Published on September 24, 2014
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Index Editorial 2 Key Industry Indicators 3 Framework for Service Profitability 4 ROI on Social Media 6 Automotive Dealer Confidence Index 7 U.S. Market Report 9 Improving Dealer Profitability 12 In-Depth with Benchmarker 17 Recognising Top South African Motor Dealers 26 Paddy O’Brien from Down Under 28 Contact Us 29
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Any Questions? Edition: September 2014 | sewellsgroup.com 2 EDITORIAL A Spread of Essential Reading Manish Jar Group Managing Director For Everyone in Motor Retail Dear Readers, We are excited to bring another global edition of Benchmarker to you. Let me start by thanking you all for an overwhelming response to our first global edition. It is your feedback and encouragement that keeps us going. I must confess though, that at one point in time, we were really not sure if a global edition would actually work. But it did. Yet another reminder of how flat the world has come to be. Well, we all know that the planet we live in is diverse in significant ways, yet it is always a happy feeling to discover the common threads that run across the geographies, cultures and markets. This edition of Benchmarker actually celebrates this diversity as we present to you a potpourri of articles covering multiple facets of auto retail. Delightfully, there is a common thread that runs through this entire issue as we endeavour to bring the best practices from around the world to you. The opening section, as always presents very useful dealer performance indicators from multiple markets and Greg Strydom in his article, that follows, thoughtfully unbundles the levers of service department profitability. Our in-house Social Media Expert, Dimitri Kotov, brings some more insights from the fascinating world of Social Media. As thought leaders in auto retail performance improvement space, we always strive to contribute to our ecosystem. A step in this direction has been the recent launch of the Sewells Group Automotive Dealer Confidence Index (ADCI) by Sewells Group India. We believe that in the months to come ADCI will become an important lead indicator of retail sales in India and hope to launch this index in other markets as well. The article on Sewells Group ADCI offers some more details on the subject. Other than other regular features by Tony Noland and Paddy O’Brien, this issue also features an insightful article on Dealer Profitability by Dennis Anderson for our friends in the emerging markets. Finally, the most interesting part of this issue is the dealer interviews which explore very meaningful best practices of auto retail. After all, ‘Sharing and Growing’ is the eventual mission of this exercise. As we know, social collaboration is reshaping our world in more ways than one and we are contributing our bit. Enjoy reading and keep writing to us. Manish K Jar Manish Jar is the Group Managing Director of Sewells Group. Other than managing the general affairs of the company, he consults with strategic clients. His areas of interest within auto retail domain are network strategy and leadership development. He can be reached at email@example.com Send me a message on Linkedin! Click here “...we all know that the planet we live in is diverse in significant ways, yet it is always a happy feeling to discover the common threads that run across the geographies, cultures and markets.”
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Brought to you by eSOS, the global dealer financial reporting system of Sewells Group “Sewells Group believes in measurement as a critical business management practice.” Edition: September 2014 | sewellsgroup.com 3 INSIGHTS Key Industry Indicators This specially compiled table presents the key performance indicators for franchised motor dealers in the listed countries. These have been assembled by the Sewells Group operations in the listed countries and represent current ‘best practice’ norms in these markets. Each item is an independent key indicator. Sewells Group believes in measurement as a critical business management practice. If you measure your performance and can compare it to an industry indicator, you are in a position to evaluate and potentially improve that area of your business. You will then be able to create a collective discussion with your management team around why your performance should be better than the given indicator and delve into the factors, which might be restricting your business from achieving these levels of performance. Finally, when conclusions are reached, the key points of these discussions can be converted into actions for the management team with clearly defined targets to be achieved. Dealership Overall Australia New Zealand China India Indonesia Philippines Thailand South Africa Total Dealership Gross Profit % of Sales 15.16% 13.56% 9.30% 11.52% 13.60% 11.10% 9.80% 15.21% Total Expenses % of TDGP 87.93% 84.34% 76.65% 70.70% 91.70% 58.00% 63.00% 77.09% PBT % of Sales 2.36% 2.25% 2.63% 2.29% 1.10% 4.70% 3.60% 3.15% Asset Activity 4.6 5.52 7.4 5.02 2.5 5.1 4.2 7.2 Return on Operational Assets 10.50% 14.03% 17.99% 10.94% 2.80% 23.80% 15.20% 19.46%
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Any Questions? Edition: September 2014 | sewellsgroup.com 4 Looking for a Framework for Service Profitability Greg Strydom Global Retail Consulting Lead From an earnings and returns perspective, contributions from fixed operations make the difference between an investment that makes sense and one that leaves the owners wondering why they bothered in the first place. For a dealership to be viable it has to be stable, well-managed and profitable. Although front end operations like new and used vehicle sales, accessories and aftermarket sales are important to turnover, fixed operations cannot be underestimated. With new vehicle margins under increasing pressure (in some cases slipping below 5%), the need for the service department to capitalise on the over 65% gross profit to sales it has available, is crucial. This raises an important question, what business model should the service department follow to ensure the dealerships remains balanced and healthy? Most service departments operate under a classical capacity model. The most relevant and comparative example we can look at is a dentist’s practice. The dentist business offers a unique blend of maintenance and repair work, undertaken by limited resources for customers who would rather not be there. The ability of dentists (or more importantly, Service Managers) to leverage their skills in a productive and efficient way influences the level of throughput they are able to create as well as the earnings they make. The drivers of profitability under this model are complex, but can be condensed to the following key components: MARGIN MANAGEMENT Margin management is the ability of the workshop to create a balanced mix of income streams i.e. contributions from retail, internal, warranty, fleet and sublet. These need to be managed to maximise the level of gross profit contribution; a healthy mix would reflect a gross profit to sales figure over 65%. Greg is the Head of Global Retail Consulting Practice and Head of Solutions at Sewells Group Australia. He is based in Melbourne. Greg works with a wide range of OEMs and dealers across the globe. His focus areas are retail performance and after sales. He can be reached at firstname.lastname@example.org Send me a message on Linkedin! Click here “...the need for the service department to capitalise on the over 65% gross profit to sales it has available, is crucial...”
