Autotrader Follow Up Piece for Car Dealer Magazine

'As a follow up to my stinging article in the July issue of the magazine, I recently had a meeting with a regional director of Autotrader.


The fact that senior figures within Autotrader were prepared to engage in anything other than rudimentary business calls is a credit to the company, but the meeting did nothing more than highlight why the majority of car dealers are so unhappy.


Our disagreement focused on the current pricing structure and the perception of value. Autotrader say that their figure of around £9 a week per car is excellent value compared to spending £100 a week on a regional press title or in my case the cost of a used car display area. They also argue that a number of pricing and analytical tools are available to me, they have the highest amount of unique visitors AND I have a 'trusted advisor' (tossy corporate speak for a rep) to visit me and talk through my needs.


The visit also involved the introduction of a 'customer charter'. 'We want to hear your feedback so that we can improve our service, very much like the Natwest initiative'.


During the last 18 months Autotrader have made significant steps in customer service. The portal is excellent, customer interface has become more efficient and the people are pleasant.


I used to fly with British Airways but rarely do today. I liked the fact that I had a seat, that the cabin crew were polite and professional and they had an excellent safety record. What budget airlines did was strip the offer down to the base level but the product remained the same. Now I find it very difficult to justify the difference.


'But BA had a good year last year' said the director when I used this analogy.


My prediction is not that Autotrader will cease to exist - I still have an account albeit reduced - but like BA they will lose their market position. It is not enough to assume that service and market dominance will ensure the success of any company. I am happy to pay more for Autotrader than I would a competitor as I accept their current position as market leader but not ten times as much.


The irony of the introduction of a customer charter should not be lost on anyone. Every dealer in the land is screaming for a reduction in price but will they listen?

False economy in this economy - Latest Car Dealer Magazine Piece

For the last year, more than half of my enquiries have been from people looking to swap their existing car for one of mine or have been looking for cash back.

There is no doubt that rises in insurance premiums and regular increases in road tax have forced many to look hard at the cars they own and seek a change. A recent RAC report claimed that over a third of all motorists had reduced the use of their car due to the price of petrol.

Whilst it is a natural step to want to change your car to reduce some of these costs, for many people the logic of this process is flawed. I am constantly hearing of deals where a low mileage user chops in a perfectly serviceable petrol car for a new diesel to save themselves £100 a year on tax and gain 15mpg. However, the actual outlay of five figures plus interest if financed seems to escape their attention.

Most of the swap deals I am offered are against my 'part exchange to clear' cars. Some customers think it is in their best interest to swap a 50k petrol family hatchback for a 120k small diesel car with no regard whatsoever to the actual cost of annual maintenance.

Maintenance too is an area where people try to cut corners. How many people have stopped the routine service of their vehicle? How many cambelts are being replaced in this climate and if so with how many water pumps? The ostrich approach is common yet consequences are financially catastrophic when something goes wrong. Many of these cars are seen limping their way into dealers with the idea of passing the problem.

So far the reduction in vehicle parc has managed to delay the reduction in residuals of less efficient cars but there are signs things are starting to change as evidenced by last months book drop. At what point the cost difference starts to encourage buyers back these cars in big numbers remains to be seen but there are some great buys out there for the canny individual...

Autotrader - The frustrations continue...

For the last fifteen months I have been in regular contact with Sharon Randall. Sharon is the sales director of Trader Media Group, the company that owns Autotrader.


I had become exasperated with continual rate rises and lack of regional representation. I have often felt that in order to achieve results from a complaint, talking to the most senior person possible in a constructive and fair manner is the most effective way.


During our initial conversation I questioned whether multiple rate increases were justified given the current economic climate, particularly in the retail motor trade. I explained that to me as a dealer, Autotrader were just the means in which I broadcast my current stock to the country and that in essence all they had was a great domain, some servers and patented search system. Couple this with the fact that major competitors were offering to display the same number of cars for around 90% less.


I also explained that having spoken to many of my friends who had independent dealerships, I was not alone in my frustration. Another important factor I discovered in my conversations with fellow dealers was the reverence in which Autotrader was held. With the development of internet enquiries, many felt that despite continual lack of service and price rises, to leave Autotrader was too risky.


