Trend Tracker :: Latest Entries

DIY job card analysis

Trend Tracker — Tue, 16 Feb 2010 19:46:27 +0000

Analysing job cards is an essential research tool for our reports on the market for servicing and repairs. It is the simplest way of deriving the average values of jobs and revealing the strengths and weaknesses of the two principal market suppliers - franchised and independent. The method, albeit arduous and boring, is relatively straightforward and it's the kind of research any franchised workshop or independent garage can do for themselves.

There are two approaches: either an uncomplicated 'job count' or a full analysis including average job values. To paraphrase the instructions for computer software, the former is 'recommended' and the latter is for 'advanced users'.

For a 'job count', you just need to list common jobs in a table. These could include, for example, routine servicing, tyres, MOT testing, brakes, exhausts, engine/electronics, battery/electrical, suspension/steering, gearbox/clutch, cooling ….. 'other' (to cover everything else not specifically identified). As we are usually only concerned with the retail market for servicing, maintenance and repairs, we don't include internal or warranty work but you might like to add these as broad categories.

Next you select at least 100 job cards from a week or two during a reasonably busy period like September or October. If, for instance, the first job card off the top shows a routine service, two tyres replaced and front brake pads, then you place one tick against each of these categories. Then you just carry on through the rest of the job cards in a similar fashion. Finally add up the total number of entries in each category and overall to arrive at what percentage each is of the total.

In an analysis we completed recently on a franchised workshop, the dealer returned 1.7 operations per job card or 170 separate operations for 100 job cards. Of these 170 operations, 69 were routine services, 24 brakes, 19 MOTs, 16 engine/electrical, 7 tyre replacements and 3 suspension/steering. On the other hand a recent check on an independent revealed 1.3 operations per job card with 47 MOTs in 100 jobs cards, 29 routine services, 12 tyre replacements, 10 brakes and 7 suspension/steering.

These results are fairly typical and not unexpected. The franchised workshop is a routine service specialist with 70% of job cards led by a service. The independent garage carried out many more MOT tests than the dealer, more 'repairs' and does reasonably well from servicing too.

Interestingly, the franchised dealer concerned has a comprehensive DMS computer (dealer management system), but only markets its MOT facility infrequently. The independent has no computer at all however the owner runs a simple MOT reminder system. This consists of a filing box divided into 24 months (because MOTs can be for 13 months). He makes out MOT reminders when customers collect their cars and places them in the divider 12 months hence. When the time arrives he sticks stamps on that month's MOT reminders and puts them in the post. Remarkably simple but obviously very effective!

Written by Trend Tracker director Chris Oakham, this piece first appeared his column in the subscription monthly Auto Retail Bulletin in January 2010. (See www.auto-retail.com for subscription details.)

And so it begins

Trend Tracker — Tue, 16 Feb 2010 19:43:55 +0000

Previously we have explained how the number of cars on the road up to four years old has a knock-on effect to the aftersales market. As new car sales fall the so-called 'four-year car parc' diminishes in size and franchised dealerships, which rely on younger cars for servicing business, start to feel the effects. Then as time passes this dearth of cars becomes a problem for independent garages targeting older cars. What is less well understood is that a falling four-year car parc impacts on the market for car body repairs too, because it is generally newer cars that are repaired after an accident.

Right now our company is working hard to complete two major reports on the markets for car body repairs and servicing. With all the research complete the effects of the falling four-year car parc are already apparent.

The four-year car parc has been falling since 2004 because new car sales peaked in 2003. However the fall was barely detectable at around four per cent, 2004 to 2007. Then as new car sales fell off the proverbial cliff in the second half of 2008, the pace quickened and we calculate that by the end of 2009 the fall will amount to 15% since 2004; and by 2012 the fall will be 25%.

In the bodyshop market, the number of repairs has fallen eight per cent since 2006 and the falling four-year car parc is a key driver. Clearly there are other factors at work including: car usage, write-offs, recession, weather, vehicle design, used car sales (refurbishment), propensity for motorists to claim, etc. But there is a strong correlation with changes in the four-year car parc.

In the market for car servicing, maintenance and repair, our principal indicators come from a consumer survey we have run continuously since 1993. This survey asks 1,000 motorists every month the simple question: “Where did you last have your car serviced”. The earliest results found that 24% of motorists had their last service at a franchised dealership. This peaked at 30% in 2005 and the trend has been downwards ever since. The latest result for 2009 is 27.8%. Again there is a strong correlation with the four-year car parc.

Of course players in the service market do not have to accept this situation and they can reach out to motorists in other age segments. But in the car body repair market it is insurers that decide which cars are repaired. The number of car body repairs has already fallen by eight per cent in three years and our forecast model suggests a fall of 14% between the recent peak in 2006 and 2014.

