MT Interview: Tony Whitehorn, president and CEO, Hyundai UK

As Hyundai UK launches its new Click to Buy service, Julian Buckley speaks with Tony Whitehorn, president and CEO of Hyundai UK, about how the carmaker has worked digital into its selling mix

In January this year, Hyundai UK introduced its ‘Click to Buy’ site, described as the first national programme that would allow customers to purchase a new car via the internet. All Hyundai models offered through the site are offered at a fixed ‘discounted’ price, eliminating the haggling which makes up a large – and in some cases detested part – of the dealer experience.

In essence, the Click to Buy system looks to streamline the traditional car buying process. The process starts by giving a trade-in valuation, followed by configuring the new car, arranging finance and then paying a deposit. The customer then sets an appointment at a dealer of their choice where the trade-in value is finalised and any related documents are completed before taking delivery of their new vehicle.

Hyundai claims that cash buyers can complete the transaction in less than five minutes. These deals even offer the option of having the new vehicle delivered to their home or office for a small additional fee.

The Click to Buy system takes over from the system delivered by partners Rockar, the company which Hyundai teamed up with in 2012 to help push the South Korean carmaker into the burgeoning online marketplace. As part of that deal, Rockar also operated Hyundai stores in a variety of non-standard locations, including Bluewater shopping centre in northern Kent.

“What’s really surprising,” says Tony Whitehorn, CEO of Hyundai UK, “is that over our time with Rockar we discovered that 95% of people who bought a car lived within 10 miles of the store. We thought it would be a nationwide thing, but it’s not, it’s local.”

The Click to Buy system was not, as could be imagined, developed in South Korea by Hyundai. Instead it was produced here in the UK, independent of the head office. Whitehorn says it’s one of the reasons he loves working for Hyundai – where most OEMs would insist on taking control of such product development, he says this is one of the first companies that’s happy to say ‘You do it’.

Moving forward, the existing Rockar stores will be managed by Motorline and branded as Hyundai Digital, while Hyundai UK will use Rockar as a digital consultancy. “There’s a lot of crossover between Click to Buy and the Rockar solution. But now all our dealers will have Click to Buy and they will be able to set their own prices,” he says. Whitehorn further points out that it’s a model that is already known to work, with Motorline selling about 2,500 cars over three years in an online-only space. All staff will transfer over to the new Motorline-managed outlets.

Instead of being a push to get a single demographic (eg. women) involved with the brand, Whitehorn says that the focus of online at Hyundai has been driven entirely by customers. For example, the introduction of the Rockar and now Motorline stores was in no way intended to open another access route to car buying for women uninterested in visiting a dealership. “I have three children; my two sons are not interested in going into a dealership, they would prefer to buy online – they buy everything online. And those millennials have influenced their parents and now, to a large part, we’ve become a digital generation as well. Because of that, the way we buy is different.”

Another major difference to the modern retail motor market are the disruptors, including sites which pitch dealers against each other to win individual deals. Whitehorn says that the wider industry has essentially allowed this to happen by not getting involved with the digital space before these companies could gain a foothold.

“It might seem like a great thing for the customer, but these intermediaries charge and it’s the customer, not the dealer, who pays. That’s money that could go on the deal to the customer. Ultimately it has to be the manufacturers giving the best deal to the customer.” Whitehorn adds: “I’m saying that intermediaries are not a long-term solution.”

Dealerships still essential

Despite this concerted move towards online selling, Whitehorn does not believe this is the beginning of the end for the physical dealership. “Because we’ve gone down the digital route, people have accused us of playing a part in the demise of the dealerships.” But, as with other OEM directors recently interviewed by Motor Trader, he does not accept this. “Every person who has bought a car from Rockar has eventually asked ‘where do I get my car serviced’? People want that relationship; the dealership might look slightly different, but the dealership model will continue.”

Hyundai has found that there’s a definite link between interaction with the product and customer sales. For example, the original plan was to outfit Rockar locations with just digital hardware, allowing customers to examine and specify the vehicles online. It was found that when a car was brought into the store, more of that model was sold. “They put an ix20 in the front and sold three in a week!” says Whitehorn.

