MT Interview: Peter Bell, MD, Manheim

Appointed in March this year, Peter Bell is the managing director at Manheim, the auction and remarketing division of Cox Automotive. In this interview he talks with Julian Buckley about adapting the business for the digital future, including changes to physical auctions

 

You’ve got an extended background in automotive but you’ve just recently joined Manheim. Can you say what the learning curve has been like?

 The learning curve has been steep. There’s a lot more to Manheim than just auctions, so there’s been plenty for me to get my teeth into. It’s been made easier by joining such a great team, they have some rich experience, which is invaluable to a new person.

I’ve had exposure to remarketing in my previous roles, so I’ve always understood how important it is. But I’ve been getting into the detail, the mechanics of the overall process, looking at the end-to-end offer. There’s a richness of data available, so I’m starting to understand how to unlock that to help vendors and buyers.

Looking at data, what’s the biggest takeaway? Is it vehicle values, the volumes, or the swing in demand for different fuel types?

All of the above! The data is coming from the vendor and the buyer so it gives a full picture of the business. We can see what’s happening across the physical and digital channels across the regions and locations. We have a real insight.

Customers use the data to understand what is and is not selling and then adjust their stock plans?

Yes, our data insight is intended to let our buyers understand what’s happening in the market, what price points work, how they should be developing their stock profile to meet consumer needs. Which leads to maximising profit.

So you’ve been sitting with people in your team to get to grips with the business, trying to absorb their knowledge?

In large part yes. I’ve been here three months now and a large part of that has been spent with teams within the business, getting to know people, understand what they do and understanding the challenges and opportunities they’re dealing with. But I’m also spending more time with our customers. I want to hear from them, get their perspective on what we do really well and how we can help them more. Perhaps by developing more solutions or helping them with their business challenges.

Motor Trader reports a lot about auction companies getting new contracts to remarket defleeted vehicles. Is getting these guaranteed vehicle volumes your primary focus?

It’s important to get new business customers, but we still have to look after our existing customers, whether they’re vendors or buyers. We have to connect with them in the right channel, at the right time, with the right products and the right price.

Has there been anything you’ve been able to port over from your past automotive business experience?

Not yet, but it’s early days. I’ve always focused on delivering an exceptional customer experience and that’s increasingly important. Then there’s just understanding customer needs, including those offered by Cox Automotive [parent company of Manheim].

Can you give us a brief outline of the services you’re talking about?

There’s a number of streams to the business. Of course, there’s the physical auctions which I think we’re best known for. Then there are the online auctions, which give us national coverage. Then there’s the inspection services business, refurbishment and defleeting through the vehicle solutions. We also have logistics solutions, including the Movex platform which provides transport. Then there are the managed services, including retail solutions, then there’s data insight and NextGear Capital business which offers funding solutions to buyers.

Are there any key KPIs you’re looking to improve?

Customer satisfaction is a key one for me. We already measure that, but I want to see it move forward. It will tell us what we’re doing right, day to day. To support that I’m always interested in the operational KPIs, they tell you in real time about whether we’re getting the right volumes through the lanes, what’s happening in terms of arrivals, sales, performance of the business.

But KPIs are not necessarily going to offer a good performance insight. What you’d use as an operational KPI, looking at throughput and whether we’re running the business efficiently, is not necessarily going to offer good insight as to overall performance.

It might be efficient, but it could leave people thinking “that wasn’t a good experience”.

Exactly. Having worked for a period in contact centres, the question would be how you correlate things. In that example I can look at the KPIs on the wall and I’ve answered every call to my service level. That’s great, but it doesn’t tell me if the calls were any good. If we’re just saying “can’t help you” I’d have the most efficient operation and the most dissatisfied customer base ever. It’s about customer needs, how we meet them. Ultimately, that’s what we’re here to do.

How do you measure customer satisfaction?

We use a couple of methods. We use Net Promoter Score as a metric, it gives us qualitative and quantitative feedback. We also have a broader survey which covers more open relationship and business matters, service delivery, etc.

You’re a fresh face in a traditional business. Is it right to say you’ve been brought in to stir the pot?

Well, it’s nice to be thought of a fresh face at this point in my career! I’ve worked in automotive previously but also in the financial sector, so perhaps I’m not typical of all hires. But Cox has hired people from outside the sector at a senior level.

I think I bring commercial and operational experience to the table, I’ve worked with some well-known brands where customer experience is critical. So I think I’m here to drive change and transformation, push remarketing to the next stage.

As you’ve worked your way through the business, has anything stood out where you’ve thought “that can be done better”?

