sewells group global edition benchmarker quarter 1

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BENCHMARKER GLOBAL EDITION Auto Retail Best Pracces from Across the Globe Index Editorial ............................................................ 2 Key Industry Indicators ..................................... 3 Automove Dealer Confidence Index (India) ... 4 Improving Customer Sasfacon Scores .......... 6 The U.S. Market Report .................................... 8 Digital at Retail ............................................... 11 Dealer Interview ............................................. 13 From Michael Boneham’s Desk ...................... 15 Contact us....................................................... 16 Quarter 1 2015

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BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

Index

Editorial ............................................................ 2

Key Industry Indicators ..................................... 3

Automotive Dealer Confidence Index (India) ... 4

Improving Customer Satisfaction Scores .......... 6

The U.S. Market Report .................................... 8

Digital at Retail ............................................... 11

Dealer Interview ............................................. 13

From Michael Boneham’s Desk ...................... 15

Contact us ....................................................... 16

Quarter 1 2015

BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

2Edition: Quarter 1 2015 | sewellsgroup.com

A Spread of Essential Reading

EDITORIAL

Manish JarGroup Chief

Operating Officer

For Everyone in Motor Retail

Dear Readers,

Thanks for your enthusiastic response to Benchmarker Global Edition. We will continue to work hard and will keep bringing you insights and best practices from around the globe as long as you keep encouraging us.

It is fascinating how fast the world around us changes. There are so many new developments between the time I last penned down this note for you, and now. Today we have new geo-political issues, fresh fall in oil prices, technology shifts in Silicon Valley and so on. Amidst all these seemingly chaotic changes, the auto industry is certainly undergoing a shift.

There are definitive trends that in the long run will dramatically change the model of auto retailing.

Our “Digital at Retail” section discusses some of these trends.

As thought leaders in the auto industry, we always experiment with new problem-solving techniques and new performance models. The feature by Abhijit Joshi presents some interesting insights on the improvement of customer satisfaction, based on a methodology developed by Sewells Group. While the interview with Yi Fei Yang takes us back to important basics on managing successful businesses.

Our regular column on performance indicators presents some fresh numbers that we have collected from various markets for you. The issue also features a column by Michael Boneham, our new Executive Chairman.

Like the earlier issue, we have been able to pack some variety that you will certainly enjoy reading.

Do write to us with your feedback on what you would like to see in the next edition of Benchmarker.

Manish K Jar

Manish Jar is the Group COO

of Sewells Group.

Other than managing the operations, 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 protected]

Send me a message on Linkedin! Click here

Any Questions?

BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

3Edition: Quarter 1 2015 | sewellsgroup.com

Key performance indicators for franchised motor dealers have been assembled by the Sewells Group operations in the listed countries. These 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.

Key Industry Indicators

Dealership Overall Australia New Zealand China India South

Africa Indonesia Philippines Thailand

Total Dealership Gross Profit % of Sales 16.05% 14.18% 8.15% 11.90% 15.35% 13.2% 12.6% 9.1%

Total Expenses % of TDGP 75.81% 77.84% 70.03% 67.16% 76.37% 80.0% 50.9% 56.5%

PBT % of TDGP 24.19% 22.16% 29.97% 25.92% 23.63% -7.5% 46.1% 41.0%

PBT % of Sales 3.71% 3.06% 2.17% 2.53% 3.25% -1.0% 5.8% 3.7%

Asset Activity 7.1 5.72 6.94 5.19 8.6 3.4 4.9 4.2

Return on Operational Assets 17.10% 13.08% 13.16% 13.33% 20.20% -3.4% 28.6% 15.6%

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.”

