERS
• SCATHING REVIEWS FORCE MOTOR OMBUDSMAN RETHINK
• VW SAYS 1% SERVICE GROWTH AN EASY WIN
• BEST-IN-INDUSTRY PAY PACKAGE FOR BMW TECHNICANS
• FCA CONFIRMS RENAULT MERGER BID
• CAR MAKERS TO SLASH ADMINISTRATION COSTS
• STOCKWATCH – Motorpoint heading for 10% rise this month
• LAUNCH DIARY – Fiat Tipo Sport, Renault Clio, Honda-e
• COMING UP – BRC shop price index, Nationwide house price index, AA and Lookers AGMs, Motorpoint final results
• MONEY MATTERS – Businesses should refocus on GDPR

Honda to cut 30 retailers

Honda has told its franchised retailers it will shrink its network from 155 to 125 sites over the next three years as part of an initiative to double return on sales from 1% to 2%.

Speaking exclusively to Auto Retail Agenda, Phil Webb, Honda Cars managing director, said: “Honda UK will be reducing its dealer network in order to create a sustainable and independently viable business model for the future – both for Honda UK and for our retail network. Currently at 155 dealers and with a 1% return on sales, the objective over the next three years is to move toward having 125 dealers and to double our return on sales.”

The latest edition of Auto Retail Network’s Franchising Report shows the Honda network currently registers 339 cars per site, well below the UK average of 435 cars per franchised dealer per year.

“While there are number of elements impacting this decision, such as changing consumer behaviours and the powertrain shift as we move toward 100% electrification, the reality is that the average drive time for a new Honda retail sale is 35-40 minutes. Our network is currently mapped on a 20 minute drive time. Competitor brands with similar market shares have smaller networks, generating the opportunity for a higher return for each site,” said Mr Webb.

“We have already made changes around our representation model with the introduction of hub, spoke and island. This has enabled significant efficiencies, but we need to move this further. In light of the above, we will be reducing the network to 125 sites over the next three years, ensuring that we are focused on doubling our return on sales for our investors.”

Scathing reviews force Motor Ombudsman rethink

The Motor Ombudsman has more than doubled its customer service headcount after getting a rating of just 1/10 on the Trustpilot user review website following scores of complaints about the scheme.

Around 7,500 retailers and service businesses are accredited to one or more of the Codes of Practice it polices covering car sales, vehicle warranties, servicing and repair covered by The Motor Ombudsman (TMO).

Bill Fennell, TMO managing director, said: “For the full 2018 calendar year and January to April 2019 period combined, the volume of Trustpilot reviews represented only 2.2% of the cases that we worked on, and just 0.14% of the total contacts made to The Motor Ombudsman during this time.

“In response to the concerns raised, we have made significant changes to our organisational structure during the past 12 months and increased our headcount by 122%, all of which was focused within the Customer Service department in order to achieve an improved experience for customers and businesses.”

VW says 1% service growth an ‘easy win’

Volkswagen says growing the annual servicing throughput in its retailer network by 1% should be an easy win as it targets owners of older models.

It says it wants to claw back servicing work of its older models from independents by more than doubling the age of car for which owners can buy a service plan from eight to 20 years.

A spokesman said: “Our service penetration really drops off as cars age and lose value and this is a way of trying to reverse that. Our service throughput across the retailer network is around 1.2 million a year and if we could add just 1% and put another 12,000 cars in our workshops our dealers would easily cope with that and get the extra work and that should be achievable given the size of the car parc.”

Best-in-industry pay package for BMW technicians

Group 1 Automotive is offering what is claims as best-in-industry packages as it looks to recruit 60 technicians for permanent roles in its Barons and Chandlers BMW network.

With technician recruitment and retention one of the most difficult areas retailers currently face, Group 1 is advertising salaries of between £29,250 to £39,375 a year, with potential to earn more linked to training and is flexible on the working hours pattern.

Dealership jobs board, Autotech Recruit, which is handling the placings said: “We have been trusted by a major international dealer group with the recruitment of 60 permanent BMW vehicle technician roles with some unique benefits. Our client is expanding its workshop workforce in the UK and is seeking qualified and experienced vehicle technicians to join their company on a permanent basis. The whole package on offer is the best we have seen in this industry.”

WORLD NEWS

FCA confirms Renault merger bid

Fiat Chrysler has confirmed it has made a `transformative’ merger proposal for French carmaker Renault in a move that would create one of the world’s biggest car makers and deliver annual savings of around £4.5 billion the companies need to fund development of electric and self-driving vehicles.

Stock markets liked the news; shares in Renault jumped 17% within minutes of the announcement and those in FCA by 19%.

In a letter to employees FCA head Mike Manley said the deal could take more than a year to finalise.

https://bit.ly/2EBXbAj

Car makers slash administration costs

Car makers struggling to squeeze profit from their operations have begun slashing administration costs as they target billions in savings. This week Ford revealed plans to shed about 10% of its workforce with 7,000 jobs to go by late summer and perhaps as many as 550 in the UK from marketing and communications as part of its global restructuring which it says should save around £475 million a year.

At Daimler new chief Ola Kaellenius is reported to be targeting a 20% cut in central administration salaries.

STOCKWATCH

Closing prices at 24 May and weekly movement

Motorpoint heading for 10% rise this month

BCA 185.4p (-3.6p)

Cambria 63.5p (1.0p)

Caffyns 410.0p (n/c)

Inchcape 579.0p (+12.5p)

Lookers 86.5p (-1.5p)

Marshall Motor Holdings 165.0p (n/c)

Motorpoint 198.5p (+10.0p)

Pendragon 23.1p (-0.2p)

Vertu 40.2p (+2.2p)

LAUNCH DIARY

Fiat Tipo Sport. New flagship version of the range. From £19,255.

Q3. Renault Clio. Fifth generation supermini, prices tbc.

Honda-e. Online (refundable) reservation of £800, deliveries from spring 2020. Prices tbc.

COMING UP

Wednesday: British Retail Consortium shop price index

Friday: Nationwide house price index, consumer credit, mortgage approvals

5 June: AGMs, AA plc, Lookers

11 June: Motorpoint final results7

MONEY MATTERS

Businesses should refocus on GDPR

Managers should refocus on GDPR after regulators revealed they have received more than 60,000 notifications of data breaches in the first year since the legislation took effect.

Mark Thompson, of KPMG, warned: “With hundreds of investigations currently in progress we are slowly starting to see substantial enforcement and fines as a result of non-GDPR compliance. This shows that organisations still have a long way to go in placing privacy needs at the top of their priorities and at the centre of their operations.

“Privacy was definitely high on the board level agenda last May, but it has since slipped down the priority list. It needs to be considered like any other critical asset and be consistently thought of as a priority at board level. Data is an asset that, mishandled, can become a liability that damages your brand and destroys trust.”

John Swift

Editor

Auto Retail Agenda

Tags: Auto Protect, BMW, Honda, Motor Ombudsman, Motorpoint, technicians, VW