Dealer Insight: Chapelhouse Group

Chapelhouse Group had a good year in 2022, reporting a profit before tax increase from £3.3m to £5m to June 2022. Turnover increased by 27.2% to £95.1m with strong demand for both new and used vehicles, it said. The group maintained a return on sales of 5.3%.

It also took home the Customer Care Award at the Motor Trader Industry Awards 2022.

The Group kicked off the year with a change of leadership, with Phil Clay stepping in as its new managing director. This followed the recent announcement that Nick Coen was to step down from the role.

Clay, who joined Chapelhouse in 2015 as group aftersales manager was invited to join the board in 2017 as aftersales director, before becoming group operations director in 2019.

Motor Trader caught up with Clay to talk on Chapelhouse’s results, the challenges facing automotive retailing and how the group is investing in its people.

He said: “Our turnover increased by 27%. We had a turnover of just over £95m. There’s strong demand for old and new but used was a buoyant market with lots of used vehicles going up in value. That has supported a lot of other dealers as well, not just us.

“The brands that we are in partnership with are starting to get some stock coming through, which has also helped to support us. In terms of our gross profit, the previous year was £11.5m and that has moved forward to £15.3m with our net resulting in £5m, so a move forward of £1.7m.

“All in all, a strong set of results, something that we’re proud of and very happy with. The returns are 5.3%. We’ve also put extra things in place to monitor our expenses  just to make sure that they are as tightly controlled as possible. “

Although Chapelhouse saw success last year, Clay said that it was a challenge. He added: “I think everyone will say that. We took on a second buyer with a view of working that bit harder to find the right stock.

“Business is all about people and without the people that we have in the business, we wouldn’t have got those results. We’ve done a lot of investing internally in our people. So, we’ve really looked at all the benefits across the board with rewards and the number of holidays that we give everybody. All staff start with 23 days and after 12 months with a business you have 25 days. We even bought an apartment in Majorca that we could let staff use. So, we have really tried to think outside the box to try and make us an employer of choice and make us stand out.”

Chapelhouse has also looked at the work/life balance of its emlpoyees, adjusting hours during the winter to help out. Clay said: “We’ve reworked our sales rota so that we have winter hours, allowing staff to finish at 6pm and the work alternate weekends. It’s about work/life balance and trying to give everybody the right balance for them. I think that’s paying off.

“Also, to make people’s lives easier, we’ve invested a lot in software and hardware for the businesses as well joining up several systems. So, the lead management system, showroom system, phone system through Key Loop, it is all linked, which is saving time for our employees and customers.”

Part of investing in its people includes training from third parties, rewarding and helping develop staff. Clay added: “Over the last 12 months there has been a lot of ongoing training with third parties coming in to train our staff. A lot of businesses make decisions based on negatives in the business, but we’re going to decide based on supporting the people that are going the extra mile for us. We are going to make our decisions based on the idea that there is a customer at the end of everything that we do. And if we run our business with that sort of ethos, I think we’re onto a winner. And that’s one of the big cultural changes. All the decisions that we’ve made have been with the customer at the end of everything and we need to make it as simple for that customer as possible.”

Helping customers through

With economic uncertainties hitting the UK, Chapelhouse has seen customers looking to reduce their payments or change their circumstance to a more stable one. On this, Clay said: “We’re all going through it together. The economic environment at this moment in time is a challenge. But at the end of the day, what we’ve got to do is invite our customers into the showroom, talk about their concerns, and try and overcome those concerns with them.

“We’ve got lots of customers trying to reduce the payments on the cars and we’ve been able to help and support them with that. Two of our brands offer seven-year warranties, whereas if you’ve got a car that’s over three years old with a different brand, and always pay for repairs, suddenly it adds to the total cost of ownership for that car. Sometimes swapping a customer into something that’s got a four- or five-years warranty left on it gives the customer peace of mind. So, they’re not too worried about the monthly payments because they know that if anything goes wrong it is covered.”

Chapelhouse has also looked to ease the buying process for buyers investing in its website to make it “seamless and easy to communicate” with the dealership. Clay added: “You can reserve a car by paying a deposit online. It takes the car off sale, but we can do contactless transactions from start to finish. If that’s what the customer wants to do.

“Our research suggests that there’s still a place for us. Customers still want to touch, feel, and drive the car. But certainly, the start of the customer journey is becoming more and more remote. So rather than coming into a showroom, not understanding what they want, and being sat with a salesman who is explaining what the options are, quite often the customer has done the research online beforehand, and they know just as much as us about the car.”

New dealerships

The group recently opened a new Suzuki dealership in Blackpool, making it the eighth Chapelhouse Suzuki location in the Northwest.

On this, Clay said: “We have a good relationship with Suzuki. We’ve been in partnership with them for over 30 years. So as expansion opportunities come up, we’ll obviously have the relevant conversations. I joined the business seven and a half years ago, and we had five sites at that point. And as businesses have grown in our catchment area, and it makes commercial sense to purchase here because it protects our core business, and we are marketing in those areas anyway. So, by having the footprint that we do around the North West and having the support of Suzuki, it gives us that autonomy to try and expand the brand. The Blackpool dealership is a fantastic facility on a two-acre plot. We’ve spent a lot of money on the refurb, and Suzuki has been blown away by it.”

Looking forward into the coming year, Clay acknowledged a number of challenges but looks to continue supporting staff and growing the business.

He said: “There are going to be a lot of challenges in 2023. It’s not going to be a year where you can’t take your foot off the gas. You’ve got to keep driving the business forward. We’ve still got the aftermath of COVID, rising energy costs, and a cost-of-living crisis to deal with. But as a business and as a board, we just want to continue to strive forward.

“Last year we made cost of living support payments to the team. This year, there’s going to be more of the same where we really look at staff benefits and reinvesting some of the money that we’ve made back into our people.

“It’s going to be a challenge, but we’ll get through it together.”