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe “... dealers who relentlessly manage these components will set themselves up for considerable benefits...” Edition: September 2014 | sewellsgroup.com 5 Looking to a Framework for Service Profitability EXPENSE MANAGEMENT The extent to which throughput and gross profit relates to the operating expenses incurred by the department. A quick way to look at this is to measure the retained portion of gross profit (i.e. profit before Tax/Gross Profit). Dealers should be looking at retaining at least 25% of their gross profit on the bottom line. CAPACITY MANAGEMENT The extent to which productive resources are kept busy with customer paid work. This is the responsibility of the workshop management team and is reflected in the relationship between available hours and clocked hours; a target of greater than 90% applies. WORKFLOW MANAGEMENT This is the ability of productive resources to complete work on time and without compromising on quality. Sound work processes and the skill and motivation of the technicians are important here. The metric is the relationship between worked hours and sold hours; a figure above 110% is the target. The importance of fixed operations and in particular, service contributions are no longer under question. In fact, dealership viability and investor returns depend on it. Without a healthy service department there is no viable dealership business model, and so it makes sense to get your service model right.
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Dimitri Kotov Head - Social Media Solutions Dimitri Kotov is the Head of Social Media Solutions at Sewells Group. He is based in Melbourne, Australia and works closely with many motor dealerships showing them better use of social media to increase brand awareness, customer loyalty and sales. He can be reached at email@example.com Any Questions? Send me a message on Linkedin! Click here Edition: September 2014 | sewellsgroup.com 6 TIME TO GET SOCIAL Are You Getting ‘Real’ ROI from Your Social Media? At a unique gathering of marketing professionals in Melbourne, two presenters spoke about their efforts to ‘engage’ with their target audience through social media. They talked of consumer sentiment, and paid lip service to metrics that attempted to quantify the return on investment of their efforts. The presentations solidified in my mind the fact that most marketing agencies are still fumbling their way through the social media landscape. It also means that too many dealerships are paying for a marketing service without a ‘real’ return. To help guide dealerships in this endeavour, I’ve noted the FOUR questions they should be asking their marketing agency about the ROI of their social media: If the answer to any of these questions does not satisfy your hunger for ‘real’ ROI, then you may wish to reconsider your investment. Whether you have already chosen the path of utilising social media or not, just like every other activity in your dealership, there should be clear rules for success with your social media efforts. As with anything, educating yourself will enable you to make better decisions that won’t leave you wondering. Follow Sewells Group! facebook.com/sewellsgroup twitter.com/sewellsgroup linkedin.com/company /sewellsgroup ‘… there should be clear rules for success with your social media efforts…’ ‘… too many dealerships are paying for a marketing service without a “real” return…’ How many website visits do I receive from my social media sites? 1 How much customer data (enquiries) have I captured from my social media sites? 2 How much of my customer database is being communicated to via social media? 3 What campaigns have we run on social media sites, and how much customer data (enquiries) did we capture as a result? 4 S/M ICONS
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Automotive Dealer Confidence Index to Quantify Nationwide Dealer Sentiment Sewells Group’s second Automotive Dealer Confidence Index Report Shows Dramatic Improvement in Dealer Sentiment Edition: September 2014 | sewellsgroup.com 7 The automotive industry in India has been a sunrise sector, contributing a significant share to country’s GDP. A healthy and growing domestic market, an active and constructive involvement from the government, growth of domestic auto manufacturers to become true global players and presence of multiple global brands in the country have made sure that this industry has come of age in India. Automotive dealers are closest to the ‘action on the ground’. They are in constant touch with customers, potential customers, OEM staff and competition dealers. Consequently, each dealer carries a wealth of insight that shapes his / her sentiment about the near future. Sewells Group aims to be able to represent this collective sentiment in the form of an index, whose movement over time will reliably predict the direction of wholesale and retail sales across brands and categories. Globally, confidence indices are viewed as reliable precursors to business performance. Such indices aim to capture and quantify the sentiment of various industry stakeholders – be it CXOs, suppliers, vendors or distribution partners who usually are in the middle of the action. People within the industry, typically use these indices to get a sense of stakeholder sentiment and optimize their actions in line with the sentiment. Market analysts, on the other hand, interpret theses indices as a ‘lead indicators’ of the performance of a particular industry or sector. An accurate, representative index may demonstrates a high level of correlation with actual business performance. Sewells Group Automotive Dealer Confidence Index is an attempt to capture and quantify the sentiment of auto dealers across the length and breadth of the country, representing a host of brands across product categories. With everything else in the Indian auto sector being executed at a global scale and with global vision, Sewells Group believes that the time has come for Indian auto industry to have a dealer confidence index. NEED FOR AN INDEX TO CAPTURE DEALER SENTIMENTS THE SEWELLS GROUP APPROACH The sentiment of the dealer fraternity is captured through a survey designed specifically for this purpose. The survey delves into areas such as impact of current economic scenario on market and dealership business, expected performance of market and the dealership over the next six months and view on current levels of sales, inventory and profits vis-à-vis previous quarter. It also captures views about current levels of sales, inventory and profits vis-à-vis same period in the previous year as well as their expected levels over the next six months. The survey collects the dealers’ opinion about dealership manpower strength of in the future,which is representative of their sense of optimism in the business. All of these factors provide information to derive the index value. This index value is measure of how dealers see the overall market and their businesses performing in next six months. The ADCI is designed to vary between -100 and +100 where an index score of -100 represents the most pessimistic outlook, and +100 indicates the most optimistic sentiment. The ADCI survey is administered in the beginning of each quarter, to capture the sentiment of the dealer fraternity at the end of the previous quarter. The survey results in an ADCI index at the end of the previous quarter.