INSIGHTS

BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

4Edition: Quarter 1 2015 | sewellsgroup.com

Indian Automotive Dealers Step Into 2015 With Cautious OptimismFourth Sewells Group Automotive Dealer Confidence Index (ADCI) Survey for India indicates tempering of dealer optimism across all vehicle categories in the country

Automotive dealers represent a key barometer in the automotive business. They are at the most crucial position in the automotive supply chain acting as a link between the manufacturers and the customers. Thus they carry a wealth of insights about the current and expected performance of industry. The inception of the Sewells Group ADCI survey was due to the fact that the dealer sentiment is a true representative of the health of the automotive retail business. The aim of Sewells Group ADCI is to collectively capture this sentiment in the form of an index which can act as an indicator to display the overall business and market performance in the future. In addition to the index value, the report talks in detail about the opinion of the dealer fraternity with respect to various aspects of business performance like sales, inventory and profits. Manpower strength which is indicative of dealer optimism is also captured in the survey.The Sewells Group ADCI survey conducted with automotive dealers across India is to quantify their sentiment about the automotive retail trade, with a six-month time horizon. The survey is conducted quarterly, with an intention of tracking the movement of dealer sentiment over time.After the first three successful ADCI surveys, Sewells Group conducted the fourth and final survey for 2014 in the month of January 2015. The survey was conducted to calculate ADCI for the October-December 2014 quarter. Responses were received from 172 dealers, across 125 cities, representing 31 different brands.

TOTAL NUMBER OF RESPONDENTS:

PASSENGER CARS TWO-WHEELERS COMMERCIAL VEHICLES

Figure 1: Total Number of respondents to the Sewells Group ADCI Survey for End of October-December 2014 Quarter for India

AUTOMOTIVE DEALER CONFIDENCE INDEX (INDIA)

The results of the fourth Sewells Group ADCI for India for the October-December 2014 quarter revealed interesting insights. Overall, the ADCI at the end of Oct-Dec quarter stands at +7 indicating an optimistic sentiment. However, the fact that it has dropped from +14 at the end of the previous quarter points to a slight tempering of dealer sentiment.• Passenger car dealers continued to remain optimistic about business prospects in spite of a duller than expected festive period. The index for

passenger cars segment stood at +9 at the end of Oct-Dec quarter, as compared to +8 at the end of Jul- Sep quarter.• The index for two-wheeler dealers saw a significant dip in the Oct-Dec 2014 quarter when compared with the Jul-Sep quarter of 2014. The

index moved from +35 at the end of Jul-Sep quarter to +10 at the end of Oct-Dec quarter of 2014, indicating a drop in optimism levels of the two-wheeler dealers.

• Commercial vehicle dealers, who displayed some signs of revival in the previous survey, continue remaining guarded about business prospects over the next six months. The index stood at -19 at the end of Oct-Dec 2014 quarter as compared to -3 at the end of Jul-Sep 2014 quarter.

BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

5Edition: Quarter 1 2015 | sewellsgroup.com

AUTOMOTIVE DEALER CONFIDENCE INDEX (INDIA)

Figure 3: Trend of Sewells Group ADCI for India up to October-December 2014 Quarter

Some other key findings of the survey are:• Majority of the dealers are bullish about their expected dealership manpower strength in the next six months.• Dealers continue to remain optimistic about the market conditions and their business performance over the next six months.• As compared to the sentiment of the dealers at the end of previous quarter (Jul-Sep 2014), a lesser number of dealers at the end of Oct-Dec

2014 quarter expect their profits to be higher in the next six months.2014 has been an eventful year in India, and the movement of the Sewells Group ADCI echoes the same. The formation of a majority Government at the Centre resulted in a spike in optimism across the automotive retail trade earlier in the year, and we are now seeing some of this enthusiasm get tempered by market realities. An impending cut in interest rates and falling fuel prices are potential drivers of continued optimism at this point. That said, the Sewells Group ADCI at the end of 2014 does indicate that automotive dealers, while positive, are approaching 2015 with a hint of caution.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.

For a detailed copy of the Sewells Group ADCI Report, please drop a line to [email protected].

