The timing was good. Motor Dealer was speaking to Duncan Chapman, managing director at Volvo specialist. Ray Chapman Motors shortly after the group had gained the Investor Supplier Group accolade on the annual Volvo seller awards. It gained for good purpose.
In early 2022 Volvo got here knocking at his door. Ray Chapman purchased Clive Brook and its two Volvo dealerships and went about integrating them into the group, finding out the staffing and turning two separate companies with totally different cultures into one.
The Volvo investor award for a seller that’s bought a couple of web site, so the investor award is predicated on a number of KPIs, together with automobile gross sales, service visits, Google opinions, overhead absorption, a multi a large number of KPIs, and we come out high.”
Ray Chapman has been with Volvo since 1969, and the group now has shops in Braford, Huddersfield, Malton and York.
It’s now a much bigger firm, working in a local weather like different seller companies beset with rising prices after a tricky Price range with hikes in Nationwide Insurance coverage and wage prices. So, what’s his tackle the present market?
“From a Volvo perspective, it’s very sturdy. , I perceive the Price range and there’s quite a lot of fear on the market as regards to the fee base throughout the trade, whether or not or not it’s minimal wage, nationwide insurance coverage and extra prices that simply preserve creeping up.
“As a way to mitigate that, we have to preserve and develop quantity. And from Volvo’s perspective, we’re attaining that. Volvo final yr had over 3% market share. We’re on observe to develop that additional this yr. We’ve simply come out of a three-week sale occasion, each for brand spanking new and used.
“And fairly frankly, our order take, I’ve by no means seen it as sturdy. Whether or not or not it’s, retail, fleet, or Motability. Volvo is a reputable various for a few of these various German manufacturers which have been competing in opposition to for a few years.
“Volvo as a brand has come through a massive transitional period. The cars are appealing to a wider audience now, from a demographic perspective and coupled with all the new facilities around the UK, in terms of showrooms, it’s attracting a lot more people and we’re selling more cars.”
The figures bear it out. Volvo gross sales within the UK final yr have been 66,408, up 32.3% on 2023. Market share has grown to three.4% from 2.6% final time. In keeping with Chapman when it got here to the ZEV Mandate Volvo sellers have been forward of the sport. Final yr, virtually 27% of the vehicles it offered have been EVs whereas the minimal goal was 22%. It will stand it in good stead for 2025 when the ZEV goal rises to twenty-eight%.
“We’ve introduced the new EX 30, which is fully electric and did tremendously well in its segment, and that was a huge contributor to achieving 27%.”
However Chapman is aware that a lot of the gross sales have come from fleet and wage sacrifice enterprise facet and there are nonetheless vary and different points regarding EVs.
“When I look at where that [EV] share is coming from, I think in the main its fleet and its salary sacrifice. That’s been a significant player from our perspective. From a retail perspective the public, I think, you know, the mindset has always been around anxiety with range, and people are slowly getting their head around that there are significant cost savings with electric.”
“We’ve introduced the new EX 30, which is fully electric and did tremendously well in its segment, and that was a huge contributor to achieving 27%.”
However Chapman is aware that a lot of the gross sales have come from fleet and wage sacrifice enterprise facet and there are nonetheless vary and different points regarding EVs.
“When I look at where that [EV] share is coming from, I think in the main its fleet and its salary sacrifice. That’s been a significant player from our perspective. From a retail perspective the public, I think, you know, the mindset has always been around anxiety with range, and people are slowly getting their head around that there are significant cost savings with electric.”
Chapman is signed up the NFDA EVA scheme which presents sellers coaching on EVs and speaking the problems regarding EVs to customers.
“We as a retailer have an enormous half to play in influencing and re-educating the general public as regards to electrical. Many households have two vehicles and a type of vehicles is mostly your runaround automobile. How usually is that automobile going to do greater than 200 miles in a day?
“Why would you not have an electric car. We work out that for every 12,000 or 13,000 miles, it’s, on average, a saving of £1,500 a year on fuel. And then when you factor in some of the additional maintenance savings from service perspective, it’s just a win-win, really. The cost of EVs are coming down. We feel we’re in a strong position, but that’s because of the far foresight of the brand many years ago.”