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Figure 2 : Results of survey conducted in July 2014 showing the movement of ADCI over the last quarter Edition: September 2014 | sewellsgroup.com 8 Automotive Dealer Confidence Index After the successful inaugural ADCI survey conducted in April 2014, Sewells Group conducted the second survey in the month of July 2014 to calculate ADCI for the quarter ending June 2014. Responses were received from 126 dealers, across 75 locations, representing 21 different brands. The second edition of the survey represents an interesting point in the political and economic environment in India. This was the quarter in which a majority government has been elected at the Centre for the first time in almost three decades. The new Government has been voted to power on the back of promises to jumpstart the economy and implement long overdue economic reforms. The business community, of which automotive dealers are an important part, is optimistic of consumer sentiment improving rapidly. This sense of optimism is reflected in the significant swing in the ADCI index from end of Jan-Mar quarter, to end of Apr-Jun quarter. Sewells Group will conduct the ADCI survey on a quarterly basis, and track the movement of dealer sentiment each quarter. Over time, we believe that the ADCI will evolve to become a reliable indicator of wholesale and retail sales performance across brands and vehicle categories. SEWELLS GROUP ADCI FOR THE INDIAN AUTOMOTIVE INDUSTRY Total Number of Respondents 10% Passenger Cars Two Wheelers Commercial Vehicles 13 33% 42 126 71 57% Figure 1: Responses received for the second ADCI survey The key highlights from the survey are as under: • The index for passenger cars moved from -40 at the end of Jan-Mar 2014 quarter, to stand at -3 at the end of Apr-Jun 2014 quarter. This is a substantial positive jump, and indicates a significant positive movement of dealer sentiment in the passenger car category. • The index for two-wheeler dealers moved from +13 at the end of Jan-Mar 2014 quarter to +18 at the end of Apr-Jun 2014 quarter. The movement of the index indicates a slight positive movement of sentiment. • Commercial vehicle dealers continue to remain pessimistic about their business prospects. The index for commercial vehicles falls from -32 at the end of Jan-Mar 2014 quarter to -38 at the end of Apr-Jun 2014 quarter. • The overall index at the end of Apr-Jun 2014 quarter stands at 0, with about 60% of respondents indicating that they expected the business to be profitable in the next 6 months. For a detailed copy of the Sewells Group ADCI Report, please drop a line to firstname.lastname@example.org.
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Tony Noland Owner, Tony Noland & Associates Tony Noland started as a salesperson and served in most of the traditional management positions in the retail dealership structures, including Dealer Principal ultimately becoming President and CEO of a major U.S. 20 Group company with more than 3,000 automotive clients. His regular BenchMarker International column records and reviews the U.S. retail motor business. He can be reached at email@example.com New Vehicle Sales Recovery Continues; But Look How Bad It Really Was… 2007 2008 2009 2010 2011 2012 2013 16.1M 13.2M 10.4M 11.6M 12.8M 14.4M 15.5M Edition: September 2014 | sewellsgroup.com 9 U.S. MARKET REPORT The year 2013 ended as the best new vehicle sales year in the United States – a comforting total of 15.5 million new vehicle sales in the U.S. since 2007’s total of 16.1 million total new vehicle sales. Each individual month in 2013 exceeded the previous year’s sales total. The manufacturer U.S. sales results for 2013 were as follows: Manufacturer 2013 Sales Change vs 2012 General Motors 2,786,078 7.3% Ford 2,435,974 10.4% Toyota 2,236,042 7.4% Chrysler 1,788,926 9.0% Honda 1,525,312 7.2% Nissan 1,248,420 9.4% Hyundai 720,783 2.5% Kia 535,179 -4.0% Mazda 283,946 3.1% BMW/Mini 375,782 8.1% Mercedes/Smart 343,588 12.7% Volkswagen 407,704 -6.9% Subaru 424,683 26.2% Volvo 61,233 -10.1%
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Edition: September 2014 | sewellsgroup.com 10 The strong retail market in 2013 allowed most manufacturers to decrease their dependence on fleet sales: The top 10 best-selling vehicles were as follows: U.S. Market Report Manufacturer 2013 Fleet Sales % 2013 % 2012 Ford 707,800 28% 30% General Motors 653,100 23% 26% Chrysler 403,200 22% 26% Toyota 195,300 9% 10% Hyundai-Kia 187,000 15% 10% Nissan N.A. 173,400 14% 15% American Honda 30,400 2% 2% Vehicle 2013 Sales 2013 Rank 2012 Rank Ford F-Series 793,402 1 1 Chevrolet Silverado 480,414 2 2 Toyota Camry 408,484 3 3 Honda Accord 366,678 4 4 Ram Pickup 355,673 5 7 Honda Civic 336,180 6 5 Nissan Altima 320,373 7 6 Honda CR-V 303,904 8 9 Toyota Corolla 302,180 9 8 Ford Escape 295,993 10 10 Overall, 2013 was a good year for the retail dealership business. While the total dealership gross as a percentage of sales declined by 0.3%, dealers were able to reduce their expense spend per vehicle and thus sustain their net profit. The parts and service sales as a percentage of total sales continued to decline in 2013. Also, the service and parts absorption of the dealerships saw a reduction of 0.1%. As you will note in the chart below, parts and service sales as a percent of total sales and the dealership service and parts absorption continued its decline. Following, for your reference, are certain 2013 year-end retail dealership measurements provided by NADA. NADA DEALERSHIP FINANCIAL PROFILE Category 2013 2012 Change Total Dealership Sales $41,333,975 $37,993,989 $3,339,986 Total Gross as a % of Sales 13.4% 13.7% (0.3%) Total Expense as % of Sales 11.2% 11.5% (0.3%) Net Profit as % of Sales 2.2% 2.2% 0% New Vehicle Sales % of Total 57.1% 56.2% 0.9% Used Vehicle Sales % of Total 31.3% 31.8% (0.5%) Service & Parts Sales % Total 11.6% 12.0% (0.4%) New Retail Gross Profit per Vehicle $1,200 $1,283 ($ 83) Used Retail Gross Profit per Vehicle $2,361 $2,098 $263 Service & Parts Absorption 55.2% 55.3% (0.1%) Return on Equity 29.0% 27.8% 1.2%
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Construction on new homes ended 2013 at the highest rate since 2007 and the forecast for 2014 is for the industry to sustain its growth. Non-housing construction is also experiencing growth. Last, but certainly not least is our inflation rate. Our current rates of inflation of 1.6% when coupled with the low prime interest rate are both positive indicators. The outlook for the auto industry in 2014 will remain good as we saw in the short-term, when we got some relief from the brutal weather conditions and customers started going back into the showrooms. Edition: September 2014 | sewellsgroup.com 11 U.S. Market Report PROSPECTS GOING FORWARD Looking forward at the rest of 2014, there are many positive economic signs that should translate into growth – while I feel we will not experience the same rates of growth in the auto industry as has been seen during the past two years. Undoubtedly though, 2014 should be a good year from a sales and net profit standpoint. There was a negative at the beginning of this year as new vehicle sales for the months of January and February were substantially reduced due to the severe weather conditions most areas of the U.S. experienced. Record depths of both cold and snow prevented customers from visiting dealerships which then translated into reduced sales for the first quarter of 2014 when compared to 2013. This led to new vehicle inventory levels around an 88 day’s supply which was followed by a period of increased consumer incentives. While interest rates remained low during this period, this higher than acceptable day’s supply did impact on dealer inventory orders. The first indicator I watch is the U.S. unemployment rate. January 2014’s rate of 6.6% was the lowest in five years. While there are issues with the quality of jobs available, this indicator continues to show improvement. Consumer confidence is a U.S. economic indicator which measures the degree of optimism that consumers feel about the overall state of the economy and their personal financial situation. The December 2013 measurement was the highest December number we have seen since 2007 and importantly January’s 2014’s measurement was up 3.2 points versus the month before. The stock market performance in 2013 has allowed many individuals to recoup losses sustained when the market crashed in 2008. According to Market Watch, a U.S. financial publication, “The S&P 500 ended the year with a 29.6% annual gain, its biggest yearly jump since 1997. The Dow Jones Industrial Average blue chips ended 2013 with an annual rise of 26.5%, the largest since 1995 and the NASDAQ Composite index rose more than 38% over the course of 2013, marking its biggest gain since 2009.
