MT Dealer Insight: TrustFord with CEO Stuart Foulds

TrustFord, the factory-owned dealer group, is looking strong through the second half of the year, with over 40,000 advance orders for vans on its books, after recording its best first half, turning in a pre-tax profit of £13.6m on a turnover of £1bn, delivering 23,000 commercial vehicles and a total of 50,000 vehicles.

On a like-for-like basis, H1 turnover in 2019 (pre-pandemic) was £919m with pre-tax profits of £5.3m with deliveries of CVs standing at 19,000 and total vehicle sales of 53,000.

As we head into the final few months of the year, Motor Trader spoke to TrustFord CEO Stuart Foulds on the group’s 2021 performance, the state of the market, and how it is looking to improve the business further.

For Foulds, it has been a challenging year with the pandemic followed by microchip supply shortages.  “We started the year locked down with aftersales open, but no showrooms. However, we had already picked up the experience in transferring to taking orders online, and all that was successful. Of course, when the dealerships opened, we then encountered the supply issue with semiconductors.

“In response to the stock shortage, we switched our sales executives from commission based on sales to order take. That is something that we have continued and will for the rest of the year, or until we start to see supply return.”

Foulds pointed out that, as with many, this year’s big success story has been commercial vehicles and fleet. He said: “With the boost in home deliveries our commercial vehicle department is absolutely on fire. To such an extent that as we speak, we’ve got 41,000 sold orders. And that business continues to come. The fleet guys are doing fantastic job. I think it’s fair to say from Ford’s perspective they have really tried to focus on getting vans delivered to fulfil these fleet orders, because we are not here for the short term, we are here for the long term. It has been a real priority for us.”

When it comes to overall performance, Foulds is delighted with how the group has navigated the year. He said: “We have been very strong in used and new cars, and services have now recovered from where it went through a lean patch in H1, as customers were a bit reluctant to go out and have their cars serviced. Those concerns seem to have disappeared and so our workshops are busy.

“The Parts Plus business has also been a success for us, and that continues to grow. We recently official opened a new centre, and a new state of the art workshop 15 bay workshop for commercial vehicles.

“Overall, business is good. I think there is a question going around of when is the bubble going to burst? Certainly, as far as used cars are concerned because prices are up 26% in the past few months. Our view is that the market will not crash. I think that there are scaremongers out there saying that the day of reckoning coming. There are others saying that it will eventually settle itself down, but it is not going to be overnight. There will be a gradual easing when new car stocks start to come through in better numbers. I predict that for new car supply, it will probably be Q3 2022 before we see volumes coming back to the levels that we would expect.”

Looking into Q4, Foulds feels that it will not be the upturn many thought it might be. He added: “If you turn the clock back six months everyone was saying that Q3 2021 would be disastrous and that Q4 would make up for the shortfall. I think the evidence today shows that Q4 is going to be just as difficult as Q3.

“From a Ford franchise point of view, we’re in unprecedented territory because normally we run with a large volume of stock on the ground. We have switched completely to having to sell stock on order. The plus side of that is that we do not have to sit with fields full of vehicles, and the interest charges that go with that. So, that has been a positive and hopefully the lessons that are going to be learned from that will allow a much leaner distribution model going forward. I think that the manufacturers have woken up and thought this is maybe a better way to transact, maybe not quite as lean as it is but much more limited than it has been in the past.”

Cutting costs

The pandemic forced all dealers to curb their spending, but now that businesses are open and trading again Foulds wants to try and keep some of that cost saving attitude.

He said: “We are constantly looking to try and keep costs down. Through this pandemic we have taken a lot of cost out of the business, so the message I’m getting to the to the team is that we do not want to do put it all back in again. Let’s see how much of that cost we can keep out and run the business in a more efficient and lean manner.

“We are in the throes of putting together a 2022 budget, so it is giving everybody an opportunity to really focus on what costs we do and do not need. I think there’s a great opportunity for us to continue the path of cost saving.

“We are currently paying particular attention to utilities. One of the things that we’ve done over the past year is making sure that time clocks are properly set on heat or light. I think this one of those things that you can become a little complacent with. It is particularly important today’s world with the price of energy going through the roof. We are fortunate in that we fixed the price of our utilities for three years, so we’re not in a situation where we’re going to suffer these massive price increases, but it’s still an opportunity just to make sure that we’re being economical, because we can win in the future. Everything that we can take out we have taken out. We are trying hard to make sure that we do not just sort of spending money for the sake of spending money.”

