7 September 2017
One of the things I really enjoy about my role is the chance to carry out a ‘deep dive’ review of a franchised motor business. These will usually be instructed by the manufacturer who may want to gain a better understanding of the issues that are causing a particular business to struggle. I have carried out a number of these reviews over the years, working with an experienced ex-operator who specialises in operational issues.
No two situations are ever alike, although it’s fair to say there are definite recurring themes that come and go depending upon where we are at in the economic cycle.
In recent times, the most common concern surrounds the volume targeting set by manufacturers. With registrations at record levels, this is to be expected and everybody has to take their fair share but this inevitably can place strains and pressures on a business. If these pressures are too great, or not adequately managed, the risk of significant or even catastrophic consequences is high.
Part of our role is to assess the targets set by the manufacturer and help with the assessment of whether they are reasonable, taking into account the territory size and market opportunity as well as the quality of sales enquiry generation and management. It is this latter area where we have observed a number of recurring themes and opportunities to significantly improve - somewhat surprising given that many businesses now run with specialist enquiry management software. However, installing the latest enquiry management software is not enough on its own. It is the correct implementation of the system that will reap the rewards. With or without software, the long held maxim of ‘people and process’ come to bear. We have found in 100% of our reviews that there is significant opportunity to deliver improvements to both the consistency of delivery and the management of the processes in place that help generate enquiries.
The rewards for improvement are potentially massive with the best example being a business that was at a break even profit 12 months ago and is now on track to deliver a £600k profit in 2017. For any business that is suffering from the pressure of not being able to hit volume targets, we would always recommend that management carry out their own deep dive review of activity levels in this critical area. You may be surprised at what you might find and the hidden opportunity locked away in the business.
If you would like to discuss the benefits of a deep dive review in more detail, please contact me or your local UHY automotive expert. Alternatively, if you would like to read more of our automotive related blog posts, please click here.