Adapting to these 'black holes' in the aftersales markets will be a challenge for players, who need to adopt long-term strategies as these markets will not 'right' themselves any time soon.

Written by Trend Tracker director Chris Oakham, this piece first appeared his column in the subscription monthly Auto Retail Bulletin in November 2009. (See www.auto-retail.com for subscription details.)

Dealer survey is not all doom and gloom

Trend Tracker — Tue, 16 Feb 2010 19:37:25 +0000

Earlier in the year in this column we discussed the state of franchise networks and our new study of the used car market. As is often the case in these troubled times, the situation changes almost daily as better information comes to light. For once, though, the new information is not all doom and gloom.

The latest intelligence on franchise networks indicates far fewer site closures than was estimated nearly twelve months ago from trends early in the recession. The number of franchise sales points is presently estimated to be just over 5,000 operating from around 4,300 sites. While this is a lot healthier than the estimates reported in January, thanks to many fewer closures in the second half of 2008, the rate of closure is still averaging over three per cent of sites per annum. This equates to 600 closures over the next five years.

In April we covered the half-time results of a survey of franchised and independent dealers looking at used cars. At that point the news was far from good with enquiries overwhelmingly down and interviewees - both franchised and independent - predicting used car sales down 15% this year compared to 2008.

The survey was completed at the end of May after interviewing 200 dealers in depth. The final result for used car enquiries compared to 2008 was still negative with 81% of franchised dealers and 75% of independents saying they had definitely noticed a fall. The final result for used car sales in 2009 compared to 2008 was less pessimistic than the half-time results indicated with both franchised and independent dealers predicting an average fall of 10%.

Another area we examined in April was gross profit margins, which at that stage of the survey were similar to 2006. The results of the completed survey confirm that franchised dealers are sustaining similar gross margins to 2006 - around 10% - but independents' margins have fallen three percentage points to just under 13% mainly because of a substantial rise in reconditioning costs to the same level as franchised dealers.

The dealer survey also looked at vehicle stock and what changes dealers will make because of the recession. Sixty per cent of franchised dealers and 57% of independents said they are re-profiling their stock and the chart details the expected changes.

How dealers are changing their stock profile due to recession

While the survey did not explicitly cover the now widely-reported shortage of used car stock, both franchised and independent dealers had between 5% and 10% less stock than in our 2006 survey. Comments collected during the survey reinforced the notion of stock shortages with franchised dealers apparently experiencing most problems probably because lower new car sales mean fewer part-exchanges to resell as used cars. We would therefore speculate that the current stock shortage is due to higher demand from franchised dealers focusing on used and buying at auction to make up for the lack of part-exchanges - rather than genuine consumer demand.

Written by Trend Tracker director Chris Oakham, this piece first appeared his column in the subscription monthly Auto Retail Bulletin in September 2009. (See www.auto-retail.com for subscription details.)

Death and Taxes

Trend Tracker — Tue, 16 Feb 2010 18:56:34 +0000

The saying “Nothing is certain but death and taxes” has been attributed to various authors including Daniel Defoe and Benjamin Franklin. Almost as inevitable as 'death and taxes' is the way the UK's population is ageing. This evolving age profile will be a key factor in car purchases in the future. And it is not even the distant future that politicians baffle us with when they talk about pension provision. Your customers' needs will be changing quite dramatically within ten years.

The chart is our interpretation of data freely available from the Office of National Statistics and shows the age profile of the UK's population now and in five years. Noticeably the two lines are almost identical in shape reflecting the certainty that people who are around now are quite likely to be here in five years - give or take influences like immigration and emigration.

If you look carefully, there is presently a distinct peak at 62 years old, but the largest group by age is between 38 and 47. Looking forward another five years to 2014, the peaks move along five years to 67 and 43 to 52. Clearly in ten years the peaks are 72 and 48 to 57 …. and so on.

This ageing process has implications for car sales and even aftersales. Older customers have different requirements - you don't need us to tell you that - and gradually you will see customer preferences change. Older customers are, for a start, more risk averse, which might see them choose, for example, cars with longer warranties or safer cars. Despite the recession these customers will be wealthier with many perhaps enjoying an inheritance. This could affect point of sale finance volumes. It is believed that older customers tend to be more loyal, but you have to wonder how this loyalty might be challenged by prolonged exposure to the internet in ageing generations who are undoubtedly savvy in this respect.

As these various 'lumps' of population get older their requirements might change when it comes to the style of car they buy. They might only need a small car if their children have left home with some opting for a sports car, perhaps. They might not need more than one car.

Other retailers are obviously already adapting and you can see the results in clothes shops and supermarkets. Clothes are bigger and styles are changing for an older population; supermarkets too are appealing to older customers in smaller households with reduced portion sizes and meals for two.