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Improving Dealer Profitability Through Performance Reporting & Benchmarking It is a common practice among auto dealers in the developed markets to submit their operational and financial data to a third party system and generate performance benchmarks. They use these benchmarks as strategic drivers of business performance. These benchmarks also help manufacturers evaluate their policies and resultant contribution to dealer profitability. The last few months have seen emergence of some similar initiatives in developing markets, sponsored by manufacturers in some cases, and dealers on their own in some. So where do such initiatives go from here? What are the opportunities and challenges? Are there specific cultural nuances that would cause dealer performance reporting to take more time to evolve in developing markets than in other markets? How will it impact the way dealerships are managed, or how will it drive industry transformation? Any Questions? Edition: September 2014 | sewellsgroup.com 12 It is common to hear discussions among the channel managers of auto manufacturers about a particular dealer making tons of money, or another dealer losing or diverting cash to other businesses. Also, it is quite popular a claim of supposedly effective channel managers that they speak with their dealers in the language that the dealers understand; language, in this case being ‘money’. Ironically, none of these discussions actually focus on dealer profitability or dealer performance measured by scientific variables. At best, these ‘right language that dealer understands’ discussions are qualitative deliberations on some of the monetary issues that dealers may be concerned about. Also, one frequently comes across discussions among dealers and manufacturers about business viability challenges and required remedies in fuzzy, qualitative terms. “It has been my experience that competency in mathematics, both in numerical manipulations and in understanding its conceptual foundations, enhances a person’s ability to handle the more ambiguous and qualitative relationships that dominate our day-to-day financial decision-making” wrote Alan Greenspan once. INTRODUCTION DEALER PROFITABILITY: THE NEED FOR AN OBJECTIVE PLATFORM Dennis Anderson Group Chief Operating Officer Based in Bangkok, Thailand Dennis’ main responsibilities include the management of the practices of business management, performance consulting, process efficacy and competence development in the group. He can be reached at firstname.lastname@example.org Send me a message on Linkedin! Click here The net result is a manufacturer-dealership relationship driven only by obvious opportunities, emotions and many non-business variables. In my view, this may not be an ideal scenario for developing markets.
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe All these three variables require a science to be at work. Dealers need to have a method of objectively analyzing their performance and taking their decisions on the basis of the real stories and not the assumed, visualized or planted ones. The idea should be to use the art of dealership management to complement the science of dealership management, and to not replace it. In markets like North America, Europe and Australia, dealers use “dealer composites” to benchmark their performance against other dealers. Dealer composites are nothing but sets of statistical benchmarks on performance parameters such as Sales, Gross Margin, Asset Turns, and Return on Assets etc. The web-based systems that generate dealer composites are generally operated by expert third-party operators. Dealers upload their transactional data on these systems and receive various benchmarks such as market best, zonal best, national best, brand best or market average, zonal average, brand average etc. These systems are called performance reporting systems and are either sponsored by manufacturers or are subscribed to by dealers independently. The benchmarks come very handy for dealers to evaluate profit opportunities for themselves. In most of the cases the dealers participate in “Performance Groups” facilitated by expert consultants to evaluate their profit opportunities or improvement areas, and evolve methods to realize the same. These groups essentially bring peer dealers together to discuss their numbers and best practices for mutual benefit. Performance Group exercises help dealers understand what their profitability levers are, and how are they performing in those areas. Thus with the help of these benchmarks, dealers are able to diagnose their challenge areas and are able to focus on them for Edition: September 2014 | sewellsgroup.com 13 Improving Dealer Profitability The way dealerships are managed generally in developing markets does not seem to follow Greenspan’s logic. Interestingly, in some cases it is done in a way that is exactly contrary to his dictum. Dealer Owners and Manufacturers use ambiguous, qualitative logic to hide the financial inappropriateness of their decisions. To be fair to them, though, this is more of a cultural and structural issue, and there are certain drivers of this behaviour: • First, in developing markets we see the spirit of entrepreneurial thinking, and in most cases this ends up abusing this capability by justifying our fuzzy, non-objective decisions. This is aided by the fact that most dealership decisions are taken by the promoters and owners, who in turn are not accountable to anyone; there is a natural human tendency to rationalize the outcomes. • Second, there is a serious lack of know-how among manufacturers about the science of dealer profitability management. The fast growth in the developing markets and talent shortage has resulted in few resources being invested in skill development at the dealer development and channel management level. Meanwhile, the top management share of mind is largely given to other more important variables of strategy such as product and technology. • Third, the market leaders are often companies with relatively less or nil global experience to draw this expertise from. Their success in the respective markets has bred some amount of apprehensions in their minds about the practices of global manufacturers who have not necessarily been so successful, Dealer Profitability Management being one of them. • Last and probably the most important, the governance culture of the private business and SMEs is far from evolved. Most of the private businesses are products of a complex, non-transparent, economically inefficient system of governance. Having said this, the future of auto retail in these developing markets belongs to the manufacturers and dealers who can build a business model that will make them more efficient, transparent and scalable. Efficient so that they can be profitable and build value; transparent so that they can get access to cheaper capital; and scalable so that they can generate economies of scale and scope to become more competitive. WHAT IS POSSIBLE: DEVELOPED MARKET SCENARIO
