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Daihatsu has a refreshingly different way of doing business.
While most car franchises spend an obsessive amount of time and money on building and policing brand identities, Daihatsu’s UK boss has a healthy disregard for what he describes as the “corporate cufflinks” culture which is forced upon many dealers.
The brand is a niche player in the UK. Since the turn of the decade annual sales have hovered above the 4,000 mark but with year-to-date sales tracking 25 per cent ahead of 2006 and apparently on course to hit 5,000 units, 2007 is shaping up to be a year of change for the franchise.
The brand’s Japanese masters want to rapidly grow international volumes so the next step for the UK will be a doubling of sales to 10,000 units by the end of 2009.
Masterminding this drive is UK managing director Paul Tunnicliffe. This is his second innings with the brand having been its marketing director when distribution was handled by Inchcape in the
1990s and sales, powered by daily rental and fleet deals, hit the 12,500 mark. He was promoted to his current position in 2005 and has also worked at Alfa Romeo and Land Rover.
Since 2000 UK distribution has been handled by International Motors, the Midlands-based importer which also looks after Subaru and Isuzu and is expected to shortly add a Chinese brand to its UK portfolio.
Tunnicliffe is delighted with the brand’s September sales which leapt 43 per cent year-on-year to 1,321 units – the second biggest jump after Alfa Romeo. The increase came on the back of demand for the Sirion and Terios which he said benefited from the brand’s return to TV advertising, on carefully selected specialist channels, and a Tesco car park promotion generating 400 test drives which have so far converted into 80 sales.
With its small engined cars, this Toyota-owned brand is beginning to reap the benefits of the growing green lobby with dealers reporting that the 1.0-litre Sirion’s £35 road fund licence has become a deal clincher.
Unlike many brands who claim to be aiming at cash rich younger buyers, Daihatsu is comfortable with its fifty-something demographics.
“We call them ‘bright greys’ – they are typical of the new generation of older people who are fussy about what they spend their money on. They’re also less inclined to pay a premium for a brand and will recommend their car to family and friends,” he said.
“Having an older customer base, which is very loyal, is no bad thing.”
Daihatsu is confident its existing 115-strong network can handle the doubling of volumes although it is always on the lookout for new partners to represent the business. According to Tunnicliffe typical dealers are family-run owner-manager sites in non-rural locations, many of them are primarily used car businesses.
“We’re pretty low profile compared with our competitors but still have a good story to tell for a certain kind of dealer. It’s our 100th anniversary this year and what we’ve set out to do is turn the heat up and encourage dealers to increase sales quite dramatically,” he said.
In tandem with this Daihatsu said it is determined to keep the costs of running the franchise as low as possible.
“We’re not into corporate cufflinks – our regional managers do not go around with clipboards to make sure dealers have bought a £2,500 plasma screen and registered 14 demonstrators – we go out of our way to keep the dealer costs low,” he said.
Tunnicliffe said this focus on costs would enable sales to grow profitably by 20 per cent this year without dealers being forced to invest in extra staff and systems or chase unprofitable business.
“The core of our dealers can increase their volumes by 50 per cent without it incurring any extra costs for them. We can then double our volume from 5,000 to 10,000 units and it will not be as unsettling as other mid-market brands,” he said.
Daihatsu is confident these volumes can be achieved as the network is not working at its full capacity. Often Daihatsu fulfils the role of a secondary brand within franchised and independent businesses. To focus the network’s attention dealers have been told that their new car margins will rise from 10 per cent to 13 per cent on each new model if they sell 100 units by
the end of December. The message is clear – the brand wants to grow and is not afraid to incentivise those prepared to grow with it.
“The basic rules of franchising do not apply to us. We represent a good opportunity for traders who have been ground down by unreasonable franchising demands,” he said.
The brand is a niche player in the UK. Since the turn of the decade annual sales have hovered above the 4,000 mark but with year-to-date sales tracking 25 per cent ahead of 2006 and apparently on course to hit 5,000 units, 2007 is shaping up to be a year of change for the franchise.
The brand’s Japanese masters want to rapidly grow international volumes so the next step for the UK will be a doubling of sales to 10,000 units by the end of 2009.
Masterminding this drive is UK managing director Paul Tunnicliffe. This is his second innings with the brand having been its marketing director when distribution was handled by Inchcape in the
1990s and sales, powered by daily rental and fleet deals, hit the 12,500 mark. He was promoted to his current position in 2005 and has also worked at Alfa Romeo and Land Rover.
Since 2000 UK distribution has been handled by International Motors, the Midlands-based importer which also looks after Subaru and Isuzu and is expected to shortly add a Chinese brand to its UK portfolio.
Tunnicliffe is delighted with the brand’s September sales which leapt 43 per cent year-on-year to 1,321 units – the second biggest jump after Alfa Romeo. The increase came on the back of demand for the Sirion and Terios which he said benefited from the brand’s return to TV advertising, on carefully selected specialist channels, and a Tesco car park promotion generating 400 test drives which have so far converted into 80 sales.
With its small engined cars, this Toyota-owned brand is beginning to reap the benefits of the growing green lobby with dealers reporting that the 1.0-litre Sirion’s £35 road fund licence has become a deal clincher.
Unlike many brands who claim to be aiming at cash rich younger buyers, Daihatsu is comfortable with its fifty-something demographics.
“We call them ‘bright greys’ – they are typical of the new generation of older people who are fussy about what they spend their money on. They’re also less inclined to pay a premium for a brand and will recommend their car to family and friends,” he said.
“Having an older customer base, which is very loyal, is no bad thing.”
Daihatsu is confident its existing 115-strong network can handle the doubling of volumes although it is always on the lookout for new partners to represent the business. According to Tunnicliffe typical dealers are family-run owner-manager sites in non-rural locations, many of them are primarily used car businesses.
“We’re pretty low profile compared with our competitors but still have a good story to tell for a certain kind of dealer. It’s our 100th anniversary this year and what we’ve set out to do is turn the heat up and encourage dealers to increase sales quite dramatically,” he said.
In tandem with this Daihatsu said it is determined to keep the costs of running the franchise as low as possible.
“We’re not into corporate cufflinks – our regional managers do not go around with clipboards to make sure dealers have bought a £2,500 plasma screen and registered 14 demonstrators – we go out of our way to keep the dealer costs low,” he said.
Tunnicliffe said this focus on costs would enable sales to grow profitably by 20 per cent this year without dealers being forced to invest in extra staff and systems or chase unprofitable business.
“The core of our dealers can increase their volumes by 50 per cent without it incurring any extra costs for them. We can then double our volume from 5,000 to 10,000 units and it will not be as unsettling as other mid-market brands,” he said.
Daihatsu is confident these volumes can be achieved as the network is not working at its full capacity. Often Daihatsu fulfils the role of a secondary brand within franchised and independent businesses. To focus the network’s attention dealers have been told that their new car margins will rise from 10 per cent to 13 per cent on each new model if they sell 100 units by
the end of December. The message is clear – the brand wants to grow and is not afraid to incentivise those prepared to grow with it.
“The basic rules of franchising do not apply to us. We represent a good opportunity for traders who have been ground down by unreasonable franchising demands,” he said.