Our main point is that the UK's ageing population changes your customers and you will have to make a conscious effort to adapt. But how? What will happen and what you must do falls into a category we call 'research we would like to do' because, to the best of our knowledge, nobody has addressed this very important area as it relates to car dealers - unless the vehicle manufacturers are keeping very quiet!

Written by Trend Tracker director Chris Oakham, this piece first appeared his column in the subscription monthly Auto Retail Bulletin in August 2009. (See www.auto-retail.com for subscription details.)

Why scrappage incentives are wrong

Trend Tracker — Thu, 05 Nov 2009 15:14:27 +0000

Former Trend Tracker analyst and now business academic Dr.Michael Wynn-Williams has contributed our latest white paper, Scrappage by Numbers, explaining why importers have been almost alone in benefiting from the taxpayer's investment in resuscitating employment in UK car production. And sad to say, although we like to be right, two reports from the BBC noted by Trend Tracker's Chris Oakham confirm his argument:

On 5th November a BBC online news item entitled "Scrappage sees UK car sales surge" reported that new car sales had recorded their biggest increase so far this year in October, helped by the scrappage scheme. "Encouragingly, there has also been an increase in demand in the fleet and business sectors, which will be critical in sustaining recovery next year," the BBC reported SMMT chief executive Paul Everitt saying.

On 11th November, another BBC online news story reported, "UK trade gap widens in September". The UK trade deficit widened more than expected in September, it said, led by a jump in car imports as Britain's scrappage scheme helped foreign carmakers. The difference between what the UK exports and what it imports was £7.2bn in September, well above analyst expectations of a £6.1bn deficit. September's overall trade deficit was the biggest since January.

Who'd have thought that one might cause the other?

Our latest report advocates a radical reshaping of the automotive industry

Trend Tracker — Mon, 02 Nov 2009 15:32:42 +0000

In the wake of the collapse of GM and Chrysler and many of their suppliers, Trend Tracker's latest report, published on 2 November 2009 - by auto industry academics Dr Paul Nieuwenhuis and Dr Peter Wells of Cardiff Business School - forecasts radical reshaping of the global car industry.

No conventional management report, Car Futures - Rethinking the automotive industry beyond the American model - is aimed at policy makers, academics, environmental NGOs, and of course, the industry itself. The authors say, “We hope to shock all of these interest groups at least some of the time as a contribution to the reconstruction of what remains a vital industry.”

Drawing on the history of the auto industry since mass production began in Detroit, the authors argue that the crisis of the once-'Big Three' (GM, Ford, Chrysler) has put in question the whole American business model, copied worldwide, that once underpinned their dominance.

They write in the report's Executive Summary, “There is a mistaken belief among car manufacturers that their activity is the be all and end all of automobility. While there is no car market without somebody making a car, there is no business without somebody making money, and that is where car makers seem to be missing a trick or two. Manufacturers only capture a limited slice of the total automotive value chain.

“New business models for the future would need to capture more of that value chain by integrating assembly, distribution and aftercare. This kind of thinking could also ultimately lead to a more sustainable car industry in economic, social and environmental terms. The current recession with its attendant credit crunch may well accelerate this process of industrial transformation. Many current players have proved to be ill-adapted to the 21st century automotive ecosystem. We may see some radically new business models emerge within the next 10 or 20 years.”

If you are interested in the future shape of the industry, see the Reports pages on this site for more details of this report and how to get hold of it.

Auto Retail Bulletin on the UK used car market

Trend Tracker — Tue, 20 Oct 2009 10:33:08 +0000

The October 2009 issue of Auto Retail Bulletin, the business newsletter for senior executives in auto retailing, carried a feature on some of the key findings of our latest 'Future of the Used Car Market in Great Britain to 2014' report. (Click on the heading above to download.) Those of you who are concerned with used car market trends may find it usefully amplifies the information posted in our Reports pages. For more information on the excellent Auto Retail Bulletin - to which Trend Tracker's Chris Oakham contributes a regular column - go to www.auto-retail.com.

Redundancy is not the only option

Trend Tracker — Tue, 01 Sep 2009 15:08:45 +0000

There are many ways of executing research projects and our preference is to utilise telephone surveys. We like to go directly to the horse's mouth and obtain our information first hand. In other words we don't guess anything; we use so called 'primary research'. If necessary we will phone up and interview hundreds of people or businesses. However the sample so obtained has to be representative. In the case of franchised dealers, for example, the profile data always include total staff employed and might even include a breakdown of staff employed by department. And thereby hangs a tale.

When completing a telephone survey you don't obtain an interview from every call. But for franchised dealers we usually complete an interview for every two or three contacts. We call this our 'hit rate'. Lately out 'hit rate' for franchised dealers has fallen from one interview per two or three calls to one in six and the reason is fairly clear - redundancies combined with holidays. The downturn, and dramatic fall in new car sales, has hit franchised dealers hard and they have been forced to act on staffing levels and the average number of staff employed has fallen by over 10% from a year ago.

