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...
Thursday, 18 August 2011
Monday, 1 August 2011
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
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...
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...
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