I think the principal challenge is getting the teams more connected. We have such a range of end-to-end solutions, the opportunity and challenge is to bring those to life for our customers, demonstrate how those solutions can meet their business leads, help them operate more efficiently.

The principal observation is that we need to be increasingly digitally focused, as we said in a recent white paper. Over the next five years we’ll see a significant swing to the digital environment – 80% of our sales moving to digital.

When you say more connected as teams, is that getting people out of their silo, interacting with the wider business?

The positive of that is that we’re not an inherently siloed business. I think there is an opportunity to do a lot more collaboration as we unlock more data. That can only be a good thing.

Going back to that five-year timeframe, in 2023 will you still have 16 physical auction locations?

Well, we’re forecasting that there’ll be 20/80 auction/digital split over the next five years. It’s a significant shift. Really, it’s an inevitable shift due to convenience, cost efficiency, etc. We’ve seen it in other industries.

That doesn’t mean there’s no place for auction sites, but they will change. Our thinking is that the footprint will largely stay in place but we’ll have to develop towards inspections, storage and fulfilment. But there will still be a need for auction lanes, particularly for big, brand-led events and specialty auctions.

We also think there’ll still be a need for physical auctions for older cars. The buyers of those vehicles will need to assess the metal before making a purchase decision. It’s perhaps less about the death of the physical site and more the evolution of those sites.

What pricing structure do you use for cars going through the lanes, is it a flat per-vehicle rate or a percentage of sale value?

Our pricing tiers are relatively simple. The more you buy, the more you benefit. Prices are published and generally fixed related to vehicle price range.

So it’s essentially a matrix, value versus volume?

Yes. Exactly.

What happens if a customer who has contracted to run 5,000 cars a year through Manheim doesn’t deliver those 5,000 units?

Well, we have to respond to how business develops and individual customer circumstance. Sometimes the return of the vehicle is not up to them, it’s the decision of the end customer. We work closely with the vendors to understand what numbers they’ll be returning because it has implications for us. But we don’t penalise our vendors if they don’t reach a forecast number.

There is an idea to read the ECU of every car to deliver a very accurate picture of the vehicle’s history. Is that feasible?

Trust, confidence and transparency are critical, it’s what we all demand in our lives as consumers and it’s as relevant in the business-to-business space. Our Manheim SureCheck product demonstrates that we believe in the need for greater confidence. Is it feasible to extract data in the way you’re talking about? Absolutely.

Vehicle descriptions need to become more accurate, it’s pivotal, and taking data from the ECU is a great source. The NAMA grading system serves the industry very well, but the addition of onboard data is a great opportunity to enhance that. Accessing that data is something we’re working towards. The bigger barrier, though, is the disparate, proprietary systems which exist and the lack of common access.

That same process could help with electrified powertrains, knowing the condition of the battery, loss of charge depth, etc.?

Agreed. From our perspective, EV model choice is still limited but we know it’s a major focus for manufacturers and volumes will only increase, through tax laws and environmental pressures. As we move into that space there are new challenges. We need to know how to handle and process EVs, charge batteries. Deal with health and safety related to refurbishment, checking battery condition, which leads on to battery disposal.

Do you see a point where you’ll have a sale dedicated to EVs and electrified vehicles?

Yes, absolutely. With a larger number of recognised brands and model types, I can see that. But there are other wider challenges to meet first, like the charging infrastructure in the UK.

New diesel sales are falling quite dramatically, but in the used market they’re as strong as ever. Can that continue?

Dieselgate broke in 2015 but since then we’ve not seen any negative impact. Our view is that demand for diesel will continue in the used car marketplace, although the profile of diesel might change as smaller, more energy-efficient cars enter the market. We think the move away from diesel in the city car market will continue as consumers become more informed and choice increases. But predictions are getting more difficult, largely due to external forces.

As new-car buying trends change do you think it could create a shortage of diesels in the remarketing world?

We’ll need to work with our vendors and buyers to satisfy what demand is out there.

But there’s a mismatch if used customers want diesels but they’re not being bought in the new car market?

If there’s a mismatch the guys who manage it best will succeed. Our business is more about connecting buyer and seller rather than vehicle types.

How did Manheim become the top commercial vehicle remarketer and what’s being done to help maintain that position?

Great question. It’s quite simple really, our LCV team have a passion and enthusiasm for their business that’s infectious. I think ten industry awards in ten years reflects an intimate understanding of their customers, both vendors and buyers.

How do we maintain that? By allowing the team to keep doing what they do and give them the tools they need. It’s the same across the rest of the business. The team don’t need me standing on their shoulder, they need me to clear the way for them. And that is what I’m here to do.

For the full article, please see the print or electronic version of the July/August 2018 issue of Motor Trader