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Parts Inventory Turns Benchmark Median 9.8 10 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Gross Profits % Benchmark Median Edition: September 2014 | sewellsgroup.com 14 Improving Dealer Profitability Exhibit-1 and 2 above present the crucial performance parameters for a homogeneous group of 22 dealers from Australia. The chart clearly shows the performance spread that exists between the similar dealers in the similar markets. The gap between the best and the worst represents a realistic opportunity for improvement which is substantial in this case. Such opportunities may go unnoticed without performance reporting and benchmarking. 25 20 15 5 0 19.4 12.8 6.3 18.1 18.5 7.7 12.5 16.9 13.5 13.7 22.0 10.6 11.2 12.3 9.9 9.9 9.9 9.8 7.5 8.5 1 22 10 Parts Inventory Turns 17% 16% 15% 14% 13% 12% 11% 8% 7% 6% 5% 14.3 14.9 13.5 12.8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 10% 9% 11.6 10.7 12.5 13.1 10.5 10.1 11.9 15.8 10.9 10.7 13.2 12 11.5 13.5 10.2 12.1 13.9 11.5 Overall Gross Profit % Sales better performance of the dealerships. Exhibits 1 and 2 demonstrate how dealer composites help dealers identify the opportunities, focus on them and make improvements. Another important aspect of benchmarking is its dynamic nature. Benchmarks, like living organisms, automatically adjust for market changes and therefore provide a very live and realistic picture. Dealer performance reporting is done in different ways in different markets. e.g. In South Africa, thousands of dealers independently subscribe to the Sewells Group system called eSOS, submit their data and in turn get the performance benchmarks; In Australia, manufacturers have their own performance benchmarking systems that churn out within-manufacturer benchmarks, which are then used by Sewells Group in the dealer performance groups. Dealer composites are also used by manufacturers in these markets to understand real issues with dealers and to assist them with more conducive policies. A good example of this –one of the manufacturers in Australia, on the strength of a business case brought forward by dealer composites, agreed to invest in the fixed operations profit improvement program for dealers, which resulted in huge savings for the dealers. Exhibit 3 shows how the dealers benefited from this program. Also, Exhibit 4 presents the case of a dealer of a different brand who individually targeted to improve on the basis of benchmarks and peer group learning and succeeded. The dealer performance reporting systems are run and managed by third-party operators in most developed markets. This is done because these operators act as non-involved parties, and are therefore better positioned to do justice to the stories that data reveals. Third-party operators offer three distinct benefits over manufacturer-driven systems: first, being non-involved parties, they help build trust amongst stakeholders by ensuring that the data is used only for benchmarking purposes; second, they are able to offer inter-brand benchmarks which are far more powerful than single-brand benchmarks. Importantly, third-party operators bring invaluable experience and expertise from a cross section of manufacturers and dealers to the table, making them much more effective.
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe However, a lot needs to be achieved in terms of building an ecosystem where: • Dealers are convinced about the strength of performance reporting and benchmarking as a strategic tool of dealership management • The cultural and structural issues of transparency, trust and objective decision making see some resolution • The stakeholders who probably ‘do not know what they do not know’ take a slightly more open view of the scientific practices of developed markets even if they come from other ‘not so successful counterparts’ Edition: September 2014 | sewellsgroup.com 15 Improving Dealer Profitability 35% 30% 15% 10% 5% Year on Year % Improvement - Service Performance 100% 90% 80% 70% 60% 40% 30% 20% 10% WHERE ARE WE: THE SCENARIO IN DEVELOPING MARKETS The current status in the developing markets is more of a start-up situation. A couple of global manufacturers such as Ford and General Motors have taken the lead with generation of dealer composites and have started running performance groups for their dealers. Others have been doing basic, in-house exercises on the same. Exhibit 3 above demonstrates the YOY profit improvement achieved by the 22 dealer group in Australia mentioned in the Exhibits 1 & 2. This was achieved on the strength of Performance Reporting, Benchmarking and Peer Learning. Exhibit 4 demonstrates how the Target Dealer has improved his Service and Parts Absorption over months by benchmarking against the peer group. 0% Service Gross Profit as % of sales Labour Gross Profit per Technician Average Retail Hours per Repair Order Retail Labour Sales 5 per Repair Order Service Workshop Efficiency Service Absorption % Service Operating Profit % of Sales 25% 20% 4.3% 17.8% 31.8% 7.7% 4.3% 10.2% 8.5% 0% Oct 08 Tier 1 National Tier Benchmark Target Dealer Nov 08 Dec 08 Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 50% 62.9 58.2 66.2 64.4 69.5 72.2 64.9 68.6 78.8 73.5 60.4 67.6 62.8 82.5 57.8 64.4 66.6 67.1 62.0 66.7 73.5 70.2 73.6 73.3 79.7 79.7 79.7 79.7 79.7 79.7 79.7 79.7 79.7 79.7 79.7 79.7 69.3 68.4 72.2 64.4 74.4 74.7 74.2 77.7 78.8 95.1 80.1 84.5
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe THE FUTURE BELONGS HERE: OPPORTUNITIES & CHALLENGES CONCLUSION Edition: September 2014 | sewellsgroup.com 16 Improving Dealer Profitability “Whoever is first in the field and awaits the coming of the enemy, will be fresh for the fight; whoever is second in the field and has to hasten to battle will arrive exhausted.” says Sun Tzu, The Art of War. Growth is life. A high growth scenario is the best thing that can happen to players in any market. But like other good things in life, growth has a tendency to spoil the players. It sometimes leads to a feeling of complacency. In times of high growth in developing markets, it is natural for the successful players and beneficiaries to ignore non-critical issues. It is evident that many of us see dealer profitability as a non-issue and therefore ignore it. Or it is possible that many of us write this off as an ‘impractical’ initiative in this market, for it is difficult to do. But the future will belong to those dealers and manufactures who can pro-actively get the profitability piece right. A robust practice of dealer performance reporting and benchmarking will prepare them to survive in all scenarios. It will also present many opportunities for all stakeholders such as: • Platform for a more equitable and fair relationship between dealers and manufacturers thus contributing to the vision of ‘extended enterprise’ that some of the manufacturers have for their dealer networks. • Framework for the manufacturers to add real value to dealerships by offering them training, tools and techniques for better dealership management and profitability, resulting in a win-win for all parties – the manufacturer, the dealer and the customer. • Catalyst for market consolidation and resultant evolution. A transparent system and availability of data will provide basis for objective valuations thus paving way for mergers, acquisitions and entrepreneurial rewards beyond dividends. • Opportunities for dealership groups to showcase their capabilities and tap capital resources such as private equity or stock markets and fuel growth The point is that business is not a fuzzy discipline. It requires scientific assessment of the situation in a quantifiable or an objectively qualitative manner to take decisions – more so when you want to build scalable enterprises. The developing markets are the hottest auto markets in the world and the time has come for them to embrace an important best practice from developed markets which is ‘Dealer Performance Reporting and Benchmarking’. I am sure that like everything else, they will give it their own unique twist and give it back to the world in a more refined and evolved form. But it is time we got started!