Digging deeper, we note that car sales executives and service technicians have been affected most by either 'natural wastage' or redundancies. Given that two-thirds of the staff in dealerships work in these positions, it is hardly surprising. But as sales executives and service technicians are responsible for generating sales, are cuts here a sensible choice?

Obviously every franchised dealer has to act swiftly and responsibly to economic conditions otherwise they could join the burgeoning list of failures. Our point, though, is that it might be better to cut jobs in non-productive areas and/or ask employees to accept fewer hours, and therefore less pay, or simply reduce pay rates. This might seem controversial, but other industries and retailers are implementing such options successfully.

Preparing for our forthcoming service report update, we have investigated the effects of the recession on franchised dealer service department revenue and the fall in service sales is around 12% - accounting for both retail and internal (new car preparation). The average dealership employs just short of six technicians so by making one technician redundant, or not replacing one who leaves, the productive capacity is reduced by 17%. The shortfall has to be made up by the remaining five technicians through increased productivity, thus increasing bonus, or overtime working. More than that, we have found a large number of dealers disinclined to take on apprentices, who almost always contribute to overall productivity.

The upshot is that the savings are nowhere near as large as might be expected and it is a similar story in the sales department especially as salaries are highly-geared to commission. Clearly every case is different, but it is well worth considering all the options with staff before acting.

Written by Trend Tracker director Chris Oakham, this piece first appeared his column in the subscription monthly Auto Retail Bulletin in July 2009. (See www.auto-retail.com for subscription details.)

Nineteenth Motor Trader Industry Awards 2009

Trend Tracker — Fri, 10 Jul 2009 05:53:30 +0000

Trend Tracker director, Chris Oakham, was amongst 830 people at the Motor Trader Industry Awards 2009 held at the Grosvenor House Hotel, Park Lane, London yesterday evening, 8 July. The 19th Motor Trader Industry Awards celebrated the achievements of companies and individuals challenging the worst recession in the UK retail motor industry since the early 90s - and succeeding. Trend Tracker would like to add their congratulations to the winners of the 18 categories:

Motor Trade Business Management Award
Sponsored by ASE incorporating Trevor Jones
Winner: Julie Oliver, Mitchell North West

Most Improved Business Award
Sponsored by NIG
Winner: L&L Automotive Mercedes-Benz Hertfordshire

Customer Care Award
Sponsored by Car Care Plan
Winner: Ken Jervis (Kia) (Stoke-on-Trent)

Aftermarket Innovation Award
Sponsored by Mobil 1
Winner: Ken Jervis (Kia) (Stoke-on-Trent)

Marketing Award
Sponsored by AutoTrader.co.uk
Winner: The Car Shop (Northampton)

Website of the Year Award
Sponsored by Motors.co.uk
Winner: Sytner Group Ltd (Leicester)
Highly commended: Clive Sutton, Holden Group

Product of her Year Award
Sponsored by Motor Trader
Winner: Castrol Professional - Red Carpet Training
Highly commended: Motor Codes

Used Car Retailer of the Year
Sponsored by Aviva Driveaway Insurance
Winner: Thame Service Station (Oxfordshire)
Highly commended: TC Harrison (Derby)

Bodyshop of the Year
Sponsored by Britannia Accident Assist
Winner: AJC Wilson Bodyshop (Essex)

Garage of the Year Award
Sponsored by Motor Codes
Winner: Academy Group (Manchester)

Car Franchise Of the Year Award
Sponsored by Mondial Assistance
Winner: Kia Motors (UK)

Service Adviser of the Year Award
Sponsored by Castrol Professional
Winner: Michael Allison, Sinclair Volkswagen
Highly commended: Jazz Mann, Chiswick Honda (London)

Sales Team of the Year Award
Sponsored by MAPFRE Abraxas
Winner: L & L Automotive Mercedes-Benz Hertfordshire

Sales Manager of the Year Award
Sponsored by Dealerweb
Winner: Gareth Lloyd Sinclair Volkswagen

Dealer Principal of the Year
Sponsored by eBay Motors Pro
Winner: Amarjit Shokar Romford Mazda (Romford)

Franchised Dealership of the Year Award
Sponsored by Experian
Winner: Now Kingston (Middlesex)

Dealer Group of the Year Award
Sponsored by HPI Finance Gateway
Winner: Sytner Group

Outstanding Achievement Award
Sponsored by Aviva
Winner: Robert Forrester (Vertu Motors)

Cars: choice or necessity?

Trend Tracker — Fri, 26 Jun 2009 15:02:43 +0000

A weighty tome landed in our office this week: 'The Car in British Society' from the RAC Foundation. It is the latest incarnation of what started out life as 'The Lex Report' latterly becoming 'The RAC Report'. Running to 158 pages, it is impossible to do the 2009 edition justice here, but merely pick out a few uplifting facts for motor retailers.