Figure 2: Sewells Group ADCI for End of October-December 2014 Quarter

SegmentEnd of Q1-

2014End of Q2-

2014End of Q3-

2014End of Q4-

2014

Overall -20 0 +14 +7

Passenger Cars

-40 -3 +8 +9

Two- Wheelers

+13 +18 +35 +10

Commercial Vehicles

-32 -38 -3 -19

BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

6Edition: Quarter 1 2015 | sewellsgroup.com

Improving Customer SatisfactionCustomer satisfaction measurement and improvement has always led to divided opinion at automotive OEM level, where customer experience management is viewed as a key differentiator. Almost all global OEMs now have very robust C-SAT measurement surveys that provide a measure of customer experience across their network. While the importance of this activity is beyond debate, OEM managers always seem to be grappling with this question - how do they improve the customer experience at their dealerships without appearing to be ‘actively managing’ the scores?

Sewells Group has been working closely with leading automotive OEM’s and dealers helping them improve their customer management process. We deploy scientific approach to ensure that we not only work towards improving C-SAT scores, but also focus on truly enhancing the customer experience. Only when we work on the processes that drive experience, we help dealers improve their scores and sustain it over a long period. Sewells Group works closely with the subject OEM in various spheres of dealer performance improvement. Customer experience & customer satisfaction have always been an important metric to monitor network performance.

The first step towards improving customer satisfaction would be identifying the existing customer satisfaction (C-SAT) score. This is typically done through a customer satisfaction survey usually done by a third party survey agency. The survey is conducted every month with a pre-determined number of respondents to calculate the monthly C-SAT score. This is followed by an analysis of 3-month average C-SAT score. Dealerships are then ranked in descending order of their C-SAT score. Improvement measures are then taken through a comprehensive onsite intervention plan focused on the bottom quartile of the dealerships.

IMPROVING CUSTOMER SATISFACTION

Abhijit JoshiGroup Practice Head of

Process Efficacy

Abhijit is responsible for overall business performance,

solution building and client servicing.

He can be reached at [email protected]

FEATURE

BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

7Edition: Quarter 1 2015 | sewellsgroup.com

3M ROLLING C-SAT SCORE

APR-1

3

MAY

-13

JUN-1

3

JUL-1

3

AUG-13

JAN-1

4

SEP-1

3

FEB-

14

OCT-1

3

MAR-

14

NOV-13

APR-1

4

DEC-1

3

MAY

-14

70

65

60

55

50

45

To state an example, one of the world’s leading OEMs identified that their C-SAT score for a region had been declining over a six month period, the reasons for this being gaps in various processes leading to improper customer experience during demos, test drives and car delivery (see figure 1).

A mechanism was developed to monitor C-SAT score of dealerships in the bottom quartile. The philosophy adopted was to work with bottom performers and help them improve their scores. It was expected that this would in turn help the OEM improve their national average scores. Sewells Group worked with the OEM to develop a comprehensive on-site intervention plan. This plan covered structured process review of various dealership activities and aligning them to recommended processes to get the desired improvement in customer experience. The intervention plan also included activities aimed at improving specific skills of role holders involved in delivering desired customer experience. Sewells Group certified process coaches carried out in-dealership interventions as per the defined agenda. The process improvement action is lead by application of Sewells Group Lead-Lag Model of performance management.

The on-site implementation by Sewells Group Coaches delivered spectacular results for this OEM. By purely focusing on driving score of this improvement at the bottom quartile dealerships, national C-SAT score at this OEM moved by 30% over a span of 5 months (see Figure 2).

At the core of this methodology lies the Sewells Group approach of ‘Lead-Lag’ model where we recommend working on ‘lead’ performance metrics so as to cause desired change in ‘Lag’ measures. In this case, our team worked on improving all input parameters that led to desirable customer experience and positive feedback. Application of sound performance management principles, coupled with our ability to do effective on-ground implementation helped us in demonstrating measurable performance improvement to our client.