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe In-Depth with Benchmarker The Sewells Group operational footprint covers Asia Pacific, Africa and the Middle East region. This gives BenchMarker Global the unique opportunity of delving into automotive retail best practice strategies with motor dealers throughout these regions and sharing their insights with its readers. In this issue we speak to four dealer principals – one each from New Zealand, Australia, India and South Africa – who share an important principle of operating superbly balanced businesses at the core of their success. Accurate Inputs for Decision Making At All Times Edition: September 2014 | sewellsgroup.com 17 – Raj Naresh Singh, MD Bhagat Group, Chandigarth, India Spreadsheets are highly favoured as key operational tools by Raj Naresh Singh MD of the Bhagat Group in Chandigarh, India, and multi-franchised dealer principal with Ford (17 years), Volkswagen (4 years) and Mercedes Benz with 17 outlets and a staf complement of 1200. Now, he says, adding the Sewells Group MRA decision making methodology has added greatly to the success of this burgeoning North Indian Dealer Group. “It’s the simplicity and flexibility that holds top appeal for me, and my business career has taught me that it is the simplest systems which work best. “Since we have integrated the Sewells Group MRA protocols into the system we have greatly enhanced the balance and capacity of my sheets, especially in giving us accurate input for decision making at all times.” The spreadsheet appeal, he says, is that one doesn’t need to know, as he puts it: “... any fancy programming stuff, and you can make all the necessary changes and adjustments yourself as you go along....” INTERVIEW Raj Naresh Singh MD Bhagat Group, Chandigarth, India
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Edition: September 2014 | sewellsgroup.com 18 In-Depth with Benchmarker Raj proudly says that the actual process of running dealerships and managing a whole lot of people through 17 years has taught him all that he knows. Now just 50 years old, Raj gives a simple description of how it all started: “I had a non-technical and non-commercial background and a vast yearning to learn and grow the business. We did a ‘backward forward integration’ at my family owned gas station. We saw the workshop as an allied stream with all those cars coming for fuel every day. We put in some fancy equipment which I learnt to operate and hired two technicians and ran an advertising campaign boasting the zero defect car.” The ‘workshop green’ concept was so successful that two more branches were opened in the next couple of years. “I was then appointed as a dealer by Hindustan Motors. I became a franchised Ford dealer in 1997 (which I still am) and over time also experimented with three other franchises (Hyundai, Nissan and Volvo).” The Volkswagen appointment came in 2010 and the Mercedes operation started earlier this year. “Once you have established the founding sheet, you can line-up and analyse your performance key numbers from many different perspectives, and then show the outcomes in a way which everyone in the management teams can understand and implement.”
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe “Success Is Never In Doubt; It Is An Achievable Managed Outcome.” – Paul Vorster, Action Ford, South Africa Edition: September 2014 | sewellsgroup.com 19 A background founded on his immense faith in the Ford Motor Company and built on his participation in the Sewells Performance Group concept with its intense focus on the MRA model as the decision methodology for management to reduce risk, empowered Paul Vorster and the Action Ford management team to successfully establish their new R39m all-new facility in Krugersdorp west of Johannesburg – and this in the midst of a severely depressed economy. This energetic and committed auto retailer, who describes himself as being “66-years-young” after 42 years in the motor business, puts it succinctly: “We have always had a passion in our business to maximise the use of financial statistics together with some sort of ongoing measurement or confirmation to show us that we are doing the very best we can in terms of performance in each of our dealerships; all the time.” He reflects further: “Often when businessmen invest in new facilities and infrastructure, they are confronted with the risk factors outside of their direct control – the vagaries of the economy, changing products, the timing, the people and a host of other reasons influencing you as to whether or not you should continue to expand. With all of that, we went ahead with our substantial new investment – we had found a way of defending our sanity in making those decisions through the wonders of the Sewells Group MRA model. We had taken fear and uncertainty out of the equation.” Here is Paul’s description of how Action Ford went along that path. “There is no doubt in my mind that the starting point was around 20 years ago when we became one of the first Ford dealers to join Sewells Group – importantly comprising a spread of different franchises. “The regular sharing of best-practice challenges and solutions in those groups, and our delving into the benefits of using the methodical and sophisticated management tool which is the Sewells Group MRA Performance Model, combined to give us progress in leaps and bounds. The moment you start managing those three letters – Margin, Retained and Activity – in your business on a daily basis you control the outcome and reduce risk in your operation. INTERVIEW Paul Vorster Action Ford, South Africa In-Depth with Benchmarker
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe “The moment you start managing those three letters - Margin, Retained and Activity - in your business on a daily basis you control the outcome and reduce the risk in your operation.” IMAGE Edition: September 2014 | sewellsgroup.com 20 In-Depth with Benchmarker “From that point on survival and success in your business activity is never in doubt; it is an achievable managed outcome.” Paul says that this ‘loaded statement’ must have attached to it a host of requirements to fully embrace the Sewells Group MRA Performance Model. These include: 1. Dealer Principals that have a passion for business performance that exceeds the ordinary. 2. You must use both top-down as well as bottom-up management techniques and tools. 3. You must nurture and develop ownership of the Sewells Group MRA Performance Model criteria with your departmental managers so that together you create excitement in achieving the daily targeted outcome as well as solutions to each of the challenges. 4. Make sure that the terminology, the definitions and the descriptive words used in applying Sewells Group MRA Performance Model are clearly understood and practised and become the common language of the daily workplace. “Not only must you have people who share your passion, you yourself must sustain and project a personal and visible passion to exceed the ordinary.” Paul’s ongoing passion for the business came through vigorously and repeatedly in our discussions. He also referred frequently to the encouragement and inspiration he says he gained from having Paddy O’Brien, global Chairman of Sewells Group, as his first Performance Group facilitator and the two of them remaining in active contact ever since. He also gives credit to his four decades plus of experience in the industry, including a spell working at a high level for Ford Motor Company of South Africa. Over the last 23 years, he has been the owner and major shareholder of Action Ford Motor Group (West of Johannesburg) with its two outlets (Roodepoort and Krugersdorp) where he is now Group CEO and Chairman of the Board of Directors. The business has a robust record of success. His two Action Ford outlets are firmly in the top 10 by volume of Ford Motor Company of SA. They sell on average 200 new units a month and 80 used vehicles. Parts turnover is R4.5m ($0.44) and there are R2.5m ($0.24) service sales a month. Paul says that he reads his high customer satisfaction (CSI) ratings from manufacturer/suppliers as both recognition and also important measurements of success and profits – all part of the achievements for successful endeavours. He lists the following achievement for the business in 2013: • Ford Dealer of the year. • Service Manager of the year. • Sales Manager of the year. • Business manager of the year Ford After sales. • Sewells Group Businessman Of The Year (BOTY) most improved dealer year-on-year (large category). • Sewells Group ADM graduate. And some closing maxims from this top-performing global best practice retailer: • Live your dream every day and enjoy the journey to your destiny – which must be Success • Always aim to be better than the best!