The RAC Foundation has very different objectives to the authors of 'The Lex Report' who focused entirely on issues of importance to dealers. But then the RAC Foundation was established to protect the interest of the motorists whereas Lex was, at the time, the UK's largest dealer group. Essentially the new report is about the changing nature of car ownership and in many instances the data follow trends over decades. Unlike its distant predecessor, however, this new report is not based on a substantial and original survey but assembles various sources including government statistics. Nevertheless it is an extensive piece of work and many of the key findings and conclusions are crucial indicators for motor retailing.

Unsurprisingly the study finds that cars totally dominate travel in the UK. Quite simply with 85% of individual travel by car, no other form of travel comes even close, which has to be good news for motor retailing. But the report does point out that whilst car use has grown for nearly half a century, this trend now seems to have come to a halt with growth since the early 2000s only in proportion to increases in the adult population. The authors say that the reasons for this are unclear; however it seems to us that their reported 'saturation' of driving licence-holding of 70% of adults might be an important contributor.

Low-income households have experienced the most growth in car ownership over the last ten years. And although there has been some convergence in car use between low income households and the average population the difference is still large. The study confirms that car owners highly value the freedom and independence a car offers. In particular there is reference to the necessity of cars for work, shopping, and even after-school child escort trips for parents. Compelling evidence is provided to suggest that the vast majority of drivers have little interest in public transport and the report points out that between 80 to 90 per cent of people say they would find it difficult or impossible to adjust their lifestyles without a car.

Drivers are, though, not unaware of the costs of owning a car - economically and environmentally. People do adjust car use according to economic pressures, but most cannot envisage a future without their cars and most would go to considerable lengths and expense to maintain their ownership and use.

You cannot help feeling after reading this report that cars are a necessity and it would take events of seismic proportions to change usage patterns, which in the long run has to be good for retailers.

The Car in British Society can be downloaded as a PDF file at www.racfoundation.org.

Written by Trend Tracker director Chris Oakham, this piece first appeared his column in the subscription monthly Auto Retail Bulletin in June 2009. (See www.auto-retail.com for subscription details.)

New car finance research highlights dearth of credit

Trend Tracker — Thu, 04 Jun 2009 13:06:37 +0000

Our latest investigation is into car finance, updating a report which we first published in 2004. Since then the whole world has gone pear-shaped and the financing of car purchases has been hit hard in the credit crunch.

The background to the present troubles began with a financial crisis in the banking system in 2007, followed by a credit crunch in 2008, which has resulted in worldwide recession. The UK government and the Bank of England have taken fiscal and monetary measures to lessen the effects of a potentially severe recession, but so far these actions appear to be having a limited effect on the fundamental problem underlying the recession - the unwillingness of banks to resume lending to small businesses and consumers.

The consequences for car sales have been dire. Registrations of new cars to private buyers were down by 11% in 2008 compared with 1999, but they were down 44% compared with their peak of 1.25 million registrations in 2003. Sales of used cars have remained more resilient falling by an estimated 3% between 2003 and 2008 but still 12% higher than the 6.46 million used sales in 1999.

We estimate that the total retail car finance market including dealer point of sale (POS) and direct lending declined by 50% in value between 2003 and 2008. In real terms, taking into account the effect of inflation, the market fell in overall value by 58% between 2003 and 2008.

The dealer POS car finance market declined in value by 17% between 2003 and 2008 with the number of finance transactions declining by 23%. So clearly the dearth of available direct lending is a major cause of the present problems in the new and used car markets.

Competitors in the retail motor finance market comprise vehicle manufacturers' captive finance companies, independent finance companies, the high street banks and building societies, and other direct lenders. The number of independent finance companies operating in the UK motor finance market has declined over the past decade, due largely to consolidation effected by mergers and acquisitions.

The independent finance companies rely on their bank parents for long-term funding, but the banks' need to shore up their own balance sheets, and coupled with their inability to raise funds cheaply in the wholesale markets, it raises questions over the long-term future of their motor finance subsidiaries. Here in the UK vehicle manufacturers' finance companies need to access state-funded liquidity and credit guarantee schemes to continue lending, which they have so far been unable to do.

Recovery of the new and used car markets, particularly retail, clearly depends on the availability of finance. We estimate that the total number of loans and finance transactions for both new and used retail car purchasing fell by 51% between 2003 and 2008. And although our forecast for the next five years is for an increase of 38%, this falls well short of 2003 levels and represents a market volume similar to 2006/07.

Written by Trend Tracker director Chris Oakham, this piece first appeared his column in the subscription monthly Auto Retail Bulletin in March 2009. (See www.auto-retail.com for subscription details.)

