Sometimes being a follower rather than a leader can be very beneficial.
That’s certainly the case for Fontain Motors, based in Iver, near Slough, which last year recorded a £9.7 million turnover with just 11 full-time employees.
As an Audi used car specialist, Fontain Motors can watch the market and note the popular new-brand Audi cars upon which the dealer will build its future used car sales. Of course, it’s not quite as easy as that.
“As an independent, we can be flexible and decide the cars that we want to sell. But, we also continually have to balance our purchasing against profit margins, our sales against aftersales performance, our competitiveness against the overall market. Analysing costs is so important,” says Marcus Robinson, owner and MD of Fontain Motors.
Robinson accepts that his company operates fairly conservatively within a highly competitive sector. He merely points to the long and successful 22-year history of the business with its numerous industry awards as an independent Audi retailer.
Fontain Motors may not lead the motor sector, but it is leading edge in important areas of its business model: stock buying at the right price, knowledge of Audi marques and maintenance, aftersales and customer service.
In reality, Fontain Motors operates as a specialist within its specialist market. If you want a specific Audi, or have one to service, then Fontain is a prime provider.
Fontain Motors was formed in 1992 by Robinson and business partner George Mycock. In 1995, they saw a gap in the car market. “We had contacts with VAG dealers and the brainwave of concentrating on Audi, a minor brand then, which we could see had growing popularity.”
Audi Quattro rallying successes and Audi’s ‘Vorsprung durch Technik’ advertising enhanced that popularity. In the later 1990s, the Audi A4 ‘Company Car of the Year’ cemented Audi’s reputation for German technical expertise and stylish cars. “That was when the market changed incredibly, and we took off.”
Apart from the early ‘noughties’ period when the strong pound was making new car importing commercially attractive, Fontain has focused resolutely on high standard and desirable Audi used cars.
However, it did improve its business model in 2005. Fontain moved to larger premises in Iver (assisted by a tracker loan, now favoured by low interest rates) and took its car servicing and maintenance offering in-house to develop synergy between sales and aftersales.
Building on its relationship with Audi UK, Fontain has all its workshop staff trained by Audi to meet their standards. This enables work to be done on all car makes in the Audi/VW group. Diagnostic machines have the latest Audi/VW software. All repairs use Audi/VW parts.
“We can do any work on used Audi/VW group cars except for warranty work. We are much closer to Audi than the average independent dealer, yet can still be very competitive by being different.”
Sales, customer service training, marketing and computer systems are more homegrown, with initiatives encouraged. However, external training and trade show visits take place to hone sales skills and knowledge.
“On the sales front it’s all about us buying the right used cars at the right price, for discerning customers to buy. You wouldn’t believe the number of dealers who lose sight of the ultimate aim, which is to make profit.”
The growing customer-focused power of the Internet is a two-edged sword of which Robinson is fully aware. Fontain’s website is modern and automatically updated.
“Forecourt selling nowadays is more difficult. Customers browse and research cars online. They know the deal they want; make many less forecourt visits. We may only get one opportunity to meet a potential buyer.
“Also, recommendation and repeat business is crucial to our business, so we are very hot on maintaining customer service standards.”
Finding the best used cars to sell is another challenge, with a current shortage of good quality under three-year-old cars.
“People bought new in the scrappage years, so the market now has masses of over five-year-old cars, but how many people have bought new since austerity kicked in?
“We have had opportunities to expand into other markets, but I’ve also seen people try those things and go under. I like to feel in control, and actually, looking at things now, it has played to our benefit.”
That management control of direction, standards and costs is now a feature of Fontain Motors.
“Business costs are punishing,” says Robinson. “They’ve crept up on us – taxation, power, fuel costs etc – and net profits have suffered. In today’s competitive market it’s really not possible to pass on costs to customers.
“In terms of business survival or moving forward, being able to analyse your costs is so important. That’s where the clever bit is nowadays.”
SME-to-SME tips from Fontain Motors
- Maintain expert knowledge of your niche offering.
- Sustain excellent service and close contact with customers.
- Keep to your business model. Don’t over-extend your resources.
- Watch your market sector and be ready to react when appropriate.
- Keep control of key functions and costs.