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After winning acclaim for its new range, Steyr has pulled out of the UK market. But what about its dealer network?
• John Ruffles and his son Tony have been told their services are no longer required after just five months as Steyr Trucks (UK) dealer for East Anglia. They and 16 other distributors learned last month that imports of the Austrian truck were to stop, following MAN's takeover of Steyr (UK)'s parent SDP.
Some of those dealers will be hit hard, having spent up to £400,000 on new premises and equipment. Although the Ruffles are sure their other business — axle conversions for all makes of truck — will keep them afloat, they are bitter.
John launched Bury St Edmunds-based Magna Trucks in June, after speaking to Steyr for 10 months.
"Everyone at Magna worked very hard for Steyr," says Tony, who is a director of the firm.
John sympathises with Cliff Groves, head of the Milton Keynes-based UK operation, and his colleagues, who he says had to tell dealers the business was being folded on the day they got their own three-month notices of dismissal. "They were told at midday they'd lost their jobs, and then they had to confront us. I feel very sorry for them. They're being kept on to run things down."
The subsidiary, which spent 11 months trying to win a market in the UK and had begun to make inroads, was not to blame, he says. He blames the Austrian banks which squeezed Steyr when its improved product range looked like taking it into profit after years in the red.
Magna did not sell any trucks before rumours of Steyr's takeover broke in September. "We had customers ready to buy," says Tony. "We had orders for one or two trucks, but they were from big customers with fleets of over 100." Operating in this uncertain climate the company decided to break off negotiations.
The Ruffles, who estimate they spent
100,000 on staff, cars, vans and equipment, hoped to be in profit in two years. An office block was planned, but not started. Their family firm, JR Engineering, has been around for 30 years and will absorb most staff. They feel sorry for dedicated dealers who have nothing to fall back on.
HIDDEN COSTS
Setting up a dealership is full of hidden costs, says Tony. We had an open day and paid for advertising and exhibits."
They plan to look at expanding in other ways. "We've spent a lot of money on infrastructure. We're not going to throw it all away," says John. "There's no use crying in your beer." One possibility might be to apply for a franchise with another manufacturer, and the company is talking with at least one.
MAN and Steyr are unlikely to feature in these plans, however. Although Steyr has told its customers that dealers will provide parts until the operation passes to the MAN network, John has insisted that Magna will play no part in shifting over 100 right-hand-drive Steyrs that are already in the country. However, it has emerged that Clarke Commercials, the dealer for West Yorkshire, is to buy a large proportion of the remaining stock. (See Business News page 12).
Steyr, which had sold 150 of its first year UK target of 200 trucks, had told its dealers to target the small user. Although the product could not compete on price, it had good fuel economy, a comfortable cab and proven components such as the Steyr engine, Rockwell back axle and Eaton Twin Splitter gearbox, says Tony.
Dealers were told the news at an evening meeting in Newport Pagnell late last month. Although most feared the worst, some were still optimistic, he says. "When the announcement was made there was silence and an awful atmosphere, but it was only the next day when the news really sunk in."
He says the hardest bit to accept was that Steyr trucks had the genuine backing of dealers and were winning praise from customers and the press. "We wouldn't have touched them otherwise," he insists. "We wouldn't have taken a franchise to sell cheap and nasty vehicles. We are a family company and our reputation would not have been worth risking."
This is a view echoed by Mike Hanson of Hanson Trucks in Blackburn and chairman of the dealer association. "We used to be Iveco and Iveco Ford dealers and we've never had feedback from customers this good," he says.
"Although we've had one customer angry that his vehicles have become overnight collectors' items we were talking to another — a newspaper distributor — who was considering moving his fleet of 44 vehicles to Steyr."