New car sales could take six years to recover

Trend Tracker — Thu, 04 Jun 2009 12:46:12 +0000

Not since the recession of the early 1990s have so many dealers asked us what will happen over the next few years and what they should do to prosper against all the odds. Well at least some dealers seem to have overcome the initial doom and gloom and are now looking for the upside. But this does not lessen the problems in the new car market and it is here that we must initiate any search for upside strategies.

The starting point for any prediction of the future prospects for new car sales is the long term trend. What happened in the past? The download chart records new car registrations between 1959 and 2007 and then runs forward with predictions to 2013. Highlighted in red are the years affected by recessions - 1974/75, 1980/81, 1991/92 and 2009/10 (prediction).

At first sight the consequences of previous downturns appear similar. In '74/'75 new car sales fell by nearly 25% and took six years to recover to pre-recession levels. The fall was less at 12.6% in 1980/81 and the recovery only took four years even though the recession was severe with GDP falling by 6.1% between its peak in 1979 and its trough in 1981. A fall of 20.7% occurred '91/'92 and it was another six years before new car sales reached the same level as 1990.

Arguably, though, the consequences of the 1990s recession were actually worse because, as now, new car sales started to fall earlier (in September 1990) and the fall was 31% from the high of 1989 with the recovery taking 12 years on this basis. The present situation has some similarities to '91/'92; new car sales were already falling since the peak in 2003 and have deteriorated substantially since August 2008.

The most optimistic scenario is that shown, which is based on new sales in September 2008. The prediction is 1.78 million new car sales in 2009 - a fall of 18% from 2008 - followed by 1.8 million in 2010 and a six-year recovery period to the same level as 2008. However the picture is potentially much worse if you start with 2007's sales and apply the fall of the early 1990s. This works out as 1.66 million registrations in 2009 and a recovery of 12 years. The downturn could easily be this bad or worse if for no other reason than the present dearth of credit. Back in the early 90s credit was not really an issue if you could afford the sky-high interest rates - the Bank Base Rate reached 15% in 1990.

Our own assumption is the best-case scenario and we have utilised this in several market models already including our recent report on the UK market for servicing and repair. And thinking about servicing and repair this is surely one of the more recession-proof areas, or is it? If new car sales fall as shown, then there will be a consequent reduction in the 0-4 year old car parc of 20% within five years and thus less work for franchised dealer service departments, which rely on younger cars. Overall we don't believe the market for servicing and repair will fall appreciably because when motorists hang on to their cars they eventually have to spend money on maintenance. So servicing and repair is potentially an upside provided dealers act decisively to retain service customers with older cars. The simplest strategy is to retain customers who bought used cars from the dealership. Service retention levels for used cars sold by dealers average 22% but the best performing dealers exceed 40%. It almost goes without saying that upselling service customers is now crucial.

While the new car market has suffered badly in previous recessions, used car sales have been more robust - dropping less than 10% and recovering more quickly. This time it could be more tricky if credit is problematic, but the big slide in used car values does make used cars more accessible and perhaps easier to finance.

As always when business is tough, expenses and overheads must be reined in. Staff cutbacks are inevitable and in 1991/92 the average franchised dealer reduced staffing levels by 15%. Quite simply seventy per cent of an average dealer's total gross profit is spent on wages and salaries, and therefore a 15% reduction here is worth considerably more than a 15% reduction elsewhere.

You view on the final upside depends what happens to your dealership. In the last five years 17% of franchised dealer sites have closed down. In the next five years we believe another 14% are likely to go. Clearly this means more business for those that remain, which was certainly the case after previous recessions.

Written by Trend Tracker director Chris Oakham, this piece first appeared his column in the subscription monthly Auto Retail Bulletin in December 2008. (See www.auto-retail.com for subscription details.)

Mashing bangers: the UK's revenue-neutral scrappage scheme

Trend Tracker — Mon, 18 May 2009 16:38:19 +0000

When UK dealers taking part in the scrappage incentive scheme invoice for new cars exchanged for scrapped clunkers, they will find that the £2,000 allowance is VAT-inclusive. Manufacturers passing on the £1,000 allowance they receive from the Government can reduce their input tax on the sale of the new car by £130, leaving a net contribution of £870 from the taxpayer, based on the current temporarily discounted 15% tax rate.

Discussing the scheme, Auto Retail Bulletin's May issue helpfully notes that when it went live on 18 May, it was still not clear how HMRC would treat the VAT involved in the scheme, particularly where it may involve VAT-registered light commercial vehicle dealers who would not normally pay VAT at the point of sale.

The scheme has been introduced with an apparent lack of joined-up government among the government departments and agencies involved, and with apparently an at best lukewarm blessing from The Treasury. As Professor Garel Rhys has noted, it stands to boost the sales of a number of dealers, but only those of Nissan among the UK's remaining car plants, since 86% of UK-sold new cars are imported, and the rest are all far beyond the reach of those who've made do with old bangers.

