Beefing up local solutions
New car sales have powered out of recovery mode into full blown growth, with the Society of Motor Manufacturers and Traders (SMMT) revising upwards its full year sales projection to 2.4 million. If the trade body is right this would put sales on a par with the pre-recessionary levels of 2007.
However, some believe the SMMT is being a tad conservative. Robert Hazlewood, director of Volkswagen, which itself is currently achieving record levels of sales growth, told me he expects the market to be even bigger.
‘I think everyone is now of the view that it will be somewhere between 2.4 and 2.5 million, which is almost getting back to the peak years we have seen previously. We're going to have a good year; I'm absolutely confident this will be the first year ever in the UK in which we will sell 200,000 cars,’ he said.
So what’s driving sales? For the past couple of years it has been the retail sector with private buyers finally confident about their long term employment prospects and property values, prompting them to consider trading-in their cars.
However, it's not just retail demand driving sales. The fleet sector is booming too with year to date sales to businesses running more than 25 cars up 9.6 %, while those to smaller firms with less than 25 cars has surged by 19.2%. Both figures recognise that a high proportion of fleet cars have been worked longer than their normal use by date and are now being chopped in.
The recovery has led many carmakers to review and revamp the way they manage their fleet operations at a local level, an acknowledgement that user-choosers, especially in smaller fleets, need to be treated the same as prime retail customers and that a well managed charm offensive is needed to attract and keep them with the brand; a vital consideration for dealers hoping to win service, maintenance and repair work.
Two years ago Volkswagen addressed this issue with the launch of a Small Business Leasing package through nominated fleet centres, in a strategic move to win and retain local fleet business.
‘I’m not sure any network has ever really cracked local business. Most will focus on retail, with some sites focused on fleet; it is more challenging in that local business arena,’ admitted Hazelwood.
‘But we have now spent a lot of time looking at putting the right sort of offers into the marketplace for local business users and then showing the less fleet orientated retailers just how they can take full advantage of that local marketplace. It’s a combination of clarity around numbers and training and development in individual dealerships.’
The move has paid off and established some mutually beneficial links between fleets and their local dealers. Importantly for Volkswagen it has also driven a higher proportion of its fleet business through its dealer network, with the brand looking at the big picture in which retention and aftersales play vital roles.
‘The programme has worked extremely well for our 57 fleet centres but in Q1 we’ve seen a genuine take-up of local business user fleet sales by our non fleet centres. That is a positive sign that this side of the business is starting to grow.’
Peugeot has also addressed its local fleet offering with the recent launch of its new Business Centre Network programme focused on providing local fleet services across the brand's car and light commercial product lines.
The initiative is only being rolled out to 88 of its dealers, less than half its total network, all of which have needed to meet strict standards criteria. Each site has a business specialist trained to talk fleets through the best product and finance solutions for their needs.
Nick Crossley, head of Peugeot business sales, is confident the service is addressing an important local fleet need.
‘We pride ourselves in ensuring that customers receive the very highest level of care and service tailored to their business needs.
‘The dealer standards programme ensures the highest quality of service across the dealer network, so that our business customers can be assured of receiving class-leading products and services.’
From an aftersales perspective, the Peugeot Business Centres will also provide specialist business aftersales advisors, a collection and delivery service, courtesy cars and dedicated car and LCV demonstrators.
What Volkswagen and Peugeot are doing is indicative of a wider trend among carmakers to beef up their local business offerings and what better way to do it than through their franchised dealer networks?