Improving customer experience and achieving higher customer satisfactions scores is a science. At Sewells Group, we understand this science and are able to consistently demonstrate this to our clients.

Figure 1 shows C-SAT score for OEM for the period preceding Sewells Group intervention

Figure 2 shows improvement in C-SAT score after Sewells Group intervention

3M ROLLING C-SAT SCORE

APR-13 MAY-13 JUN-13 JUL-13 AUG-13 SEP-13 OCT-13 NOV-13 DEC-13

70

65

60

55

50

45

6 KEY FACTORS CONTRIBUTING TO C-SAT IMPROVEMENT

1. Buy-in & active involvement of DP

2. Focus on Delivery Process management

3. Enhancing Sales person knowledge

4. Strengthening customer contact process through CR department

5. Robust monitoring of concern resolution process

6. Focus on improving customer feedback rate to C-SAT surveys

FEATURE

BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

8Edition: Quarter 1 2015 | sewellsgroup.com

Tony NolandOwner, 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 protected]

The 2014 manufacturer’s results have now been tabulated and will be noted as the best, in term of sales, since 2006. 2014, with 16.4 million sales, exceeded 2013 by 1 million units. From a dealer’s perspective, one exciting fact is that in 2014, much of this year’s increase was led in part by retail sales versus less profitable fleet sales.

From a manufacturer’s perspective, on a percentage basis, Subaru and Fiat/Chrysler easily outpaced their rivals from a unit sales standpoint in 2014. Subaru was up 21.0% and Fiat/Chrysler was up 16.0%.

2014 sales results, by manufacturer, were as follows:

Manufacturer2014 Unit Sales

(Millions)Change vs 2013

General Motors 2.9 5.3%

Ford 2.5 -0.6%

Toyota 2.4 6.2%

Chrysler 2.1 16.1%

Honda 1.5 1.0%

Nissan 1.4 8.4%

Hyundai 0.7 0.7%

Kia 0.6 8.4%

Volkswagen 0.6 -2.9%

Subaru 0.6 21.0%

In the race for the luxury sales crown, BMW outsold Mercedes-Benz 396,655 to 366,588.Trucks, as a percentage of total sales, increased in 2014 to 53.2% versus 51.2% in 2013.

Improving U.S. Economy to Boost Sales and Dealer Confidence

THE U.S MARKET REPORT

BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

9Edition: Quarter 1 2015 | sewellsgroup.com

The year-end manufacturer market share results, by region were as follows:

Manufacturer Region 2014 2013 Change %

U.S 45.2% 45.1% 0.1%

Asia 45.8% 45.5% 0.3%

Europe 9.0% 9.4% -0.4%

The year-end U.S. market share results saw some large gains as well as a few significant decreases. The largest share loss came from Ford, which reported their results were a reflection of its reduced availability of product due to the closing of truck plants for a change over to their new 2015 F-150 aluminum platform. The F-150 however was still the best-selling vehicle in the U.S. Chrysler/Fiat had the largest gain in terms of market share in 2014 at 1.1%.

The top selling models and their sales change by percentage versus 2014*:

Manufacturer 2014 Share 2013 Share Change %

General Motors 17.9% 17.9% 0%

Ford 14.7% 15.7% -1.0%

Toyota 14.4% 14.4% 0%

Chrysler/FIAT 12.6% 11.5% 1.1%

Honda 9.4% 9.8% -0.4%

Nissan 8.4% 8.0% 0.4%

Hyundai 4.4% 4.6% -0.2%

Kia 3.5% 3.4% 0.1%

Subaru 3.1% 2.7% 0.4%

Volkswagen 2.2% 2.6% -0.4%

Mazda 1.9% 1.8% 0.1%

BMW 2.4% 2.4% 0%

Mercedes-Benz 2.2% 2.2% 0%

Vehicle 2013 Sales

Ford F-Series -1.3%

Chevrolet Silverado 10.3%

Dodge Ram 23.6%

Toyota Camry 4.9%

Honda Accord 5.9%

Toyota Corolla 12.3%

Nissan Altima 4.7%

Honda CR-V 10.2%

Honda Civic -3.0%

Ford Fusion 3.9%

Ford Escape 3.5%

Chevrolet Cruze 10.0%

Toyota RAV 4 22.7%

Chevrolet Equinox 1.7%

Hyundai Elantra -10.4%

Ford Focus -6.4%

Hyundai Sonata 6.5%

GMC Sierra 14.9%

Ford Explorer 9.1%

Toyota Prius 11.5%

Several factors have impacted vehicle sales and the mix of models sold. I realize the fuel prices U.S. consumers have is a point of contention around the world, but, with pump prices 34% lower than at the same time in 2014 and forecast to go lower, consumers not only seem to be more aggressive in their buying, but are buying less economical models. Another factor contributing to this sales increase is the easing of and availability of consumer credit. The U.S. Unemployment Rate currently stands at 5.6%, the lowest in six years which, when coupled with the rise in Consumer Confidence, has more consumers in the market for new and used vehicles. From a global consumer confidence standpoint, according to the Nielsen Global Consumer Confidence Index, through three quarters of 2014, the U.S. stood at 108 versus the average of 98.

*Autodata January 2014

THE U.S MARKET REPORT

BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

10Edition: Quarter 1 2015 | sewellsgroup.com

Most experts agree that unit sales will continue their increase in 2015, though, most likely, not at the same rate. The consensus forecast is in the 17.0 million unit range.

Used vehicle sales remained strong in 2014 and most dealers saw an increase in their volume and gross profit per retail vehicle. While the final year-end data isn’t available, according to Edmunds.com, through September total used vehicle sales totaled 27.9 million units.

One area of concern for dealers is their decreasing fixed coverage/absorption percentage. October 2014, YTD, the average dealer percentage stood at 56.4%. The challenges dealers are facing include their ability to increase the number of customer visits as well as the average sales and hours per service repair order. With most manufacturers having switched to synthetic oil, the needed customer service intervals have been extended.

New products coming to dealer showrooms this year, and an improving U.S. economy have dealers optimistic about 2015. As with you, we live with the concern that an act or acts of terrorism can quickly impede or disrupt this optimism.

New Vehicle Sales = 57.2% + 8.0%

Used Vehicle Sales = 31.4% + 6.3%

Service and Part Sales = 11.4% + 5.8%

Total Dealership Sales = + 7.2%

Total Dealership Gross = + 5.3%

Total Dealer Expenses = + 5.0%

Total Dealership Net as a Percentage of Sales remained the same as 2013 at 2.5%.

DISTRIBUTION OF TOTAL SALES AND THE 2014 RESULTS VERSUS 2013

At the retail dealership level, the average NADA member dealer had the following results through October 2014:

THE U.S MARKET REPORT

BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

11Edition: Quarter 1 2015 | sewellsgroup.com

In a world where technology has evolved has evolved exponentially, the automobile dealership model has remained largely unchanged. The landscape is still dominated by large bricks and mortar facilities in prominent locations, stocking dozens of cars. Well-presented sales people are seen waiting for customers, to walk them through well versed, but age old sales pitches.

Automobile buyers today are way more informed than ever. Before they set foot into a showroom, they have already spent significant hours online, creating and refining their consideration set. This has led to fewer dealership visits per car purchased (down to 1.4 from 5 visits about 5 years ago). Couple this with the meteoric rise in real estate values over the last couple of decades. All this has inversely impacted dealership profitability and put a question on the role of automobile dealerships. No longer can dealers afford to keep large showrooms and staff on payroll, waiting for customers to walk-in. The role of the dealer has changed from being an information source to a product experience provider. A fact that dealers would do well to embrace.

Let’s look at three key trends, which will have a strong impact on the automobile retail model.