Some of us think all scrappage schemes are market-distorting and create sated consumers to dampen a future recovery based on consumer confidence in paying real, sustainable market prices. At least in the UK scheme's case, it hasn't been clouded with dubious claims of environmental benefits. And we can take comfort from the modesty of the UK scheme. The Germans have spent €2.5bn on allowing clunker owners to swap ancient Polos for cheaper new Porsches should they wish, and they can buy them in Poland if they prefer.

While we estimate that if the average price of a scrappage incentive-driven new car purchase in the UK is £8,500 or so, the Government's £3,000,000 budget for the scheme will be more or less recouped by VAT receipts that HMRC would not have had without the scheme. So at least the rest of us won't have to pay for other people's new cars.

Toby Procter
18 May

Why the decline in auto retail finance?

Trend Tracker — Mon, 18 May 2009 15:58:14 +0000

Auto Retail Bulletin's May 2009 issue carries a feature on Trend Tracker's 2009 UK Retail Car Finance market study, explaining how the global financial crisis has interacted with new and used car demand and hit direct lending even harder than point-of-sale vehicle finance.

Auto Retail Bulletin is a subscription journal to which Trend Tracker director Chris Oakham contributes a monthly column on topical auto retail and aftermarket issues. Our thanks to editorial director Rupert Saunders.

Brand new from Trend Tracker - The UK Retail Car Finance Market 2009 report

Trend Tracker — Wed, 25 Feb 2009 15:38:01 +0000

Does your business have any exposure to the UK retail car finance market? If it does, you won't need to be told that it has done neither lenders nor borrowers any favours in the past year. But in our 2009 update of the UK retail car finance market study we offer something much more useful.

The UK Retail Car Finance Market 2009 from Trend Tracker analyses the impact of the global financial crisis and the recession in the UK from a longer-term perspective, basing market forecasts to 2014 on a clear understanding of trends in market volume and value since 2003. If you work for a company that will still be around to exploit the coming recovery, you will need to understand just how far the market has moved since before the crisis erupted. You need to assess how vigorous that recovery is likely to be, and understand why it won't restore demand even to the level of three years ago. This report will help you do just that.

There's no doubt the motor finance market is influenced by complex factors. It plays chicken-and-egg with supply and demand for new and used cars, just as inter-bank lending and retail credit are also directly, painfully related. Finance oils the wheels of car sales, but it can also lock them up, as now. Understanding the complexity of the factors behind the trends is what distinguishes Trend Tracker as the preferred source of intelligible, relevant data to so many major companies in the UK automotive sector.

While the full extent of toxic debt in the banking system is still unknown, and the full horror of 2008's decline in new car sales has yet to be revealed, it's still possible to see clearly beyond the current crisis. Trend Tracker remains confident that our analysis fully supports a rational forecast for the finance market's direction out of the crisis. A forecast that suppliers would be wise to heed when assessing the resources they will need in future.

Please go to the 'reports' section of our website to download the detailed contents pages and list of tables and charts for this report to see if it really can help you plan a post-crisis future for your business.

Available now the report is £1,450 + VAT for a PDF file and bound copy. You can buy the report using your credit card online now and download a zip file containing a PDF of the full report and a 15-slide Powerpoint summary. The hard copy will then be despatched to you within three working days. Alternatively phone us on 0870 421 4350 for other ways to buy.

Buy single sets of results from the rts Auto Retail Industry Salary Survey 2009

Trend Tracker — Tue, 03 Feb 2009 18:46:05 +0000

You can now buy single pages from the rts Auto Retail Industry Salary Survey 2009 reporting basic and total pay for individual jobs for £15 + VAT each. Available as an instant PDF download, in most cases the information comes complete with the job description as well as salary information by region and nationally. Download the free sample for a car valeter now!

These individual pages cover:

Bodyshop Painter / Panel Beater
Bodyshop Foreman / Estimator (job description for Estimator only)
Bodyshop Manager
Bodyshop Receptionist / Adviser
Car Sales Executive (job description for Sales Executive but salary details merge Sales Executives and F&I Managers)
Dealer Principal / General Manager
Dealership Accountant
General Clerical Assistant (job descriptions are for Ledger/Accounts Clerk, Database Controller, Accounts Assistant/Cashier and Sales Administration Assistant
Sales Manager (job description for General Sales Manager)
Parts Counter / Warehouse Assistant
Parts Manager
Parts Sales Representative / Telesales (no job description available)
Parts Delivery Driver / Van Sales (job description for Parts Delivery Driver)
Service Department Clerical Staff (job description for Warranty Administrator and Service Receptionist
Service Mechanic (no job description available)
Service Foreman / Workshop Controller (job description for Service Foreman)
Service Manager
Service Receptionist
Service Technician

New Trend Tracker research on automotive sales training

Trend Tracker — Fri, 12 Dec 2008 18:20:13 +0000

The December '08 issue of the excellent Auto Retail Bulletin newsletter (see www.auto-retail.com if you haven't seen it before) has a summary of a pilot survey carried out by Trend Tracker this year - the first ever independent survey of UK franchised auto retailers' satisfaction with the short sales training courses offered by carmakers.