Naturally Sharon was defensive citing recent technical developments, strong user numbers and brand credibility.


During the same period I received a letter from another TMG company Auto-trade Mail outlining a 10% increase in their monthly subscription. When I called their sales manager to ask why given a huge increase in subscriber numbers and lack of product development, I was told 'because we have not put the price up for a few years'.


Six months later and the only thing that had changed for the positive was the regular contact from a very capable regional sales person. Another rate increase was looming, business was still slow and those feelings of angst that had temporarily disappeared under the surface began to rear their ugly head yet again.


So I put another call in to some dealers, to my regional representative and to Sharon.


This time some of the dealers were starting to act. Only a handful were doing nothing, many were reducing spend and a couple were leaving altogether.


I decided to reduce my spend from 35 cars to 10 which was is the minimum number allowed in order to gain full account facilities. My rep was disappointed but not surprised. She told me how she was having difficult conversations on a daily basis with dealers who were fed up with the continued arrogance of Autotrader. She told me that whilst she was unable to effect any kind of offer to change my mind, a special team had been employed at head office to try and recover lost dealers with reductions. I could not believe that a regional sales person had been given no ability to try and negotiate a better package.


I spoke to Sharon, we had another very similar conversation where her defensive weapons of technical development, user numbers and brand were employed but this time with little effect.


Sharon maintained that the development of mobile platforms (iPhone apps and the like) were the future and these developments had to be paid for. I argued that most dealers only view Autotrader as a search portal, no different to countless others. Customers are aware that many popular listings companies do not have mobile apps so whilst it maybe convenient for someone to find a car on an iPhone, the search does not end there.


She told me that the user numbers of both mobile and traditional platforms were much stronger than those of competitors. I argued that web statistics can be engineered for any purpose and that the only thing that mattered to me were deals not internet views.


She remonstrated that the Autotrader brand was by far the strongest and that dealers were paying for quality. I argued that a company who believes they have the strongest brand and that their pricing structure is value, do then not employ a team of telesales people to undermine the position of their regional counterparts with offers and discounts.


In February this year a dealer from Bath started the Motor Traders Advertising Union. I had absolutely nothing to do with the organisation but I welcomed it. Whatever their motive and regardless of their success, it provided evidence given the overwhelming support they garnered that dealers were taking action. MTAU galvanised negative opinion and forced Autotrader to act.


I had a phone call from my rep shortly afterward telling me there was a 50% reduction on all additional stock until July. This brought the average cost per vehicle back to a level which I felt comfortable with.


I spoke to Sharon again. I told her I was pleased that Autotrader were taking action and that in July I was hoping to see a revised pricing structure that would allow dealers to either come back or at least maintain higher stock levels.


I had a phone call from my rep this week. There is to be no revised structure. The deal has finished and that is that. She sounded desperate on the phone, she told me if she found another job tomorrow she would be gone. Having eighteen months of dealers lambasting would test anyone.


I read in June that the owners of TMG had refinanced the company to raise £280m for a special dividend. It means the company has taken on more debt and is more dangerously leveraged. When I read this my heart sank. Sharon is just a puppet, when private equity groups run companies they look for nothing more than a return. Years of customer relationships, staff morale and shared visions mean nothing when interest and dividends have to be paid

Survival of the fittest...

We are now in the second half of 2011 and what can I tell you? Well, the market is tough but you already knew that. At no point have I seen a market with so many variables out of dealer control to adversely affect the market. Exchange rates, natural disasters, low consumer confidence, dwindling used car parc, increased raw material prices and many others conspire to make these the most challenging trading conditions I have seen in my thirteen year motor trade life.


Being brutally honest over Christmas I almost threw in the towel. I spent two months over the winter looking hard at what I want out of life and came to the conclusion that I love this job, I love my business and it will not beat me.


