IMI Magazine

IMI Magazine

News Analysis

Aftermarket non-starterThree aftermarket shows scheduled for the first four months of next year was clearly a non-starter and anyone of sound mind should have known that this was two too many. Even so, the announcement in mid-October that AutoExCeL 2005 - which promised a fresh approach and was booked for next April at the ExCel venue in London’s Docklands - had hit the buffers came out of the blue. As recently as mid-August the organisers were claiming that the event would be the best trade show for the UK aftermarket.The cancellation has led to widespread regrets among aftermarket players, many of whom regard previous aftermarket shows as stale add-ons to other events. The Automotive Distribution Federation, for example, was moved to issue a press release to record its disappointment and noted that AutoExCeL had received its support "because we felt it addressed some very important points we had been making for many years". That leaves the Aftermarket Show, which last year was tagged on to Autosport International, and the ATS aftermarket show, which has been programmed to take place next April as an adjunct to the SMMT’s Commercial Vehicle Show. It could be, of course, that there is no commercial case for a standalone aftermarket show. The SMMT’s European Automotive Trade Show in 2001 was the last of the genus and was widely seen as a failure with plenty of empty spaces in the exhibition halls and rumours of serious financial losses. This led to some new thinking and the re-branding to Auto 1 which, in the event, had to be cancelled due to a lack of interest and the prospect of further heavy losses. It is significant surely that both of next year’s events are adjuncts to other non-related exhibitions. There is clearly an urgent need for a sense of unity, leading to a single all-embracing aftermarket show with universal support. But there’s precious little evidence to suggest that will happen.

Nissan sets the Tone for more growthThe announcement that Nissan is to produce a fifth model at Sunderland is great news for the local community as well as for the motor industry. Starting in 2006 the Tone, a small MPV based on the Micra, will be added to the line-up, thereby preserving employment and providing a much needed boost to the components sector. As some other parts of the UK’s motor industry currently face difficult circumstances, the Nissan experience highlights two factors which play a crucial role in defining success or failure in vehicle manufacturing.The first arises over currencies. Nissan’s veiled threat to look upon its UK assembly operations less favourably in the absence of the country’s membership of the eurozone has evaporated due to sterling’s quite hefty depreciation against the euro during the past couple of years. The UK is once again an attractive vehicle assembly location, and Nissan is guarding itself against losing competitiveness in mainland Europe by sourcing around 75% of the new model’s components in euros, including some from UK-based suppliers. By this means a large part of the risk posed by fluctuating currencies is being shifted to the components sector.Secondly, there is no substitute for high productivity. Various studies have identified Sunderland as Europe’s most efficient car manufacturing facility and, under these circumstances, it was always improbable that Nissan would have contemplated, let alone put into practice, any significant rundown.

Citroen makes its pointFurther proof that vehicle manufacturers will maintain a firm grip on their franchised networks – irrespective of block exemption changes – has come from an unlikely source. In a recent spat between Citroën and the RMI over showroom standards, the Office of Fair Trading ruled in favour of Citroen. The message from this decision could hardly be clearer: a vehicle manufacturer has the right to demand that its dealers have showrooms of sufficient size to display the full vehicle range. Very sensibly, Citroën has resisted the temptation to adopt a triumphant stance and instead has highlighted the ruling as a victory for both sides. After all it is to both parties’ advantage that models are displayed to full effect in the interests of enticing consumers and maximising sales. However, it seems doubtful that the RMI and the retail motor trade generally will be able to shake off easily the feeling that vehicle manufacturers are using the setting of standards at both showroom and servicing locations as a means of continuing to exert unfair and, in some instances, illegal control over their franchised networks which is at variance with the spirit of block exemption revisions. Meanwhile, it would be prudent for dealers to anticipate a stronger direct involvement in the retail motor trade on the part of the manufacturers, and for manufacturers to prepare for dealers to cast their marketing net ever wider in the search for sales and to justify the investment in premises.

Just asking for reformThe AA’s new owners have lost little time in stamping their mark on the organisation. Under the energetic leadership of Tim Parker, who carried out an impressive turnaround at Kwik-Fit, it is already clear that there will be a ruthless attack on under-performing parts of the group. An early sign of this is seen with the decision to close several unprofitable ventures, notably the AA Service Centres network, comprising 122 outlets, and AA Tyre Fit which provides nationwide coverage of mobile tyre fitting with a fleet of 130 vehicles. In addition, the AA has announced that it will no longer perform vehicle inspections on used cars for private consumers. At the corporate level, a new marketing approach will be adopted which is expected to jettison the ‘Just Aask’ badging and bring back the ‘fourth emergency service’ moniker. Of these developments, the disposal of AA Service Centres is the most noteworthy. The AA’s experience suggests that there is no middle ground in servicing and that groups require nationwide coverage in order to secure the economies of scale necessary for an adequate return on investment. It is understandable therefore that Nationwide Autocentres, the UK’s largest independent vehicle servicing and MoT operation, is to acquire 50 of the AA centres, bringing its total to 225. In an interesting business development all of Nationwide Autocentres’ outlets are to become AA-approved service providers for AA members and customers, and subject to an AA audit. What is to be made, though, of reports that some car manufacturers have approached the AA concerning the possible purchase of the 72 servicing centres which are not being acquired by Nationwide Autocentres? As evidence grows that manufacturers are achieving the bulk of their operating profits from finance and servicing activities, further moves into the servicing and repair functions would be logical, provided they do not replicate the Ford/Kwik-Fit flop.

‘Character’ makes a comebackAnyone who has delved into the origins of the global motor industry will appreciate the role of ‘characters’ in shaping the sector’s development. A review of the British industry, for example, highlights the importance of people such as Colin Chapman, William Lyons and Lord Nuffield, to name just three, who had the energy, vision, skills and determination to establish and cultivate companies as diverse as Lotus, Jaguar and Morris. The past couple of decades, though, has seen the industry fall under the influence of an altogether blander type of individual. The destiny of most vehicle manufacturers has been controlled by management boards and committees where it seems that the key watchwords have been ‘play safe’ and ‘cut costs’. More recently, however, the cult of the individual has once again started to sprout some green shoots. At General Motors septuagenarian Bob Lutz’s arrival and swift elevation to the position of vice chairman has added a fizz to the corporation’s model development programme, as well as building up expectations that the ‘Lutz factor’ will arrest GM’s North American market decline. At a different level the name of Chris Bangle, BMW’s controversial design chief, is undoubtedly better known by BMW aficionados than the chairman or any other board member. And now huge excitement and expectation has been generated through the arrival at ailing Volkswagen of a DaimlerChrysler whizkid in the form of Wolfgang Bernhard. Are investors clutching at straws or is the motor industry still essentially one of those businesses, like fashion and pop music, where inspired individuals really can make a difference?