AP Eagers sells used cars from shopping centres -...

PremiumGoAutoNewsEDITION 24 SEPTEMBER 16, 2016 THE BUSINESS PAGES OF GOAUTONEWS

Showroom linked to AP Eagers dealerships brings new twist to used car shopping

Private imports losing headwayPolitical will to push through import plan is stalling under fear of backlash

Dealer disruption loomsMazda boss: streamline the purchase process or have it done for you

Volkswagen rates its dealers onlineDealership customer ranking system goes live on Volkswagen’s website

AP Eagers sells used cars from shopping centres

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PUBLISHER: John Mellor

EDITOR: Neil Dowling

JOURNALISTS: Tim Nicholson, Daniel Gardner, Ron Hammerton, Ian Porter, Terry Martin, Byron Mathioudakis, Tung Nguyen

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AP Eagers sells used cars from shopping

centresShowroom linked to AP Eagers dealerships brings new twist to

used-car shopping

Page 3

ASIC TARGETS DEALERS – AGAINRegulator pings car retailers in a ‘highly

selective approach’ to insurance products

Page 14

AUTOSPORTS CLOSE TO LISTINGMajor vehicle group will become Australia’s third listed automotive company after AHG

and AP Eagers

Page 16

Private imports losing headway

Political will to push through import plan is stalling under

fear of backlash

Page 7

AUDI GOES BACK TO ITS FUTUREAudi’s reaches back to show customers a rich history in technology and motorsport

Page 10

DEALER DISRUPTION LOOMSMazda boss: streamline the purchase

process or have it done for you

Page 11

USED CARS NOW ONLINEUS and Europe concept hits

Australia as two brothers open a virtual used-car showroom

Page 17

Volkswagen rates its dealers online

Dealership customer ranking system goes live on

Volkswagen’s website

Page 6

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Showroom linked to AP Eagers dealerships brings new twist to used-car shopping

AP Eagers sells used cars from shopping centres

TO READ THIS STORY ONLINECLICK HERE

By JOHN MELLORn AUSTRALIA’S second-largest dealer group AP Eagers has taken a further step this week in what management has long believed will transform used-car retailing in this country.

The apparently quirky concept of selling used cars from shopping centre stores with plush Apple-store-like fitouts and no physical cars in

sight was launched this week at Westfield Garden City in Brisbane’s south.

The Garden City store is being used as a proof-of-concept in the shopping centre environment prior to the opening of a full flagship store at Westfield North Lakes in Brisbane’s north this November.

Operated under AP Eagers’ used-car brand Carzoos,

the concept has long been the brainchild of AP Eagers managing director and CEO Martin Ward, with many of the business systems and customer offers developed and tested across much of the Eagers network of dealers in Queensland, the Northern Territory and Newcastle (Klosters) over the past few years.

Carzoos has been the brand

used by Eagers for its used-car operations in Brisbane since 2011 and the Garden City store is the latest piece to be added to the puzzle.

Eagers has high hopes for the shopping centre used-car sales model because the used- car market is much larger than new car volumes, used cars are free of the restrictions that come with new car franchise rules and used cars cover all

the makes and models on sale in Australia from the highest prices to the lowest.

The shopping centres are effectively marketing platforms designed to expose millions of potential used-car buyers to Carzoos and, equally, to position the brand top-of-mind when it comes time for people to move into the second-hand market.

Continued next page



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Continued from previous page

The company said that Westfield Carindale, near Brisbane, for example, has 16.2 million visitors a year.

HOW IT WORKSThe store attracts interest from

potential buyers by using a high quality fit out, not dissimilar to the high standard storefronts of Apple, and even position staff at the doorways who explain what Carzoos is all about.

They introduce potential buyers to so-called ‘buddies’ who will handle the sales process. The store is equipped

with iPads that are linked to the Carzoos used-car stock list.

The key to Carzoos is the way that it is linked into the used-car operations of the Eagers dealer network via tablets operated from the store. The buddies take the customer through the stock list looking for suitable cars for the customer.

Prices are initially based the Eagers’ dealer’s asking price as listed on their sites.

But, by pushing a button on the tablet, the buddy can call up a much lower no-haggle price.

The buddy cannot negotiate. This avoids tension and a transaction that could take hours of tooing-and-froing and increasing aggravation in the traditional dealership can be completed in minutes.

At this point, Carzoos wraps a mountain of peace-of-mind offers around buying the car which has, at his stage, only been seen on a screen.

The key is that buyers can return their cars for their money back up to seven days, and 500 kilometres, after the purchase, which is effectively

a seven-day test drive. Carzoos retains any traded car for the seven days so that customers can get back into their old car if they do not want to proceed.

In addition, Carzoos has conducted a 120-point check, offers a one-year/175,000 km warranty, a year of free comprehensive insurance (even for 18-year olds with a poor record), roadside assistance and fixed-price servicing.

AP Eagers general manager Keith Thornton told GoAutoNews Premium that

in trials of a two-day money-back guarantee, less than one per cent of customers returned cars and, of those, more than half happily transferred into other cars.

Buyers are also offered finance through the AP Eagers-owned Simplr finance brand. But it is seen as a completely separate transaction and is handled by “Simplr sidekicks”. The sidekicks can also sign up finance to customers who are buying cars but not through Carzoos.

Continued next page





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The disposal of the old car is regarded as totally divorced from the purchase of a newer used car. Here Carzoos claims that it will buy the car for a “guaranteed best in market” price.