Three 21st Century disruptions that will change the face of automotive retailing

Rohan BhallaProduct Manager -

Code Red Marketing

Rohan manages product innovation and future

development of Code Red Marketing’s customer experience

and lifecycle management solutions.

He can be reached at [email protected]

Information has never been more easily available and accessible as it is through search engines of today. Car buyers are spending considerably more time online than they are offline when looking to purchase a new car. The 2013 Polk/Autotrader.com Automotive Buyer Influence Study shows that vehicle shoppers spend approximately 10 hours online as compared to an

01 The Internet

average of 3.75 hours offline. Further a majority of that time is spent researching dealer and manufacturer websites.

Apart from vehicles and brands, customers are actively searching for feedback on dealers – who gives the best deals? Who has the best after sales? Who is more informed? Or who has the most helpful sales staff? All these matter in creating a perception of the dealership. Networked customers are using their social connections to help research not just what they buy but who they buy it from. This means that the dealership visit is now primarily focused on reinforcing what they have learnt online, and to get a real world feel of the vehicle.

The opportunity for dealers is:

a. To take the first sales contact online and not wait for the customer to walk-in. Ensure the dealer website is an extension of the real-world showroom and vice-versa.

b. To create a comprehensive online presence that covers web, social and mobile as channels of customer engagement and push sales people to embrace these mediums in their interaction with customers

c. To refine the sales pitch from a linear sales process to one where they engage customers across multiple stages in the purchase process

Source: Google Digital Drive auto shopping study Nov 2013

Dealer sites 83%

81%

77%

Manufacturer sites

Search engines

DIGITAL AT RETAIL

BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

12Edition: Quarter 1 2015 | sewellsgroup.com

According to a study on new auto shoppers, the percentage of those shopping for new vehicles with a tablet and smartphone reached 23% and 25% respectively in 2013, up by 3 and 7 percent from 2012 levels. This number is only expected to grow as these devices become more available and affordable.

Aside from access and availability another key driver of mobile proliferation is internet speed.

Global Rank Country/Region Q1 ‘14 Avg.

MbpsQoQ

ChangeYoY

Change

1 South Korea 23.6 8% 145%

2 Japan 14.6 12% 29%

3 Hong Kong 13.3 8.5% 24%

20 Taiwan 8.9 6.4% 118%

24 Singapore 8.4 6.1% 28%

42 Australia 6.0 2.6% 39%

45 New Zealand 5.6 5.7% 30%

48 Thailand 5.2 6.8% 31%

69 Malaysia 3.5 16% 30%

79 China 3.2 -6.4% 46%

93 Indonesia 2.4 46% 55%

105 Philiippines 2.1 5.7% 49%

107 Vietnam 2.0 12% 47%

118 India 1.7 8.4% 34%

This internet speed allows for better content consumption with more multimedia and innovative video and html:

a. Richer online content drives a better and seamless online-offline experience linking the virtual world with physical extensions in the showroom.

b. Wi-Fi enabled dealerships provide the ability to hook in the buyers and push active content through, while they are at the dealership

The final trend relates to the evolution of display technologies. Gone are the days when displays would only be done with all cars in all colours. Dealers can leverage new age display systems to change the dealership irrespective of the floor space available. Modern display technology is driven by projection mapping, 3D and virtual reality. This can effectively provide a complete product experience without having to leave the showroom premise or have a physical product on display. While automobile retail does require some level of touch and feel, the entire vehicle shopping experience can be drastically changed and linked back online through the use of such technology. This has the potential to transform the dealership visit into an experience, making the dealership itself a landmark location like the Audi showroom in Central London or the Tesla retail showrooms across high traffic shopping destinations in the US.