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe True Success Only When It Comes From All Departments Edition: September 2014 | sewellsgroup.com 21 INTERVIEW True dealership success without the success of each individual department is not a success at all, says Mark Palmer, dealer principal and co-owner of F Gaukroger & Sons a thoroughly successful rural dealership in Inverell, NSW, Australia. For this special in-depth probe into best-practice strategies across different continents, we had asked Mark to elaborate on the pointers to success in this operation well away from the urban angst that has continued to thrive under whatever circumstances. Balance in the mix is vital, says Mark, and he expands on the contribution from all divisions of the business: “I’ve said it before but: can you imagine sitting down early in the 20th century and creating a concept for a motor dealership, dividing it into departments and settling on the idea that some would not be profitable? Why would you do that then? And, certainly, why would you do it now? “The answer is of course that each department should and must be a profit center. If that is not the case there is an issue. If you then apply focus, structure and management, somewhere in there is a weakness that is failing to produce profitability for all departments.” The message: Go out there and fix it. With direction from Paddy O’Brien, global chairman of Sewells Group, we followed with a series of questions to which Mark gives his insightful responses: What sets Gaukroger Holden apart from the other Australian dealers? “I’m not sure what other dealers do – and that has never been my focus. I only concern myself with what we do and how we can do it better. “Are we perfect? No, absolutely not. Are we driven to succeed? Absolutely. Maintaining that level of drive month in and month out and refusing to be anything but the best you can be, seems to produce consistent results.” Are you doing anything special to motivate and retain your key staff? “The people working on your staff are the key to any business or organization and dealership success is usually directly contributable to its people. We continually pose the following to ourselves: • How well are our people trained, rewarded and appreciated? • Do we have the right people in the right roles? • Are they multi skilled (this is extremely important in smaller dealerships where so many people have to multi-task). Mark Palmer Gaukroger Holden, Inverell, NSW Australia Mark Palmer joined the motor business as an apprentice at Gaukroger Holden in 1981 and worked his way up through service (seven years), used cars (two years) and then new car manager (12 years) before taking up his present position in 2001. This single outlet business employs 36 people and sells around 360 new and 450 used vehicles a year. In-Depth with Benchmarker – Mark Palmer, Gaukroger Holden, Inverell, NSW Australia
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Edition: September 2014 | sewellsgroup.com 22 In-Depth with Benchmarker “At our dealership, all staff have incentives in place linked to some form of KPI performance measurement. This ensures all staff feel they are an integral part of the team.” What ingredients to success do you put into the mix to ensure that your people get the most out of every opportunity? “The term ‘ingredients to success’ is quite appropriate because – just as in cooking – you may have all the ingredients but if you fail to measure them the pie is going to taste and look like a mess! It’s the same with dealership performance. It never ceases to amaze me how many fellow dealer principals I know that look at the month’s results only at the END of the month! That’s like a pilot looking at his instruments or flight path just five minutes from arrival time. That’s TOO LATE! Any dealer that has a decent DMS, has good people and has a remote interest in what they do, can and does measure dealership performance on a daily basis. “In no particular order of priority, focus should be on prospect management, PDS/SSS, workshop control, daily sales, daily gross measurement, expense management… to name but a few. It becomes a daily habit – just like any other habit: it is simply what you do as part of the daily routine.” Do you differentiate between the customer experience and customer retention in your business? “No. I don’t see how they are not interconnected anyway. We also don’t differentiate between our customers. If you buy a $1,000 runner, you get the same follow-up call, the same customer service and the same buying experience as if you had bought a $50,000 motor car. The same goes for the treatment in our service department – regardless as to what car you book in for a service you get the same level of treatment, follow-up and overall attention. Where do you see opportunities for a dealer like yourself to excel given that you are away from the major metropolitan centers? “I don’t see any real difference between any dealer – be they in the city or out in the country – the same principles should apply, just service your own PMA to the absolute best of your ability. “Treat your customers well, promote your dealership, get good people on board and keep them. These are all the keys to running a good business regardless of where you are. Do you believe there are differences between a major metro dealer and a smaller dealer? “It’s all scale and relevance. Let me ask you if you believe there’s a difference between having $1,000 in the bank when you were young and that’s all you had. Then you had $10,000. Did you treat it any different? What about when you got to $100,000 in the bank? Sure, you now have more things you can do with $100,000 than with $1,000 but the principle is the same: you look after your investment, build on it, ensure you get the most from it and watch it grow. Exactly the same goes for your dealership. The numbers may change but that’s all they are, numbers.
