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The Master Plan - James Taylor Vauxhall Motors
Tech Line is going very well and it will be a key strategy going forward. Our Tech Line cars come with an aggressive price point. With them we don’t want to be competitive, we want to be best-in-class. There’s no point being in the pack – if you're going to make a step change you might as well be the best from a tax point of view.
On the face of it, it doesn’t look like it’s been a good year so far for Vauxhall, with fleet market share showing a steep decline. But it’s all part of the master plan, fleet sales director James Taylor reckons.
‘If you look at our registration performance you might say it looks disastrous, with market share down two to three per cent but there is a clear plan that should have longer term benefits. We’ve done a lot of work on residual value improvement, and focused on wholelife costs,’ he says.
‘We made the decision in the middle of last year on a change of strategy, and took 20,000 units annually out of short-cycle volume, and there’s been good news straight away on that front. Values for Meriva have improved: it’s the first car in a balanced supply situation, and the residual values of short-cycle cars are up £1,500 according to CAP. Of course, the market wants to see it’s not a blip, but over time you should be able to see these improved figures on longer cycles too.’
Taylor reckons that if you look at the relationship between short and long-cycle residual values, the two are intrinsically linked with the latter being roughly 50% of the former. So he reckons that logically, if he can improve short-cycle RVs, then long-cycle should get dragged up too, and that might equate to £10 a month lower lease rates.
He adds: ‘Coming out of the first quarter, we reduced volume by 7-8,000 units year-on-year. There will be a volume reduction in second quarter but not as much as the first, as we want them back first quarter next year when values are usually higher. What all this means is we’re looking to be more effective and work smarter.
‘It will take a year before people will really start to feel the effect. For the fleet marketplace, Insignia should start to show improvement in the next few months as well and of course that should have a big impact for customers.
‘It’s something that’s happened in the States too: they’ve taken hundreds of thousands out of short-cycle business, which is just phenomenal.
‘They’ve seen the benefits in their own business of doing it, and there’s no issue production-wise as we made the decision early enough, so that was fed into the planning. The UK market, despite the doom and gloom in the media, has actually held up year-on-year compared to the European market.
‘That the improvement in Meriva values happened earlier than we thought is great because it gives us something tangible, but this is a two, three-year execution and we need to make sure people give it the time. It will deliver some real benefits to customers and should have a direct reduction on lease rates, and now that leasing companies are now setting residual values every quarter rather than every six months, that should happen quicker than previously.’
If the hoped-for boost in residual values does happen, it will give the firm a huge fillip, on top of a new range of lower-emission diesel engines coming next year and the introduction this year of fleet-specific Tech Line models and the launch of Mokka. It’s a launch Taylor is excited about.
‘Mokka is our best opportunity for volume improvement out of our new models. The Mokka Tech Line is extremely well priced, at £17,390 for the diesel, which puts it ahead of its key competition such as Qashqai, and cheaper on BiK than Juke.
‘Tech Line is going very well and it will be a key strategy going forward. Our Tech Line cars come with an aggressive price point. With them we don’t want to be competitive, we want to be best-in-class. There’s no point being in the pack – if you're going to make a step change you might as well be the best from a tax point of view. When you add on all the extra spec, and add in the two to three thousand pounds that would cost in other cars, and then factor that into your tax, it’s quite a lot more cost on top. Drivers are getting savvier with this sort of thing.’
As well as the new models, more people are testing Vauxhall, Taylor reckons, because of the success of the test drive programme.
‘Our three-day test drive programme, in terms of volume, is up 40% up year-on-year, which is pleasing because 40% of people that have a test drive go on to buy the vehicle, and so it’s a very important tool,’ he says.
‘It’s the best in the industry, and it’s not a cheap exercise to get the right sort of car to the driver, and making sure they have the right experience. We hold the cars centrally, rather than have a few at dealers which may or may not be the right car, but it’s worth it as there’s a good business case for it, and given the scale of our business, we have a lot of cars that we have on demo anyway.’
Looking at the black and white figures, things may not appear so rosy, but Taylor is certainly confident that the radical plans put in place, plus the new products, spec lines and engines will put Vauxhall in a better place.
‘We’ve been very public with this strategy because one of the things we need people to understand is that this is something we are sticking too.’