This pilot survey revealed a 20 percentage-point gap between the best and worst performers, and most importantly, indicated where each manufacturer is most in need of improving specific aspects of their sales training provision.

We hope to carry out a full-scale version of this initial survey during 2009, and will be inviting manufacturers' training departments to join a syndicate programme to fund the work. And then, we hope to be able to conduct a similar survey of aftersales staff training programmes. For those who pay more than lip service to the principle that competent people are the most valuable resource of a retail network, we believe this research should provide valuable insights that haven't so far been available to benchmark performance in the field.

You can download the Auto Retail Bulletin summary here.

Toby Procter
December 2008

New data on the German aftermarket from Trend Tracker partner

Trend Tracker — Mon, 22 Sep 2008 15:55:31 +0000

Later this autumn Trend Tracker expects to be able to offer UK customers an unrivalled new report on the European aftermarket, published by our German colleagues at Wolk & Partner following a very extensive research programme. As soon as we have more information, we'll let you know full details.

Meanwhile, Wolk & Partner has developed a comprehensive database of 47,594 automotive service & repair businesses which are either franchised dealer workshops or belong to various independent garage networks. All are listed by name and address with mail, phone/fax and e-mail contact details, are mapped to show network densities throughout the German regions, and can be sorted by location and by manufacturer/franchise.
The data can be deployed for mailings, acquisition assessments and network planning, and Wolk is able to support clients' B2B marketing efforts with geo-marketing, applying mapping to the database at federal and regional levels. Wolk can also supply bespoke analyses of the database, analyzing workshops, for example, by number of productive staff. Ask Toby Procter for more information if you could use this data - call 0870 421 4350.

Wolk & Partner, a company which has kept tabs on the structure and size of the German light vehicle aftermarket since 1996, says there are currently some 1,050 trade aftermarket parts outlets serving over 1,950 workshops in the independent aftermarket. The trade is dominated by six major wholesalers (Stahlgruber, WM, Trost, Europart, PV, KSM) operating on a national scale, and 17 supra-regional wholesalers. Around 1,000 parts & accessories retailers serve a still-growing German B2C market.

A recent report from Wolk & Partner covers the German independent aftermarket for parts in two volumes, the first including data on the market size and structure, the second providing detailed information on the various players, with over 60 corporate profiles of aftermarket suppliers and their networks.

A second two-volume report from Wolk & Partner covers Germany's independent workshop networks. The first volume includes the results of a survey of workshops' opinions of their 'soft franchises', and gives contact details for 91 major 'soft franchise' businesses. The second volume compares 44 independent garage networks, each being analysed in 4-6 pages of comparative data for benchmarking purposes.

These reports, in German, are priced from €950 depending on a choice of optional formats and packages, but special UK prices will apply. Contact Toby Procter of Trend Tracker on 0870 421 4350 for more information.

Pre-publication offer on The Castrol Professional Car Service & Repair Trend Tracker 2008

Trend Tracker — Tue, 05 Aug 2008 14:22:54 +0000

The latest addition on our Reports page offers advance information on The Castrol Professional Car Service & Repair Trend Tracker 2008 report. Due for publication in October, this report can now be ordered at an 'earlybird' saving of £225 off the published price of £1,250 plus VAT. While we're grateful for Castrol's sponsorship which continues a long association with Trend Tracker, this latest report represents a major development of an established series. To see why we feel justified in believing this report will be THE definitive UK automotive aftersales market study, go to the Reports page on this site.

Tips on car paint care

Trend Tracker — Wed, 09 Jul 2008 14:01:29 +0000

Wisdom has it that the Web works best if live links lead browsers to information sources they may not have suspected existed, and in that spirit, links to this site and others appear on a consumer motoring site which has recently offered tips on caring for the paint on your car - at http://www.cararticles.co.uk/uk-car-paint-care-tips.html

Without expecting many 'punters' to need as much detailed information and forecast data as our new report on the UK Car Body Repair Market 2008 offers, we're happy to point Trend Tracker visitors to this recently-launched vehicle for news and comment aimed at UK motoring enthusiasts. And indeed, whenever any industry or consumer site publisher sees relevance to their own content in what we publish at Trendtracker.co.uk, just let us know and we'll look into the possibility of creating reciprocal links.