After the Beijing Olympics I heard the team manager of Britain's dominant cycling team talk about how they had achieved success in a sport which does not have huge media exposure, has relatively small participation and limited investment. The essence of his reply was that they looked at every single process and aspect of what the team did. From diet to the material of their uniforms. They found that if they could improve by just one percent in every area, the collective result would be enough to be the best


in February I examined every aspect of everything I do. From where I source my cars to how I use Twitter. From where I get my fuel to how I interact with my local community. What I found was there were many areas which required improvement and I set about setting goals to try and measure the impact of my actions.


Whilst this has not suddenly meant I am challenging Lakshmi Mittal as the country's richest man, it does give me the confidence that I can steer a course through choppy seas until things improve.


I would urge you to do the same. Simply reducing costs is not enough. Analyse everything and I mean everything. Also bear in mind that for every positive action there will be a negative reaction. For example, deciding to stop your branded number plates will mean a lack of advertising and awareness which these can provide. Starting a Facebook group which is poorly managed can be detrimental to your image.


I cannot predict what will happen in the next twelve months but I do know that Charles Darwin might have been on to something...

Training is not draining...

There is no doubt in my mind that one of the biggest weaknesses affecting the retail motor trade is a lack of training and coaching.

Most dealers rely solely on the mandatory training enforced upon them by their respective manufacturers. Whilst this source of knowledge is often useful - particularly in product terms - it does little to develop individuals and encourage personal development.

There are some dealers who are over dependent on the use of external consultants. There are some excellent external trainers available, many of whom add value to a business when employed in the right areas at the right times but to diminish the training and coaching responsibilities of dealer management employees demonstrates a lack of faith in their ability to develop people.

To me it starts from the board level down. Directors and dealer principles must work with their managers to achieve budgets. I have seen senior managers who can hardly read a set of financial reports, let alone deduce the impact in a management context. Many senior managers who come from a sales background do not understand the after sales side of the business and vice versa. It is no sign of weakness to want to improve in these areas.

Many department managers are employed due to being very proficient as sales managers, workshop controllers or parts salespeople. However when it comes to heading up a team of other individuals, they can often enforce the style that saw their own success even though this may not work for other people in the team. Greater consideration has to be given and individual training and processes developed.

Good operational employees often know what to do to be successful but they do not understand how or why they are doing it. I have seen sales people insist on a customer taking a test drive even when it is clear the customer has been through the process somewhere else and just wants to deal. Of course experience teaches you these things but good management can hasten the development.

The best advice I can give anyone who has to manage, train or coach people is watch, listen and act. Clear objectives and individual attention to the training needs of each member of your team will result in better performance and greater workplace morale.

Pioneering for profit...

I like to think of myself as something of a pioneer. Back in 2001 I was the sales manager for a start up Saab dealer. Saab had a very sharp used car manager who awoke me to the possibilities of used cars on the internet. He had developed a basic excel spreadsheet which imported data from Saab's used car management system and it allowed you to monitor your prices for similar vehicles against other dealers in the network. 'If I were you' he said 'I would be £100 cheaper than your nearest rival and you will get incremental business'.

So that is precisely what I did. In my first two years before I left for BMW we had it away. There were very few people embracing the technology in this fashion, instead preferring to opt for what appeared to be more lucrative and a a less price sensitive local market. The benefit I had was I worked for a sizeable group in a middling brand so I was lucky to have a powerful cheque book at my disposal. Saab was a brand (probably still is to some degree) where sellers are happy to get a bid on late plate cars so I was able to buy effectively and still maintain my budgeted margin.

However, like all good things it came to an end. I left for BMW and there I found a group of similarly plugged in operators who were exercising a similar strategy. Gradually more and more people saw this process as the route for success which naturally undermined the whole concept as prices were forced down in an attempt to control the market. I modified my approach and instead focused my purchases on very odd cars, 6er and 5er manual derivatives for example.

Life is nothing if not cyclical and I can see a return to those good old fashioned values. Customers are now wary of buying a car just because it is the cheapest, having travelled long distances only to find a car that has been mis-described or on VCAR. The price of fuel means customers are less likely to drive 100 miles to be disappointed. Dealers are equally wary of distance selling regulations so they too find the lure of being cheap for the sake of it not as strong as it once was.

Change of face not game - The Tesco story...

