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Daf main dealer Channel Commercials, based in Kent, is big on diversification and 'inward
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investment'. Brian Weatherley finds out how
it feeds the appetite of its growing network.
Ask Ron Stupple and Tony Chudleigh, joint managing directors of Daf main dealer Channel Commercials, for the secret of its success and they're likely to give you more than one answer.
For Stupple it's all about diversification — not least in order to avoid becoming a hostage to the fluctuating nature of new truck sales. For Chudleigh, it's about measured, step-by-step investment and a lot of DIY.
As Stupple explains: "We don't just sell trucks. We've always wanted to become a onestop shop and over time we've achieved it." Channel's in-house Pet-Reg conversion business is a case in point. Having been started as a way of gaining control over the modification process for its own customers' chassis, it has since become a highly successful profit centre in its own right. "We got so fed up with others doing it we decided to do it ourselves," says Stupple. "Now we handle work for other dealers in the network too."
That's one example of Channel's 'all in one place' philosophy. 'What distinguishes us is that we do everything,"says Stupple. "Contract hire, contract maintenance, painting vehicles, fabrication work — you name it,we do it." Its all about added value,and Channel shows no sign of running short of ideas. It recently set up its own graphics and decalcuttingclivery operation which generates a revenue of £12,000 a month. Every little helps, and Stupple believes there are plenty other benefits from doing this work in-house:"If we didn't do it for customers here they'd go somewhere else, and then we'd have to send the truck out to get it done — which takes time and costs man-hours."
As new markets appear, Channel is certainly keen to exploit them. As Stupple reports: "We sell a lot of parts and labour. It's a good example of the opportunities for a dealer. We even fit the tolling kit for Continental operators. In fact,we just keep looking all the time at what else we can do."
Surprisingly, not everyone shares that view. "I've never understood why some dealers don't want to get into these areas," says Stupple, "It's the same with used trucks. Given the margins on new trucks you've got to do it,particularly when you get into big fleets. It certainly pushes the turnover up but there's not much margin."
Channel's approach also helps cushion it from the ups and downs of new truck sales. Last year the group delivered a turnover ofjust under £30m from its activities (down on 2004's £35m). But Stupple adds: "Our profitability was OK, in fact it was slightly ahead."
However, while Channel could be forgiven for wanting to simply bank the money, it has a record of ploughing back profit into the business, not least when it comes to developing existing premises or adding new sites.
Its Strood depot benefited from a £300,000 redevelopment programme completed in March 2005; the group's impressive Ashford HQ and main dealer site opened over two years ago at a cost of £1.5m.
Ensuring the future
Chudleigh views it as a measure of the company's success that it continues to fund its own development: "I have an emotional hang-up about independent dealers; I believe you fight more for what you do if you're independent.We've always invested the profitability back into the business but we do it step by step so we haven't overstretched ourselves. And we've paid for it because we want to ensure the future."
Channel's go-it-alone approach isn't just about money: it extends to the actual site development."We do everything ourselves apart from the architecture and the health and safety," says Chudleigh."With us it's all about self-help."
Walking around the yard at Ashford, Stupple points to the vehicle washer which is lined with exterior cladding taken from a previous structure on the Ashford site.
The groundwork was handled by a local contractor who worked to the pace that Channel wanted, opening up sections of the concrete hard-standing bit by bit rather than doing it in one expensive big hit.
So as the double whammy of Euro-4 and smart card tachos approaches ever closer, how do Stupple and Chudleigh see the market for new trucks in 2006? "A number of fleets and local authorities we normally sell to didn't come in in 2005," says Stupple. "It's obviously a mix; every year doesn't follow the same pattern.
-For example, last year we sold around 300 new chassis whereas the previous year it was around 500. But last year we did 50-60 eight-wheelers as we had chassis available and got into some new customers."
Getting truck operators to even talk about Euro-4 and the new digital tachographs hasn't been easy either, although Stupple believes that the reluctance to engage is finally disappearing. "We're just starting to see over the past few weeks that people are taking it seriously," he says."Suddenly there's a bit of a panic with the bigger fleets definitely starting to pay attention."
In addition to its Daf franchise, Channel is an LDV van dealer, though the recent upheavals within the Birmingham-based van manufacturer have hit volumes. Chudleigh explains: "We've stayed with LDV vans because in the past they've given us a very good parts business. But as the old model has gone that's fallen away to almost nothing." He is clearly looking to LDV to deliver under its new backers: "If they can make it work, vans can make money."
Following the decision by Paccar to 'retire' the Foden brand, and in the brave new world of block exemption, has Channel been tempted to add to their chassis portfolio? "We looked at it," says Chudleigh,"although clearly we couldn't offend Daf too much."
"And we were reminded [by Dail of the investment the company had made in the LF45," says Stupple with a wry smile.As trucks become ever more sophisticated, Channel has also noted that there are some operators who don't want such high-tech vehicles, not least at 7.5 tonnes. D aewoo's D75 seemed to be an obvious solution, as Stupple explains: "We took the view that we should at least talk to them because in some ways the Daf LF is almost too good for the construction industry and we were picking up feedback that it would be too dear and too smart."
High expectations
"We did put our toe in the water with Daewoo," Chudleigh confirms, but he says that compared with Daf, the Czech-built middleweight couldn't meet Channel's expectations on fit and finish — a point Stupple emphasises: "We've got a hang-up on quality. We run our own paint shop, and when we looked at the Daewoo it didn't match our quality expectation.The fit and finish varied from what we wanted and given our experience with Daf it was a concern." Chudleigh puts it more suc,cinctly:"It was a bit of a embarrassment."
However, while Channel is clearly happy with its relationship with Daf, Stupple freely admits that it wasn't a wasted exercise: "It doesn't do any harm to keep an manufacturer on its toes!" is