That mentioned, Chapman acknowledges that the general public charging infrastructure is insufficient.
“The acceleration in public charge points is not where it needs to be. But, you know, there’s a lot that we can do outside of that with home charging points. Volvo has offers on now with recharge boxes and a lot of people are taking advantage of that,” he says.
A lot has been written in regards to the cost-of-living disaster and the upper prices imposed on enterprise within the final Price range which comes into drive in April. Is Chapman seeing a falloff in aftersales revenues because of this as prospects trim budgets?
“No, we’re not. As a business, we’ve been around for over 50 years. We pride ourselves on giving really high levels of customer care with great value for money. And if you look after customers, they come back.”
That mentioned, for Chapman the large subject sooner or later, as gross sales of EVs ramp up taking a higher share of the used automobile parc, is the fall-off in revenues and the necessity to discover different revenue streams to counter that.
“We need to be mindful of how we can compensate for that loss and look at other areas within the business where we can generate additional revenues that may come as a consequence of volume and growth, efficiencies and economies of scale through acquisitions of other sites,” he mentioned.
“The group does maintenance on Geely-owned Polestar vehicles. We’ve seen an increase in amount in our workshops, which is something that can mitigate some of the threats with regards to service revenues in future years.”
Ray Chapman has held the Volvo franchise for over 50 years and is a serial award-winning group, a Volvo specialist with its personal very well-defined enterprise tradition. In February 2023, it had two dealerships, and these have been joined by two Clive Brook Volvo dealerships. That is mirrored in its financials. In 2022 turnover was £124.9m with pre-tax earnings of £2.8m. The next yr turnover was £180.4m with lowered earnings of £2.09m. It made important investments in Volvo Bradford Volvo Huddersfield.
What challenges did Ray Chapman face in buying a unique seller with a unique tradition, totally different employees?
“The chance introduced itself to us. Volvo knocked on our door and we took it as a result of we might see what the long run holds. We acknowledged that it wanted a big funding, not simply in services, however in folks and in course of.
“Within the final two years, I believe it’s honest to say it’s been fairly traumatic. It’s been demanding, however we’ve refurbished our Huddersfield web site. Final yr, in 2023 we relocated to an previous Jaguar web site within the centre of Bradford, whose footprint was double the scale of the unique Volvo web site. Now we have invested tens of millions of kilos in these two websites.
“Most likely one of many greatest challenges for us has been folks and course of. We have been spreading ourselves over 4 websites, moderately than two, and it meant that we wanted to have a extra sturdy administration construction in place and that the method was clear. Now we have built-in all our accounts capabilities into one web site. We’ve constructed new programs from a gross sales perspective and it’s now constant, making it simpler to handle, monitor, and make folks accountable.
“And we rebuilt the teams There were some people that wanted to come on the journey and are still with us. There were some who wanted to come but we didn’t feel that they were up to it. And there’s some people that have just left in those two years. We feel that we’ve now got two good teams that complement our existing sites.”
Chapman has invested closely within the used automobile enterprise, within the gross sales perform, picture cubicles, patrons and inventory controllers. The gross sales supervisor focuses on gross sales moderately than administration.
“All the opposite bits and items round that, by way of shopping for vehicles, inventory administration, preparation, valeting, pictures, disposing of commerce vehicles, all of that’s utterly taken out of their fingers, it distracts them from coping with prospects and changing inquiries. These adjustments which we put in place have made a big distinction to our volumes, which have grown 40% to 50% within the final three or 4 years.
“To make a dealership successful, it’s not all about the size of the showroom and the facility. It’s more about what space you’ve got and what back-end resource you’ve got. We’ve just opened a new storage, valeting and preparation and photography centre, which is all the stuff that a customer wouldn’t see. The vehicle does not need to be on the forecourt. It needs to be presented correctly on the web at the right price.”
Most used vehicles offered by Ray Chapman are Volvo however after all it does carry different manufacturers. “It’s additional revenue, which would be foolish to throw away in view of the cost base,” he mentioned. Final yr Ray Chapman offered 3,400 used vehicles and 4,000 new.