So, after months of speculation, it has finally happened. Tesco are taking us on gang and I for one am not worried in the slightest. The talk of Tesco bringing about a revolution in the used car world is nonsense.

Can anyone remember Virgin Cars? Do Chevrolet still sell from Halfords? No. This business is unique.

Tesco is just Carsite rebranded. Carsite operate in a similar fashion to the recently departed Autoquake.

For those who are not aware, essentially Tescocars.com will be a re-marketing channel for leasing companies who are able to return improved residuals on end of contract cars. The benefit to Tesco will be a handling fee but most importantly the opportunity to upsell finance and insurance products.

Customers reserve cars for £99 and can either collect from a regional centre or have them delivered for £149 anywhere in the country.

In theory the process is easy, effective and allows Tesco to tap into the millions of customers they have stored on their database. So why am I not worried?

Primarily the purchase process allows for no test drive, no inspection or no part exchange. Three of the most fundamental parts of the used car buying decision. I know there are descriptions and virtual test drives and this will be good enough for some buyers but enough to change the market? I think not.

People may argue that a customer can sell their car through webuyanycar.com and then buy one from Tesco for an apparent 20% less. So that is 20% less for your part exchange made up by 20% saving.

The used car business has been, is now and always will be about the cars. They are unique, one of a kind. After a week of ownership from new, no two identical cars will ever be the same again. Therefore, Tesco will only ever be as good as their stock which in their case is limited purely to ex lease, Motability returns and daily rentals.

Of course dealers of all types rely on ex Motability or leasing cars but Tesco are only acting as an agent. They are not setting the price. Therefore the prices will only ever reflect what the cars are realising in an auction on any given sale day. Leasing companies do not owe Tesco a living!

Then there is the post purchase experience. I thought the website was a little ambiguous but from what I gather there is a 7 day cooling off period and a 3 month warranty.

If you don't like the car just send it back? Yes, less your £99 deposit plus the delivery fee. Great from a customers perspective but what will leasing companies think when they have had a car returned three times and are still awaiting payment?

You can never understimate the power of being a local garage in a local town. If you have the same car as Tesco (it may even be £250 more), the fact that the person can touch, feel, drive and part exchange their car will be enough to make it a futile exercise.

The 'Tesco Autocentre'. This is another name for a the NSN, a symbol group for a large number of independent garages. There will be no consistency in performance or ability. Some will be good, some will be bad. However, go into any Tesco store up and down the land and the product and service delivery will be the same.

Tesco are taking a massive risk using so many third parties to deliver one product under their priceless brand. The cars have to be great (I have sent a few MFL Direct cars back in two years of being a customer), the price has to be accurate, the models have to be desirable, the car has to have no problems and if and when they do, NSN have to be flawless. If a customer wants to return a car there has to be a no quibble approach. This is what people expect of Tesco but I believe they cannot control enough elements to make it happen.

I do not doubt for one minute that they will sell cars and if I was someone like Motorpoint I would be worried. However there is one thing to remember, any mug can sell cheap cars, Autoquake sold thousands of them. They just made no money, something Tesco historically have been very good at...

Law and Order - From Car Dealer April 2011

I think the recent signing of legal whizz Lucy is a great coup for Car Dealer. As proven in Big Mike's column last month, we are frequently bombarded with legal challenges as a result of selling cars.

This is nothing new, cars are mechanical items and whilst you rarely see the rust or engine failures of thirty years ago, we are now facing electrical issues that would make the guys at Apple cry. Couple this with the litigious nature of our culture today and 'how to get money back' type guides abound all over the internet, it often makes you wonder why we bother at all.

However, like Big Mike I am a proper dealer. I do not fear the law. When I have an issue with a car I fix it. Simple. If the car is out of the warranty period or the claim is for something which is deemed wear and tear, I make a contribution. I don't have to but whether or not I have a legal obligation to the car, I still have an ethical one.

I have yet to fall out with any of the hundreds of customers we have sold cars to in just over three years. I regularly Google the name of my business and I am not being pilloried on any review site or car forum. I know my local trading standards officer but we have a good relationship and he has no boxes of complaints on his desk with my name on them.