He continues: “It’s not a can of beans, it’s not just a commodity. It’s inspirational, you could even say [the car is] a work of art. People want to touch, feel and experience that. The cars have to have a physical presence, that’s important.”

Continuing with the ‘grocery’ conversation theme, he points out that the advent of online ordering and home delivery should’ve been the beginning of the end (or at least the start of a rapid decline) for the domination of supermarkets. But instead, more supermarkets are being opened. “People still want to have a physical experience. I don’t think you’ll ever see digital totally replace physical,” he explains.

Maintaining inventory

Whitehorn says that the carmaker has a total of 12 new or facelifted products coming out over 2018, with a further seven being added in 2019. The oldest car in the range as of June will be the Ioniq, which features hybrid, plug-in hybrid and pure electric powertrains. By June next year, the oldest car in the range will be the Kona, a B-segment crossover which was just launched in January this year.

The expanding portfolio will be supported by some additions to the dealer network. According to Whitehorn – who is impressively familiar with such things – Hyundai UK has open territories across north London, with some other infills around the London area. The latter, though, will generally be taken over by an existing dealer. These will fall between the flagship dealership in west London, former Rockar stores in East London and a south London store in the Croydon area.

Rather than flat distance, drive time is used measure ideal store/customer proximity. As it stands a 20-minute drive is considered the ideal store/customer proximity. This makes sense, as while distance is inflexible, time is variable based on outside influences, such as heavy traffic. Essentially 20mins in London can equate to two miles (or less), whereas the same timeframe could see a drive of 10 miles outside the capital.

About 90% of all Hyundai vehicles sold in the UK are manufactured in the Czech Republic and Turkey. It is as yet unknown what form a revised customs union will take, but the worst-case scenario would see vehicles held up at the cross-channel, cross-border ports. Whitehorn says that “as an industry” the UK motor trade is concerned about the future of the customs union. He adds: “The drop in exchange rate has dropped this country from historically being a ‘Treasure Island’ to just an island. That’s a problem for companies oriented around Europe.”

Looking at the situation from a wider viewpoint, the Hyundai UK CEO says that he doesn’t know whether Brexit was right or wrong. All that is clear is that the industry has to work around it and deal with the short-term confusion.

Market direction

Over the remainder of the year, extending into 2018, Tony Whitehorn believes that the new car market will continue to track downwards. In some cases, it’s possible that manufacturers not making a lot of money in the market will have to vacate the space.

This is driven in large part by consumer uncertainty, which is why he wants the government to give greater clarity as to what form Brexit will take and, based on that information, buyers will see what’s going on and make a judgement based on their personal situation.

“We’re a retailing nation, we love to sell and we love to buy. I think as an industry we’re very good at finding new ways to do that. There’s been PCP, now PCH, and people are looking at [the monthly payment] and saying ‘I can afford that’. I can afford £200/month over the next two or three years, as long as my job remains safe – that’s the decider. But it’s an out-going with which they are comfortable.”

Being comfortable is also a concern when visiting a dealership, but Whitehorn underlines that Click To Buy is not a direct response to that. Asked if the digital initiative is intended to give women more buying options, he offers a different viewpoint. “One of the reasons women don’t like going into dealerships is the potential for haggling. But a lot of people don’t like haggling… With [the] greater transparency offered by digital, that goes out of the window.” Essentially, the fixed price adds certainty and the customer can decide whether or not they think that represents good value. It’s a model which has worked well in the past – in the early 1990s, the then-new General Motors brand Saturn was launched with the promise of no-haggle pricing and the practise proved popular with customers.

Market direction also covers electrification, but Hyundai has that covered as well. According to Whitehorn, he can sell every Ioniq EV he can get, based on increasing national demand for electric vehicles. The issue for him is that he can’t get as many as he wants, largely due to sales volumes in other European countries. For example, Norway has abolished VAT on EVs which has pushed consumer interest to new heights.

The retail market has shown some concern about the depreciation of electric vehicles, largely based on battery packs and how they have been managed by the previous owner. Whitehorn: “We’re not experiencing that at this time. We have a guarantee on the battery for eight years, so that helps… But there is very little data on what fast charging does to battery life, but it will definitely shorten it. Everybody accepts that, but we’re not seeing that reflected in EV demand.”