Imagine your showroom in a regular retail space no larger than a cellphone store in a high traffic mall. Sales consultants with headsets, connected to customers online via Skype and chat through your website, making an appointment for a virtual drive at the dealership. The customer has informed the consultant not only of the exact type of vehicle they want but also where and how they would like to take the test drive. The sales consultant has prepared the projection and simulation systems for that before the customer arrives at the dealership. After the drive an image of the model along with a video from the drive is uploaded onto the customer’s Facebook page and is liked by 18 friends with 7 comments. The next week the customer walks in and purchases the vehicle giving the sales consultant a positive rating and feedback that goes viral. That’s going to be the new face of auto retailing.

02 Mobile 03 Display Technology

DIGITAL AT RETAIL

BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

13Edition: Quarter 1 2015 | sewellsgroup.com

What is your opinion about the market you operate in and your expectations from your business in relation to it?Sustainable development in Chengdu is on the rise, and the automotive market here is mature and stable. However, dealerships selling other brands of automobiles are giving stiff competition. Each dealership surely has its own advantages and disadvantages, but we at Tian Jun Technology, have one goal, which is to win market share. Along with our continuous efforts, we also hope the OEM takes effective measures to address the buying capacity of the market and draw up an effective business policy to tackle the situation.

Can you tell us how your business performance has changed over the past 6 – 12 months?Our sales performance is seeing an upward growth paradigm, with monthly sales volumes increasing from 200 to 250 units sold, over the past 6 month.

“Business Thrives If You Have Good Management & Operating Processes”

Yi Fei Yang, General Manager, Chengdu Tian Jun Technology Co. Ltd.,

Chengdu, China

Yi Fei Yang, General Manager, Chengdu Tian Jun Technology Co. Ltd., Chengdu, China

What specific action did you take to affect your result?We amended our management strategies after QC installation. Our organization chart and the sales team structure had to be redefined accordingly. Initially, we had 8 people for telephone sales. However, seeing the impact of internet and web-based research these days, we have increased the number of online sales personnel to 5 (all reporting to the online sales manager). Accordingly, the salary and incentive structures were modified to motivate the sales staff.

How important do you think having a business model is for the success of your business? Can you tell us a bit about the model that you apply?Business thrives if you have good management & operating processes, a strong team, and a focus on profitability. A strong business model and culture is very important to achieve business excellence. Newly set up stores need to survive, relying on sales volume and rapid development of staff competencies. Our sales model follows a triad approach, encompassing on-site sales, telephone sales and online sales. Since, the location of our store is a disadvantage to our business, strengthening our telephone and online sales is imperative and of utmost importance, should we want to increase our monthly sales volumes to 250 units within the coming 2 years.

Chengdu Tian Jun Technology Co. Ltd. officially commenced business in March 2013. Yi Fei Yang, the General Manager of Chengdu Tian Jun Technology Co. Ltd. speaks with Sewells Group about their dealership’s expected performance and activities undertaken to improve performance amidst competition. Here are his insightful responses:

DEALER INTERVIEW

BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

14Edition: Quarter 1 2015 | sewellsgroup.com

Are you doing anything special to motivate and retain your key staff?An efficient workforce is an important key to success. Retaining such staff in such a competitive environment could be challenging. One of the essential motivator for any staff is professional growth. We have implemented sustainable development plans for our staff which motivates them to perform at our dealerships. The incentive structure that we offer is highly competitive and attractive making it the best in class in the industry. Along with this we have given special attention to grooming and setting up the workforce to achieve success and creating a sense of belongingness with the team.

Is there anything that you are doing to differentiate your customer experience and drive customer retention in your business?Better customer satisfaction ensures good business. Each customer is given special attention at the store. Each customer is given complete product information along with a product demo. Information about the technology being used is also shared with each customer. For our service customers, one-on-one consultation and service advice is given by our expert service advisors. To improve the service experience, we have renovated our waiting areas by installing fitness equipments, private cinema rooms, activity area for children, etc.

How do you engage your staff and get them to share your VISION for the business?Each employee needs to feel a sense a belonging to the company. We consider each staff member to be a shareholder in the company and this is even communicated to them. A shared vision guarantees success and hence each activity performed by each staff member is towards the successful achievement of our common goal.