This has to do with the way we prepare cars as much as anything. When I signed off my first approved used car check as a sales manager for BMW, there were a number of advisory items. 'Do them' I said to the workshop controller. 'Crikey, the last bloke would have left them all' he replied. I could never understand this. Why mortgage the future for the sake of a few quid today?

In some perverse way I welcome problems - albeit the small and cheap to repair ones - as it gives me a chance to demonstrate both how competent and professional we are. It may seem like crappy corporate speak but there is no greater opportunity for a customer to become an 'advocate' of the business than when you have demonstrated effective problem management.

There are times when my solutions do not meet the expectations of the customer. I can't give money back at the first sign of trouble. I cannot cover every item on a car with 80k which costs just £3000. In the same way that the law is designed to protect consumers, it is also there to protect us as dealers.

Where have all the heroes gone...

'There is a positive adjective which you rarely see in any other industry which is very motor trade specific. 'Proper'. I do not think I have seen Wayne Rooney described as a 'proper' footballer or Snoop Dogg described as a 'proper' rapper. I would however describe all the people that I admire and respect in the motor industry as 'proper'.

Proper in a motor trade context means someone you can trust who acts with honour and integrity, someone who will help you out when you need a favour and most importantly of all, knows how this business works.

Unfortunately, there appears to be a worrying declining trend in the proliferation of these people. The first time I realised there was a change of mentality was when dealers stopped taking cheques from each other. I don't blame a business for protecting their interests, I look to those individuals who bounced a cheque on someone, did not settle a finance agreement or were funding cars that did not belong to them. What happened to honour amongst thieves?

It has now perforated even more trivial aspects of the trade. How many of you have collected a car from another dealer only for it to be mis-described? I am not talking about an alloy wheel scuff, one stamp missing in the book or a chip in the screen, I am talking six owners not two, lights on dashboards ('it wasn't like that when I appraised it') and even poorly executed approved manufacturer checks. There is very seldom a positive outcome to any subsequent negotiation, suffice to say it is another dealer or individual you will not do business with again.

The latest evidence in the decline of 'properness' is the advent of electronic used car disposal systems. I wonder how many times I have been used as some kind of fallback position only for a dealer to then try and use your bid to make a profit. I certainly do not have a problem with dealers making a profit, but if a car is not available to buy, do not offer it to me. Use your skill, value the car yourself and good luck. There is also the issue and I hear about it frequently, 'they put the car down to me, someone else rang them up and offered them more money and they sold it to them'. This is not good to hear.

There is also a shortage of 'proper' customers. 'I understand Mr Customer that you are not a motor trade professional but when you are telling me about your part exchange on the phone, I would expect you to tell me about the slippling clutch or missing service history as these are very obvious'. I heard a horror story from another trader the other day about a customer who wanted to return a car due to it needing a new engine, when the warranty company investigated, they found the car had been drained of oil, ran dry and then refilled once it broke.

I know that I am doomed to live in a world where in order to protect yourself and your business that examples like these are only going to become more common but the scary part of all this is I am only 32, how cynical will I be when I am 50...'

Flaming Forums...

During my motor trade sales apprenticeship, I acquired the affectionate nickname of 'the geek' long before it was cool. This was purely down to the fact that I had been to university whilst my colleagues were alumni of the university of life and would be lucky to scrape a pass.


Back then, a geek was someone who had their name sown into their socks, wore the sort of glasses that could withstand an IED and who actually knew that a Bunsen burner was for something other than setting pencil cases on fire.


However, two years ago I bought a left hand drive Mercedes and I turned into a geek...


My website designer, for the sake of this article I will call him Adam, that is actually his real name so my apologies for the lack of creativity, had introduced me to the world of Google Analytics. 'You can do loads of stuff like checking entry paths to your website, check search keywords, geographical data etc etc' he told me. 'OK mate, will check it out' I replied.


This Mercedes was a minter, 25 years old, one owner, primrose yellow and proper history. Nothing too out of the ordinary but not exactly your every day retail fodder.


Analytics told me that there was a large interest in the car from a large motoring forum and my daily web traffic went bananas. I set up a log in and password to the forum and I officially started wearing trousers which were too short for my shoes.