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Edition: September 2014 | sewellsgroup.com 23 In-Depth with Benchmarker How important is it to engage key members of the team in your VISION for excellence? What ingredients to success do you put into the mix to ensure that your people get the most out of every opportunity? “How would you feel if you were up in the back of the plane in economy and the captain was up there washing dishes with the flight stewards and wasn’t communicating with the co-pilot? Sure, the co-pilot MAY have some experience, and may be able to do everything the captain can do but you expect the full attention and service of the entire flight crew. It’s exactly the same at the dealership. Time and again you can witness dealerships that ‘glide along’ on their own flight path, going where the breeze takes them because there is no-one firmly at the controls having shared a flight plan, and a backup plan for the flight plan and a firm course of action that ensures that the dealership is going to land exactly as planned at the end of the month.” How does the pooling of concepts and best practice strategies in your business development group gatherings help you? “I find the BDG meeting concept (similar to performance groups facilitated by Sewells Group worldwide) invaluable. Comparative data, six-month trends, networking, benchmarking, industry data… these are all provided. Paddy O’Brien’s input with the Sewells Group MRA Performance Model formula (Mix, Retained, Activity) have been great for our dealership as this was a new concept to us. Of all the things that I can’t or won’t make time for, the BDG meetings have become paramount for me and are viewed as ‘must attend’ meetings of the greatest importance.”
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Mike McCready joined the motorcycle business straight out of school, working in parts and then sales there for four years. He then worked at Car Auction House for two years before joining Robertson Holden as a new car salesman in 1997. He moved from there to the position of used vehicle manager and then general sales manager from 1999 before becoming dealer principal in 2005. Robertson Holden has three outlets employing 49 people and selling around 700 cars and 100 trucks a year Edition: September 2014 | sewellsgroup.com 24 INTERVIEW In Tough Times, Don’t Kill the Team! When times get tough, don’t kill the team, says Mike McCready of Robertson Holden in Palmerston North, New Zealand. “When market conditions tighten, we focus on our proven procedures to ensure our people are carrying out their job functions correctly – and doing so with a smile. Also, we re-evaluate non-essential expenses and focus on those which generate enquiries or add significantly to our customer experience. “Firmly, though, we say don’t kill the team: if the effort is going in, we back them and support them all the way.” Retaining and motivating key staff members is high on Mike’s priority list: “Simply put, our belief is: Communicate! Communicate! Communicate! You must find out what is important to your people and motivate them with offerings which are relevant, and which are simple and achievable. “As an example, I have a particular salesperson who loves nothing more than getting time from me to tell me how well HE is going. He is a young rooster with an ego – and a good salesperson. So, I make time for him regularly. “Stroke your people if it’s important to them.” He outlines a loyalty reward programme which used to be operated at Robertson Holden where individuals were directly recognised by paying a bonus on their anniversary after six years’ service. “Then at 12 years and 18 years we increase the amount. We believe this programme is one of the keys to the fact that we have an exceptionally stable workforce here and we succeed in retaining our key people.” He talks passionately about the importance of meaningful contributions from all departments in the business. “Obviously it is frustrating to have strong monthly performances tempered by a hole to fill caused by in one department’s loss. Sometimes the forces conspire against us and an occasional departmental loss is unavoidable but when the rest of the business has a strong month at the same time, the overall effect on the business is minimised.” When all departments are properly contributing to their correct potential, Robertson Holden enjoys strong returns, says Mike. In-Depth with Benchmarker – Mike McCready, Robertson Holden, Palmerston North, New Zealand
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Edition: September 2014 | sewellsgroup.com 25 In-Depth with Benchmarker We asked him about his philosophy on the relationship between customer experience and customer retention: “Largely I feel these two are joined at the hip. Positive customer experience drives retention of that particular customer. We spread that further by instituting a retention scheme where we feel we need to invest in satisfaction/retention on a case-by-case basis and in all departments, and we share the associated costs across all departments.” Mike speaks about the difference of managing an auto retail operation in rural versus metropolitan environments, and whether there are opportunities for his business being away from the big cities. “I would expect our overheads at Robertson Holden are significantly lower than those in the major metro’s. We invest heavily in real estate and own all the properties from which we operate. Because of this, we also can embark on taking calculated risks with inventory if the franchise/ model allows for a return through wholesale sales, and feel our ability to buy and display stock at certain times enables us to take advantage of the current growth in New Zealand’s market.” He believes that some dealers who operate in centres with high property costs may struggle to keep overheads reasonable. “I have never been involved with a major metro but from my own experience and observations it would seem that metro dealers seem to walk the profitability tightrope. I would say that in New Zealand there are some well-run medium-sized dealers able to get a better return than some of the larger ones.” Returning to the motivation of his people, Mike says that he would rather have a clear understanding between management and staff on what is expected of them – and the rewards which will follow: “I feel some of the ‘vision’ statements written on the wall are perhaps a bit week. Our people know what is expected from them and are rewarded when we perform well, and we are helped here buy Holden’s ‘Grand Masters’ inter-dealer competition which is a great way to measure ourselves with our peers. Also, the processes within this (Grand Masters) are designed to create long term customer relationships and generate a profit for our stakeholders. “We have won the section we compete in for 12 of the last 13 years, so I suppose having clear expectations and direction is in essence our ‘vision statement’ and it works for us.” Does Mike have any special secrets to share with BenchMarker readers?: “Paddy O’Brien (global chairman of Sewells Group) tells me we are humble about our achievements; but I don’t feel what we do is exceptional. We try to get the little things right and maybe in doing this the perceived ‘Big Things’ don’t feel so enormous to us. I expect we have one of the strongest returns in NZ but our group has some very good operators with some being stronger in certain areas. We try to learn to learn from their experiences both good and bad.”
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe Sewells Group ‘Businessman of the Year’ Banquet Edition: September 2014 | sewellsgroup.com 26 RECOGNISING TOP SOUTH AFRICAN MOTOR DEALERS WINNERS OF BUSINESSMAN OF THE YEAR (from left to right): Dr George Nyabadza, CEO of Sewells Group South Africa; Danie Horne, B&M Garage Bredasdorp; Chris de Kock, CEO of WesBank; James Wood, Halfway Toyota Ottery; Paddy O’Brien, Chairman Sewells Group; Schalk Fourie, NTT Toyota Potgietersrus; and Derik Scorer, National Chairman of NADA South Africa.
GLOBAL EDITION BENCHMARKER Auto Retail Best Practices from Across the Globe MOST IMPROVED DEALER YEAR-ON-YEAR Edition: September 2014 | sewellsgroup.com 27 Recognising Top South African Motor Dealers Southern Africa’s top 33 motor dealers gathered in Gauteng on Tuesday 13th May for the Sewells Group ‘Businessman of the Year’ awards banquet – the retail motor industry’s most prestigious annual event, sponsored by WesBank and supported by NADA. The highlight of the evening was the announcement of the seven out of the 33 nominees who emerged as winn
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