Redefining Approach to Multi-Brand DistributionTue, 09/01/2015 - 16:31
Q: How have the sales of the various brands in your portfolio evolved over the past year?
A: Our sales have increased for every brand that we handle, with Toyota, Nissan, Honda, Volkswagen, and Mazda even surpassing our expectations. We are rather pleased with the numbers these brands have produced in 2015, and we are expecting a sales growth of more than 15% by the end of the year. Nevertheless, there was an average rebate of US$2,000 per car last year, which has been a slight issue. Even so, that has been decreasing steadily, and we hope that the 2016 lines will not incur such penalties for us. Currently, US automotive companies are facing tough competition from Japanese and Korean companies. Even so, GM has been looking to retain its market share as much as possible, while Ford and Chrysler’s market positions seem to remain stable. Regarding luxury brands, German brands will maintain their dominance, since it is unlikely that Asian companies could take over that segment with Infiniti and Acura. Regardless, the Japanese and Korean automakers are sure to continue succeeding in the overall market.
Q: With 11 brands under the Grupo Alden umbrella, have you considered introducing new names into the group?
A: We are happy with the brands that we manage right now, and even though some US brands may be dropping in popularity, the reality is that each brand has its cycle. Therefore, the more brands you manage, the more prepared you are for these changes.
Q: How important have leasing services become for Grupo Alden?
A: We sell around 2,000 cars per month, 500 of which are directed toward the fleet market, with 12% of these being purchased through leasing alternatives. However, there are many vehicles in the light trucks segment that are lacking in stock, so we have been struggling to supply them. The Nissan NP300 and the Volkswagen Transporter are particular examples of this deficit. The reason for this is that OEMs expected a regional growth rate of 10% per month, so they did not provide enough stock for the Mexican market. This has resulted in the cancellation of many of our fleet sales. We are currently working with LeasePlan, Facileasing, CSI Leasing, GE Capital, and other leasing companies under a specific structure that we have developed. In the past, the key indicator for these companies was price, but they have started to realize that effective service has become more important. When customers have a good leasing experience, the chances for future business increase. Therefore, our leasing infrastructure now includes people dedicated to certain leasing companies, who are in charge of checking vehicle availability, negotiating prices, and coordinating logistics, which are all necessary steps toward retaining business. With the current fiscal regulations, companies will surely start to lease even more, taking advantage of the opportunities in this segment.
Q: How do you convince customers that purchasing vehicles from a dealership and returning for their maintenance or service is their best option?
A: Normally, that depends on the brand. Brands like Toyota, Hyundai, and Honda charge little for servicing, resulting in high retention rates, especially during the warranty period. The older brands used to be more expensive in terms of repairs, resulting in low loyalty standards, even within the warranty period. Image plays a big part in swaying a customer’s decision. For instance, people may think that the service costs will be too high for older brands. Even so, service prices are finally leveling across the industry, given that they have become a key driver for client retention and remarketing opportunities. The future of this business is in service, and all companies need to realize that if they want to be the number one brand in the world.
Q: With the current growth of the local market, what are Grupo Alden’s priorities for the remainder of 2015?
A: Our number one objective is to exceed the average industry profit growth; if we cannot rise to that challenge, we are doing something wrong. If you are selling many cars without making a profit, you are in dangerous territory. The margins in this industry are extremely small and expenses are relatively stable. Aside from that, we want to continue expanding in Chihuahua, Queretaro, Puebla, and Mexico City, where we are already present, and we are looking to develop a stronger training agenda. As I learned from Toyota, good managers hire well, they develop their people, set good expectations, and motivate their staff.