If you have had no experience of motoring forums, they are like the masonic lodges of the car industry. Code words, inside jokes, regular meetings and special favours abound. I commented on the thread (discussion about a topic) and got absolutely no feedback. So over the next few months I observed, read and occasionally commented on various threads and gradually got to know the terms and inside jokes.


As I got a bit braver I started a couple of threads which were motor trade specific. At this point it is worth confessing to not being a car enthusiast like many. I am a trade enthusiast. As people had seen some of my posts and I was no longer a 'newbie' a few people started to comment, some with good feedback, a few with negative. Nothing I could not handle.


Then I started a thread called 'What planet do some car buyers live on?'. With hindsight this is probably the most incendiary title I could have written. In my OP (original post) I posted an e-mail conversation with a guy who had bid me £1500 off a £6000 car which had gone a little unsavoury. To be fair to the customer, he was as polite as could be before he hammered my twig and giggleberries but I bit and sent him a rather flippant e-mail back. Cue a bit of a slag fest where he questioned my business credentials and I - humble as ever- questioned his human worth.


Anyone who has ever sold cars for a living will hopefully understand the point of my question but the motoring masons did not. In metaphorical terms I was stripped naked, tied on horseback and paraded through the streets of London with the angry townsfolk hurling flaming turnips in my direction. In three days it drove literally thousands of people to my website. All PR is good PR or so they say. Not me, I was close to calling Red Adair to put out the fire.


After about a month and me begging the administrators to take the thread away, I could pick through the embers of what had been my forum life.


It taught me a massive lesson about how we in the trade are perceived and how I must empathise more with each individual car buyer. Just because I have heard 'what is your last price?' a million times this week, to that customer he is spending his hard earned and I must acknowledge and appreciate the opportunity for him to spend it with me....

And the Oscar goes to...

If you want to see my ugly mug discussing whether car dealers should be engaging in social media then you can do so here:

http://www.cardealermagazine.co.uk/publish/video-should-car-dealers-be-using-twitter-and-facebook/48120

Pope to a Dope...

I don't know about you but I was surprised to see the Pope rocking a converted Mercedes ML during the recent Papal visit. I expected something a little more Motability and a little less pose-ability. Still, if his boss is happy with his company car choice then who am I to question what car he stands up in? I even Google'd 'Popemobile' and saw that the late Pope John Paul used to have a modified Mercedes G Wagen. This latest German incumbant is not waving the patriotic flag for Mercedes, it seems the boys in Stuttgart are the chosen supplier of the Papacy.

It got me thinking about other unusual or unexpected modifications. Who can forget the Renault Espace with the Renault F1 engine rocketing around Silverstone prior to the British GP years ago or any number of Top Gear created specials? There is one converted car which very few of you will have heard about and even less will have see. My mate Bernardo's Vauxhall Chevette.

Bernardo is a free spirit, an enigma if you will. He disappears from the country for years at a time and returns as a new character. One minute a labourer in India, the next a Spanish bus driver. He is like the real life Mr Benn.

Bernardo's Chevette started life as a conventional red saloon. Bernardo however wanted it to have more of an identity. So he opened the shed (his real shed not the Chevette) and took out some tins of black and white paint. Paint brushes in hand, Bernardo painted the doors white, the body black and applied the words 'to protect and serve' on the front wings. That's right folks, Bristol's own LAPD squad car had been born.

A stickler for detail, he even applied a Sherrif's badge on the doors albeit that he chose the Star of David rather than a conventional badge but Bernardo was a multi-faith law enforcer.

The car was seen in the Bristol area for many months, Bernardo came to visit his brother and I (we were room mates) in Bournemouth and took us on a street cruise. People pointed, shouted and waved. One bloke even offered to pay us to take him to his office Christmas party so he too joined the patrol and was the envy of all his mates when he turned up to his hotel.

I will leave you with the best story. Bernardo, like his heroes from the American police dramas, was a flamboyant driver. He announced his arrival at B&Q one day by hand brake turning the car into a parking space. On entry to the store the security guard said 'if you drive like that on the way out I will call the law.''I am the law' replied Bernardo..