Finance is gold star dealer's trump card
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When the Cowie Group acquired the Hanger Group it was able to introduce Interleasing to the North East. Jack Semple visited the 'gold star' Ford dealer to find out how this has enabled it to broaden its range of financial packages to lorry operators
DRIVING along the A1231 into North Sunderland you cannot help noticing an extraordinary black pillar to the left with "Cowies" written in large, white letters. It marks one of the area's best known truck dealers, and the only one in the North East which handles Ford's complete commercial vehicle range and has the manufacturer's gold star award, given to dealers with particularly high standards of customer service.
On the sales side it has the backing of the Cowie Group, through which customers can obtain in-house dealer finance. The dealership has a fleet of 34 trucks on hire, including four Transcontinental tractive units and two refrigerated vans. Customers can use the vehicles for international work. "We offer as much variation as we possibly can," said lain Jane, general manager of the Sunderland dealership. This has meant buying new or used, cash purchase, hire purchase, contract hire and leasing.
The variety of options offered to truck operators has been given a further dimension following the takeover by Cowie Group of the Hanger Group and, more particularly, Interleasing, its slightly inappropriately named contract hire and rental specialist. With 2,000 commercial vehicles, of which 1,400 are on contract hire, the acquisition of Interleasing gives the Cowie dealer much more muscle in truck contract hire.
The Sunderland dealer formed a new contract hire division last month to develop this business in its area. "What Interleasing does nationally, we do locally", said Mr Jane. Interleasing had no presence in the area previously. The deal will greatly improve the dealer's presence in the heavy truck end of the market as it will not be restricted to Ford in negotiating contract-hire agree
ments. Ford does not have a 38 tonner at present and has never been strong in the premium heavy truck market.
Although Cowie is pro-Ford, and will sell Ford if it suits the customer's requirements, it will now be able to offer a more competitive deal with any make. To do this, it is important to find out exactly what work the truck will be expected to do, and what mileage, said Mr Jane.
Some operators do not go into enough detail on their vehicle purchase, he believes. For example, if he wants 35 per cent of the initial price of the vehicle after he has used it for three years, he has to be sure the lorry is going to be up to the treatment it is going to get, or the value will not be there at the end of that period and he will have to spend more on a replacement.
The dealer's job is to tell the operator who is not sure of what he wants, exactly what he needs and suggest how to buy it. (The operator does not always take his advice, but he should get a fair deal: i This is particularly important to ownaccount operators who tend to want to fix costs over a year. Hauliers know their costs.
In offering financial packages, the Cowie dealership is in the unusual position of being able to use in-house finance. Mr Jane identifies at least three benefits for the operator. A lot of customers do not want to be bothered with chasing around different finance houses and want the whole deal to be handled by a single company.
With all finance deals inhouse, the temptation to foist on customers a particular form of finance for which the dealer is getting especially high commission is not applicable, Mr Jane said.
Cowie Finance Services, which is owned jointly with Midland Bank subsidiary, Forward Trust, has flexibility in the way it can underwrite finance deals because it can make a double profit or mitigate any loss by disposing of vehicles inhouse. So a man who has been in business for 14 months, for example, and might be borderline, would be able to get a lease deal where other companies might have refused. Any profit in handling the vehicle is retained within the group (which includes a Bedford franchise at Colchester).
Whatever form of finance is proposed by a dealer, the suggestion should be taken to the operator's accountant, Mr Jane said. He should ensure that the type of deal being considered is right for the business at the time.
Cowie's Sunderland dealership has a large workshop servicing not only its own customers' Fords, but all makes of lorry. Mr Jane believes that operators do insuffi
cient research into their maintenance costs where they have their own workshops and fitters. They often fail to take into account the full cost of the "infrastructure" of the workshop, in terms of capital, overheads and so on.
Many customers would save money by using contract hire or buying and having their vehicles serviced by the dealer. At Cowles, each job has a fixed cost, whether it takes two hours or two days. The performance of each fitter, incidentally, is closely monitored.
Mr Jane warned operators to beware of "back street repairers", who offer low labour rates. The customer may find this attractive at first, but he has no control over the number of hours taken to get the job done to a lower standard.
Cowie's has a nightshift working four nights a week (Tuesday to Friday) in the workshop for those customers needing out-of-hours servicing. It operates a 2 4 -hour breakdown and parts call-out service. The dealer's parts department also does direct computer invoicing for regular customers, and has seven parts delivery vans. The "all-in" service is completed with a box bodybuilding division.
Business in the North East is very difficult at present due to the miners' strike, the depression and the value of the pound, but Mr Jane firmly believes the area is not nearly as bad as it is imagined nationally. "People think it's all cloth caps and pit heaps. But it's not."
He went to Sunderland from Cornwall and has become an enthusiast for the area. "The people are down to earth and friendly. They try to assist one another. The atmosphere is competitive, but everybody's not trying to cut each others' throats.
"It's a nice place to do business. Customers are open and you know much better where you stand. All businesses survive on criticism. If you upset someone it is an opportunity to do something right."
The growth of the contract hire business is a new challenge he is looking forward to, as is the introduction of the Cummins L10 engine into the Cargo 32.5-tonner in January. But steady development is essential to maintain standards. Says lain Jane: "A garage is like a restaurant. If you have a bad meal you don't go back."