Covering all bases
The new car market has been a tough place to operate for most car brands since the onset of the economic downturn. Old ways of doing things have been questioned, revised or jettisoned in the pursuit of holding on to sales and retaining customers. The message coming from many car makers is just how important SME business is and what an essential role local dealers play in facilitating this sector.
Nowadays car manufacturers make a point of saying how much they have cut back on fast-churn, high-volume, low-return daily rental business. These deals may appease factories churning out products but they have a detrimental impact on residual values which affects everyone in the car buying and selling equation.
Brands pulling back from daily rental hope the slack will be taken up by the retail sector and through sales to end user fleets. This is where retention comes into play with dealers expected to deliver increasingly high levels of service to deliver customer satisfaction.
Duncan Aldred, managing director and chairman of Vauxhall, makes no bones about the need to pull right back from daily rental deals to concentrate on end-user fleet and retail business. He calls it a ”rebalancing” and is pleased with the results as Vauxhall’s customer satisfaction ratings are gradually improving following a period of heavy investment.
‘We've got a good and proven small business strategy in place with a field team that sees customers direct and helps dealers. It has made big strides for us.
‘We’ll deal direct with the big fleets and deliver through dealers. With small businesses the dealer effectively owns the deal,’ he says.
Local fleet is a big part of a dealer’s portfolio, with Aldred saying sales to businesses running up to 25 cars could account for up to 20% of their retail sales.
Volkswagen’s fleet experience is also indicative of wider economic trends with businesses holding on to cars longer than before.
‘Over the past six months there has been a deterioration of business confidence,’ admits Robert Hazlewood, Volkswagen’s UK director.
‘By talking to the big leasing businesses we can see the slowdown of genuine end user fleet business. Companies are looking at extending contracts, there is a genuine lack of confidence and fleets are being more prudent in their buying habits,’ he says.
Hazlewood said VW continues to outperform the fleet market but admits it is tough. The SME sector is performing well for the brand, especially after the launch of a programme earlier in the year aimed at strengthening ties between dealers and local fleets.
The scheme provides SMEs with leasing options across VW’s range with quotes accessed through its website. The service is also supported by a national call centre with cars and related services supplied by the local dealer.
It’s not mandatory but, tellingly, most of VW's 215 dealers have signed up for it. Previously VW’s fleet business had been channelled through 63 accredited dealers.
At the premium end of the spectrum BMW also values the importance of local fleet business. While the big fleet deals are handled direct, with dealers acting as supply agents, its retailers are encouraged to build ties with local businesses.
Significantly BMW is one of the few brands to now feature customer star ratings on its dealer websites. All customers are invited to rank dealers according to sales and service with one to five stars and unedited comments. It's a brave move with the inevitability of dirty linen being seen but it is a welcome development and one that will be welcomed by fleets weighing up who to do business with in the future.