How can your workshop become a manufacturer's appointed service dealer?
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Colin Sowman visits MAN to find out what is required.
AAII truck manufacturers need to offer t customers nation-wide servic'rig and breakdown backup, to do this they need service agents across the country. A manufacturer's requirement for service agents will change but the growth of contract maintenance has generally meant an expansion of networks. The workshop manager who knows why and how such service dealers are appointed could have a distinct advantage.
To find out the rationale behind such appointments, Workshop visited MAN's Swindon headquarters to talk to its service and parts manager, Bill Hughes and network controller, George Fildes. What follows is the MAN way of going about appointments but all the other manufacturers will follow roughly the same procedures.
Statistics
The starting point is two sets of statistics, first is the number of vehicles that the particular manufacturer has registered. This is used in conjunction with its own average for vehicles serviced by, and parts purchased from, its franchised agents. The second set of figures are from the SMMT and gives the number of each manufacturers' vehicles registered in each postcode area. By looking at the trends and using additional feedback from sales staff the manufacturer can see where the need is growing for a new service dealer.
On a practical level the workshop manager should be constantly on the look out for signs of growth in local fleets, especially if one manufacturer's vehicles predominates. Should that manufacturer's nearest service point be some distance
away there is a chance that it will be looking for a new service agent closer to that growing fleet.
Having decided that there is the need to appoint a new service dealer in a certain area the manufacturer has to find a workshop willing and able to meet the required standards. At MAN the main dealer for that area will be given the first option of opening a subsidiary to fill the gap in ser vice cover. If that option is not taken up suitable candidates can be found from those who have written in asking to be considered or from suggestions from the area field service manager.
At the point where a manufacturer decides to add a service dealer there will not usually be enough of its vehicles coming in to keep a stand-alone workshop busy. "It's not a case of just hanging up the sign and waiting for the trucks to arrive", says Hughes. To get over the shortfall of work MAN looks for workshops with other forms of income such as an in-house facility with spare capacity or those with other .franchise arrangements.
Only if a suitable candidate can be found and is willing to take on the franchise will the next steps be taken: "We would rather sit with an open point than appoint the wrong people", says Hughes.
Short interviews will be held with all prospective candidates after which one will be chosen. Managers should not be too concerned about the level of equipment in their workshop when applying to become a service dealer; "it's people we back, not buildings", says Hughes.
Viability study
The next step is to draw up a viability study which will include an outline of the proposal, company history, existing and proposed personnel, a socio-economic overview and map of the workshop's operating area and a description of the facilities with any required changes.
To this is added the local vehicle parc, area performance figures, a list of competitors and the applying company's financial performance for the last three years. According to Fildes this can be the first of a number of shocks to the wouldbe franchisee: "Many people do not know if they are trading at a profit, their figures are often a couple of years out of date."
However, the workshop owner or director is not doing this work alone, there will be considerable help from the manufacturer via the area service manager. The completed proposal will contain a threeyear plan detailing the assumptions made, results expected and conclusions reached.
It is not unusual for the meetings necessary to compile the study to last up to three days. That period can be very unsettling to the staff who know something is going on. The boss is tied up day after day, but they often do not know what is happening. Added to the study will be the area service manager's recommendations, assessment of the staff (based on interviews with key personnel) and views on the buildings and equipment.
If necessary, and it normally is, a dealer establishment package will be proposed. This may involve help from the truck manufacturer in purchasing equipment or altering/extending buildings to get the new dealer up to standard. Some manufacturers have a standard package but MAN tailor each one to the new franchisee's requirements.
Setting up a new service dealer will require an investment running into five figures with the biggest single cost being the purchase of a specified level of parts stock from the manufacturer. The prospective franchisee will need to show where any money required will come from, how the debt will be serviced and demonstrate a long term profitability.
Operating ion MAN accepts that in the first year it is almost certain that the workshop will incur an operating loss and probably move into profit in the third year. "Dealer development is a long term proposition", says Hughes; and good reputations take a long time to build".
The complete proposal will then pass to the senior management team at Swindon who will examine and discuss every aspect. If Swindon gives the go-ahead the proposal passes to the board of directors at MAN's UK holding company, VAG. When all have approved the proposal a formal offer will be made to the applicant company to join the network.
Set out in the offer is all the conditions to be met before the service dealer goes live, a date by which this should be achieved and the area to be covered. This forms the basis of the contract to be signed between the new dealer, MAN Truck and Bus and VAG UK. For main-line truck-selling dealers this agreement runs to about 50 pages.
Once the contract has been signed the dealer development team in Swindon can get going. Its dealer establishment pack age ensures that the new recruit gets all the information and help it needs. Equipment and signs are ordered, initial parts stock is sent as are workshop manuals and michrofiches, training is arranged for all the staff, stationery and business cards are printed.
There will normally be an official opening with local and trade press coverage when fleet owners can view the new dealership, talk business and possibly place some work.
After that the new dealer is not left on its own. There will be monthly performance returns to fill out detailing hours sold in the workshop, productivity, gross profit and departmental expenses/profit as a percentage of sales.
For the parts department the sales per partsman, parts sold per hour, percentage gross profit, departmental expenses/profit as a percentage of sales and stock turn round per annum will be detailed. General details required are, among others, overheads as a percentage of sales, overhead absorption, net profit as a percentage of sales and return on trading funds.
This information is collected from each dealer in the network and collated into a dealer composite at Swindon. A copy of the composite showing all the dealers' performance (although only by a number keeping the identity of each secret) will be sent out to every member of the network.
Again the area service manager will help in sorting out any teething problems and will continue to help even after the dealership is established. He will also help when it comes to compiling the next year's business plan. A separate plan will be required for the service department and the parts department (and sales for main-line dealers). This is then broken down into quarters and each department is reviewed every four months to check its performance against the plan.
Also included in the business plans for the year is an analysis of the strengths, weaknesses, opportunities and threats to each department. From that an action plan is drawn up each year for every department.
The dealership should show a profit by the end of year three. If things go really well and sales in the area around the service dealer increase there may be a possibility of converting to a main-line dealership in the future.
Network holes
For those who may wish to take on a service dealership the best thing to do is see if your workshop fills any holes in a manufacturer's network. If that is the case it is probably best to write to the manufacturer concerned giving an indication of the size of your business, its customer base and details of local fleets using that make of truck.
Currently MAN have openings for service dealers at Dundee/Perth, Hereford, Swindon, Boroughbridge and Northampton.
ERF has open points in the following areas: Fort William, A74 between Carlisle and Glasgow, Stranraer/Dumfries, Preston, Aberystwyth/Central Wales, Pembroke, Stratford-on-Avon, Cambridge, Folkestone, Taunton, Redruth and Swindon.
Leyland DAF has no open points as such but says: "We are always on the lookout for good people to strengthen our existing network."
Mercedes-Benz's open points can be found by applying direct to the company.
Renault has open points at Inverness, Dundee, Kilmarnock, Alnwick, Kendal, Lancaster, Scarborough, Colwyn Bay, Lincoln, Derby, Felixstowe, Swindon, Swansea, S/W London (Croydon).
Seddon Atkinson require parts and service dealers in South-West Scotland, Dublin, Leicester, Cheltenham/Gloucester, Swindon, North London, South London and Kent.
AWD, Scania and Volvo do not have any open points at present.