Now that Chapman has assimilated the 2 dealerships, does he have plans for additional acquisitions? For Chapman, that query inevitably factors to future generations increasing the group.
“The fourth generation of the Chapman family is in the business and Nathan, our son, is mightily enthusiastic and driven. His involvement and input in the business over the last three or four years has been instrumental. I’m 54 and I’ve been in this business 38 years. We are first and foremost, absolutely dedicated and committed to the Volvo brand,” he mentioned.
“If there was an opportunity that came along, I wouldn’t say no, but at this moment in time, I feel as if I just want the dust to settle a little bit on the back of what we’ve gone through for the last two years. Let’s just enjoy some of our hard draft for a while before we start to put ourselves through yet more pain, both financially and mentally.”
Ray Chapman has gained the Volvo Nationwide Retailer of the 12 months three years on the trot, in 2020, 2021 and 2022. That takes some doing given how aggressive these items are and the way they’re judged. What’s the key?
“It is teamwork, absolute dedication to the job and being focused on what we need to do and then having the right people in the right place to do the job. I always say that not one person within our business is more important than the other. We’ve got different responsibilities, and we’ve got different titles. I don’t care whether it be a car cleaner or manager, we’re all equally as important as each other. And that rings very evident right throughout the business. It breeds loyalty, it breeds retention,” he mentioned.
Earlier, Chapman had cited the significance of fleet in terms of EV gross sales and it was notable that the group gained a procurement award for customer support, outperforming different manufacturers up for a title. Ray Chapman is a enterprise centre for Volvo for fleet gross sales.
“We are very proud of our fleet team. They do a phenomenal job with significant volume going through that department year on year, and it continues to grow,” he mentioned.
I ask Chapman in regards to the company and the way it impacted his enterprise. Volvo switched to company mannequin in mid-2023 with vehicles being offered direct to customers, the inventory coming off sellers’ books and sellers incomes a price on vehicles offered and requirements achieved. Cash sensible, whereas turnover fell, the influence on profitability was impartial, mentioned Chapman
“The commissions that are actually paid is in keeping with what we have been retaining beforehand. I believe it’s honest to say, we had some fairly demanding, traumatic instances within the first yr of company. We had gone from some extent the place we handled all the things. We have been in whole management. After which to flick it in June of 2023, to the purpose the place we have been facilitators. We offer the expertise for the patron.
“On the again finish, we’re closely reliant on Volvo and their administration perform. And regardless of all of the preparations, effort and work that was put into that to make it seamless, there have been all the time going to be teething issues, which prompted important quantity of frustration, to the purpose the place frustrations boiled over every so often. Relationships have been challenged.
“However we’ve come by way of that. Volvo work so arduous behind the scenes and in collaboration with the community to try to overcome a few of these system points and the final points that we’re encountering on a day-to-day foundation. We don’t actually come throughout many points now.
“In the early days, the biggest challenge for us was keeping our staff happy, because, you know, the pressure that we’re under to try and appease customers and keep them happy was significant. But we’re through it, and, you know, signs are all good. So, there’s lots of development with systems ongoing to improve it further, but the network and Volvo are completely aligned on this,” he mentioned.
Wanting forward, what does Chapman see as the largest problem for the enterprise?
“The largest problem, clearly, is value base throughout the companies however we think about ourselves to be entrepreneurs and there are answers for many issues. Pre-agency, it was rather a lot simpler as a result of all the things was in our fingers. Now we’re in company, we’re restricted by way of how we will use that entrepreneurial aptitude.
“That mentioned, we’ve nonetheless bought plenty of issues inside our energy that we will do, whether or not or not it’s further used vehicles, add-on merchandise, beauty and sensible restore centres, tyres, four-wheel alignments. There’s plenty of issues that we will do that are underneath our management and which we’re doing.
“I believe the short- and medium-term threats we will handle. It’s the long-term menace which is the largest concern to me: the influence on service revenues by way of electrification.
“I think we’re in a good place. We’ve got a very strong relationship with Volvo who are very supportive of us. They listen to us. II would hope that this year, despite some of the issues, the threats, and the challenges that we’ve got, we’re in a good position to have another successful year.”