Can you tell about your experiences in sharing best practices with other dealers (either informally or through initiatives such as Performance Groups)?We are open about learning from other successful dealers. It gives us an opportunity to review our performance and identify areas of improvement. The best practices shared are useful in modifying our business processes and helps us achieve constructive outcomes.

DEALER INTERVIEW

BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

15Edition: Quarter 1 2015 | sewellsgroup.com

What to expect in 2015As we draw a close on the first quarter of 2015, I think it’s relevant to assess where we have been and what the future might hold for the global auto industry. 2014 was a year of mixed news for the industry.

From a market perspective, particularly in the Asia Pacific, Africa and Middle East Regions there was the continuing story of the growth in the China passenger vehicle industry- now the largest in the world. I continue to be convinced of the link between growth in GDP PPP (Purchasing Power Parity) and the willingness and confidence of consumers to move into the 2 wheeler market; and from 2 wheelers to 4 wheelers for the first time. Just look at the link in China where the industry has grown so exponentially in the past 10 years aligned with GDP PPP. Unfortunately, for the vehicle industry in markets such as India and Thailand, the story over the 2014 calendar year has been a tough one, with consumer confidence low, interest rates high and inflation an issue, particularly in India.

There is an expectation that 2015 will be a better one for the industry. Confidence is returning in India, the global economy will benefit from lower oil prices, and central banks will focus on boosting economic activity.

No matter which way the industry moves, one thing that OEMs and their dealers can count on is increasing choice available to consumers and increasingly savvy consumers. As vehicle choice grows in almost all segments, customers look for more than just a purchase transaction. An example is the significant growth in the use of the internet to search for vehicles and best deal available prior to walking into a dealership.

The Customer Experience in the dealership for both sales and service is becoming even more of a differentiator and a part of the decision making process for the consumer in selection of a vehicle. This will place continuing pressure on dealerships to provide a sales experience that the customer feels makes them a special individual, and the experience is such, that they wouldn’t think of going anywhere else to service their new vehicle! Utilisation of technology in the dealership has stepped up rapidly and virtual experiences are commonplace now – integrating personalisation with mass production.

Significant new players have made their presence felt in selected markets, utilising disruptive technology and new operating systems into the sales process to customers. OEMs, dealers and consumers will be watching these developments closely. In growing markets across the globe, where consumers may be entering a dealership for the first time, the opportunities are great for the brand and the dealership to start a life time relationship with the customer- this will be an incredibly important element of the success or failure of OEMs and dealerships in these fast growing markets.

The Sewells team stands ready to support our dynamic industry with innovative products and services through our world class team members and product platforms. As we move into 2015 with confidence, my best wishes and thanks go to our customers and I look forward to interacting with you during the next year.

Michael BonehamGroup Executive

Chairman

As a respected auto industry leader and visionary, Michael is driven by the desire to continue

contributing to the industry. In his role as the Group

Executive Chairman, Michael is responsible for leading the global Sewells Group

organization on its exciting growth trajectory.

He can be reached at [email protected]

FROM MICHAEL BONEHAM’S DESK

BENCHMARKERGLOBAL EDITION

Auto Retail Best Practices from Across the Globe

16Edition: Quarter 1 2015 | sewellsgroup.com

About BenchMarker

This special global edition of Benchmarker, the global thought leadership publication for automotive retailers, is produced in an electronic format for dealers and OEM executives throughout the world. Do send your feedback and comments.

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BenchMarker’s purpose since its inception has been to create a forum for the sharing of best practices. Although we operate in a highly competitive environment our experience has been that there is a community sense amongst dealers who are willing to share ideas with other dealers. There is much to learn from others who might be experiencing similar challenges. We are keen to hear from dealers and OEMs who have examples of retail best practices.

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Editorial Team Published by Sewells Group

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