Finding stock

Sourcing stock will be on the minds of many a dealer, as the chip shortage continues to hammer the new market and put strain on the used market as a result. But, Foulds has seen the positives in this situation.

He said: “Used cars are very difficult to get hold of, so we’re running with probably 30% less stock than we normally would. But that’s not a bad thing because one of the KPIs we have our staff deliver is 12 times stock turn, so we are now turning stock once a month, whereas before we were probably doing it once every eight weeks. That wasn’t something we deliberately set out to do but we are now running with a month’s worth of stock, and I’ve said to the staff that is where we want to stay.

“In the previous regime we were running with what I believe is too much stock. I think our stock is exactly where it needs to be. What we need to be is very nimble, in terms of making sure that every new car enquiry is a part-exchange, and that we try hard to make sure that we do take the part exchange and discourage customers from perhaps looking to sell the car to a third party.

“Earlier this year we launched an initiative online and to our sales teams in which we would beat webuyanycar.com by £100 at least on a Ford purchase, and that has been successful. We use that as a real tool to try and make sure that when a customer is talking to us that we get the part-exchange. And of course, part-exchange and used car prices have gone through the roof, so it is quite a good time for a customer to buy a brand-new car because the new price is fixed, even though it is an order. You are not subject to the potential of price increases, as is happening in the used car market.

“So right now, it is a great time to buy a new car, and you are going to get fantastic price for your used car. You get a fixed price and the new one that you buy. That has been a positive message for our sales teams to be sending to the customer base. So, again, really pleased with the way that that’s gone.

“Today if you wanted, for example, a Ford Fiesta, you would probably be talking about March next year for delivery. But we can sign you up today, and that price is locked, and we’ll give you a price for your car that is off the scale.

“Commercial vehicles are the same, used vans are impossible to get so it’s really just about checking every single avenue and making sure that we leave no stone unturned to try and get a hold of that stock.”

TrustFord recently performed strongly at Inspiring Automotive Women Awards 2021, with five of its employees picking up awards. On this, Foulds said: “It is a journey that we have embarked on, and we are members of the 30% Club. We contribute to that on a regular basis. Our HR director Sharon Ashcroft and I both run regular meetings with who we call ‘leading ladies’, whichNcomprises women in the business who are in managerial positions as well as any other position. We are really focused on encouraging, not just an increase in gender balance but also in diversity and inclusion.

“On the recruitment end, when a CV comes in, the HR department will redact everything on that CV to make sure that the person reading it cannot tell the gender of the person, or the ethnicity. This is done to try and make it as clear of an interview process as possible.

“We got five awards at the 30% ceremony, which we are really delighted with. We are looking at how to increase the number of female employees in several key parts of the business. So, when you look at for example, the marketing department, the gender split is probably 60/40 in favour of female.”

This drive for gender equality has a long way to go in workshops where women are unpresented.

“If you look at technicians, regretfully there are very few female technicians. But that’s something we plan to encourage through the school visits that we do through the 30% Club, trying to encourage young girls to become practice technicians.

“There are certain areas where the gender is imbalanced and that tends to be with technicians and sales execs, and these are the two areas that we are really trying to focus on changing.”

What is next?

Looking forward, TrustFord and Foulds have several things in the pipeline.

“We are consolidating our businesses in Guernsey and that project is almost complete. The building will be complete in November. That will consolidate two sites into one and will allow us to be much more efficient. That is all on track and I hope to open that business before the end of the year.

“We continue to invest in not just people, but in property and welfare, to make sure that the businesses are up to scratch. All our sites are now EV capable, with EV charging points in every single business.

“We are not being complacent, we are active all the time making sure that all the businesses are up to date in terms of all the technology and all the training that goes with that, which has been a big investment.

“From a Ford perspective we now have a lot of hybrid vehicles and we have the E-Transit on its way, which is going to be a massive step forward, especially for a lot of customers in the London area.

“At the fleet show the interest in the electric transit was overwhelming and we’ve taken a lot of orders for that. Business is great.“