MT Dealer Insight: HPL Motors with MD Jonathan Herman

HPL Motors achieved success at the MT Industry Awards as winner of the Used Car Dealer Group of the Year for 2021. MD Jonathan Herman spoke to Motor Trader.

HPL Motors is a family business that has been selling used cars in the North West for nearly thirty years. It was able to call on all its experience to weather the pandemic and according to Companies House posted a turnover of £58.9m and a pre-tax profit of £3.9m for November 2019-October 2020.

It has grown from a small 16-car forecourt in Middleton, to stocking up to 1,200 cars across three sites in 2020. It’s satellite site in Atherton has over 75 cars, the Oldham site has over 300 used cars, and its newest and biggest site in Preston was opened after the first lockdown.

HPL Motors also picked up the Used Car Dealer Group of the Year Awards at the 2021 Motor Trader Industry Awards. Following this success, we spoke to managing director Jonathan Herman on the group’s experience over the past six months, how it approaches new and returning customers, and the potential impact of EVs on the used market.

On reopening, Herman said: “Just after re-opening in April prices were quite low but then went up quite sharply. It has been very busy with pent-up demand present, leading us to break sales record. We sold 775 vehicles in one month and everything was flowing.

“Prices of cars went up, and that is good and bad. Our stock reduced, so we went from having over 1,000 cars to 700, but it never affected sales.”

For stock, Herman expanded the group’s scope, taking in areas of the country it might not have pre-pandemic. He said: “Rather than just looking for cars close to us; we will now go anywhere. I think everyone’s done the same thing. Before the pandemic, if someone was in say Scotland or London I might think, we’re in North West, we will leave it. But now, that is fine.”

He has become more flexible on the age of stock also, but remains wary of older vehicles. He added: “Looking at age, you must be careful because if you have a reputation for selling a certain age of vehicle, and then you don’t sell that age, you could have a problem. But with the stock situation some allowances can be made. One year ago, I would only have bought back to 17-plate but I found myself going back to 16-plate and even a 15-plate if it was clean and had low mileage. Some places went back to 10-plate, and that is too far for me. But overall, it’s been an upbeat six months.”

Reaching out

With both old and new sites in its network, HPL has a variety of tactics when it comes to bringing in new customers and keeping hold of previous buyers. On this, Herman said that the group is big on speaking to previous customers, for both retention and part-exchange.

He said: “We have got three sites and the older Atherton site has been around a lot longer than the others. That long presence has paid big dividends in having customers return. For the Preston site, which is only 15 months old, it is not as easy. We’ve got some returning customers there but not in the same percentage as at Atherton.

“When it comes to marketing to returning customers, we do a lot of our marketing through email. We do some remarketing on Facebook and through Google. But we find that email really works well for us. We also have a telephone team that speak to all the previous customers just to keep in touch and remind them that we are here.

“To get new customers, we advertise through all the normal channels. We have radio advertising and advertise through Auto Trader, which I always think works. We do pay per click on Facebook and Instagram. Everything works together. We don’t just do one thing and rely on it.”

One campaign it found effective for customer retention was a campaign showing customers carousels of cars they have previous viewed. It has also employed new LED billboards outside the Preston site that are updated regularly to suit its KPIs.

Herman mentioned that online interest has slowed a little with the showrooms open, but it is not going away. He said: “We still probably sell 10-15% online but we don’t do full end to end. We have a deposit system and finance can be sorted out online. I think full end-to-end will happen, possibly in the next 24 months.

“I said before COVID that online retailing and the omnichannel experience will grow and grow and before you know it, we will have 40-50% of sales fully transacted online. But you will always have customers that want to sit in the car. Some people aren’t emotional about a car purchase and just want to have a car dropped off the next week and want to pay the sticker price. But on the opposite side you will always have people who just don’t know what they want and need the showroom. I think it might become a 50/50 split.”

New recruits

When it comes to recruitment and the changing role of dealership staff, Herman finds that newer salespeople that often do not have automotive sales experience are the best and most able to pick up new tactics.

He said: “I’m not a big fan of recruiting experienced salespeople. I’ve always trained the salespeople up from scratch, and maybe have the odd one who’s done sales before. But those do not usually work for me. With previous sales experience you can end up with lots of bad habits. And, I have found that more experienced salespeople do not want to do videos. They normally want it to be as it was, while it isn’t. So, I try and recruit people newer to automotive retail. A telephone sales background usually works quite well, or even working in the clothing industry. I have a salesperson that used to work for suit shops, and he’s probably one of the best we have. It’s all about the people. I think people previously thought that selling cars was some sort of secret skill, but it is just about being nice.

“With our online content, we have been quite fortunate that each site has one or two salespeople that are good at making videos and photographing vehicles. And we have had those who are good at it to train the others that have no experience. It seems that those who have never done sales before pick up the videos quickly, but an experienced salespeople often do not find it as easy.”

Looking forward

As the volume of EVs in the used market gradually increases, Motor Trader asked Herman what his experience of stocking and selling used EVs has been like. He said: “I wouldn’t say we have had a lot of EVs come through our sites, but we have experimented with them and it has gone better over the last three or four months. I’ve seen an improvement, but unfortunately with the improvement there has also been a price increase. So, where you were selling for an EV for £20,000 it is now £24,000. That is getting very close to new pricing. But they do seem to be getting interest and hybrids are also still gaining interest. People seem to want to buy them.

“I think the interest will continue to grow and in four or five years, I guess, we could potentially see up to 50% of the stock being EVs. I can’t see less than 20-30% of stock being EVs in five years, I just can’t. That seems mad now, but I just think it’s going to move that fast.”

Herman concluded with his outlook for the coming year, in which he looks to take the opportunities that come his way.

He said: “I look for every day to always be 1% better. Preston is still not fully maximised, and it is time to improve, and it has still got more room for more cars, so our plans for a new site will probably get under way in 2023.

“I think prices will balance themselves out in mid to end of 2022. With stock, I think it will improve early next year but it is not going to be a light switch moment. It will be a slow burn of a slightly improvement over time.”