Buddies have been trained to use the iPad system to appraise the customer’s car (from a location in the car park) with extensive use of photographs to highlight condition. The owner needs to make signed assurances that the car is mechanically sound and the deal is off if the car is subsequently found to be wanting.

At this point, the buddy sends the details to all AP Eagers dealerships, who bid for the car. The highest bid is the price

paid to the customer. This tends to draw out the best price because it covers more than 100 dealerships across a host of Eagers franchise portfolio.

Mr Thornton contrasted the Carzoos business model with that of new-car franchises, who are experimenting with shopping centre car displays. He said there were considerable savings renting 95 to 120 square metres of shopping centre space which could be kept compact because no car needed to be displayed.

He added that a shopping centre was also very cost effective when compared with 4000 square metres of frontage on a major highway used to stock used cars.



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Dealership customer ranking system goes live on Volkswagen’s website

Volkswagen rates its dealers online

By DANIEL DeGASPERIn VOLKSWAGEN Group Australia (VGA), in an attempt to drive improvements in customer service and satisfaction scores, has published dealership customer ratings in the dealer listings on its website which is open to the public.

But the public rating scheme has turned into a public shaming scheme with 23 per cent of surveys rating the aftersales experience average or below average over the last three months.

The local outfit of the German brand has received 40,000 survey results over the past year from customers rating their experience in the realms of sales and aftersales.

The company recently announced it has translated feedback from customer service index (CSI) surveys into dealership star ratings that have this week been published at the volkswagenaustralia.com.au/findadealer website.

The ratings will be updated based on quarterly feedback and from surveys taken

between June and August.The vast majority of

dealerships have recorded scores of three-and-a-half stars and above, although Sydney’s Denlo Parramatta

and McGrath Liverpool scored just two-and-a-half and three stars respectively.

Speaking exclusively with GoAutoNews Premium,

VGA director of customer experience Jason Bradshaw said that while surveys had already improved by 30 per cent compared with the previously unpublished quarter’s results, it was “definitely not” a case of job done for the brand.

“There are still a significant number of dealers … that get two-and-a-half, three as well as three-and-a-half stars,” he said.

“From an experience point of view we want to be four and five stars consistently

(and) three star is not where we want to be. Until we have all our dealerships getting consistently four stars and above, then I don’t think the job will be done.”

Although 37 per cent of those surveyed rated their sales experience four stars or above, and 35 per cent gave the same rating for aftersales service, the gap widened between showroom and service centre when it came to three stars.

^ CONTINUE ONLINE


See Volkswagen dealer rankings

CLICK HERE



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Political will to push through import plan is stalling under fear of backlash

Private imports losing headwayCOMMENT by

DANIEL COTTERILLn THE much-vaunted federal government reforms to vehicle import regulations, that the government claimed would “provide more choice and less red tape” for consumers, appear to be stalled and the likelihood of their successful implementation is in doubt.

The proposed reforms stem from a review of the

Motor Vehicle Standards Act commenced in 2014 and announced in February this year.

It was mooted that individuals would be able to personally import a new car or motorbike, from countries with comparable standards to Australia’s, up to once every two years provided certain conditions were met. Included in these were requirements

that the vehicle be no more than 12 months old and have less than 500km on the odometer.

Predictably, there has been a significant backlash against the proposed reforms from the car industry, which has not been shy in informing politicians from all sides about what they see as a dangerous and flawed proposal.

The Motor Vehicle

Standards Act is administered by the federal department of infrastructure and regional development, and the proposed reforms are overseen from a government perspective by the minister for urban infrastructure Paul Fletcher.

GoAutoNews Premium put a series of questions to Mr Fletcher’s office asking whether the government’s

policy had changed in this matter since the recent federal election, when they expected the necessary legislation to be drafted and be put before Parliament and, most importantly, whether they had done the numbers to determine whether any such reforms could successfully navigate a fractious Senate cross-bench.

Continued next page

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The response to GoAutoNews Premium came in the form of a carefully worded statement attributed to a government spokesman.

“The government is in the process of developing the Bill to update the Motor Vehicle Standards Act, in line with the announcement made earlier this year, and as part of that is continuing to consult with industry and other stakeholders on many issues of detail,” it said.

“Once the drafting of the Bill is complete, the Bill will go to the Coalition party room. The minister has confirmed to me that the Bill will be coming to the party room, in line with the normal principle that a Bill must be approved by the party room before it can be introduced into the Parliament.”

Comment was also sought from shadow minister for infrastructure, transport, cities and regional development, Anthony Albanese.

“The government raised the issue of reform in this area many months ago but has failed to do anything, creating uncertainty in the industry over an issue that is of real public importance,” Mr Albanese said.

“The government has not produced the legislation, let alone argued the case for change.”

GoAutoNews Premium understands that many rural and regional Senators and MPs have been swayed by concerns

over car dealer profitability and potential safety issues for consumers, with National party MPs said to be united against the changes.

There have for some time been reports that the parallel import reforms will be dumped.

North Queensland Liberal MP Warren Entsch is on the record saying, “I think it is dead, that is my view. There are too many issues with it and too many risks both from a consumer and from a

business point of view to take the gamble.

“I have raised this at the highest levels and I have been assured that it will go through the proper process and I welcome that opportunity.”

Given its ultra-thin majority in the lower house, it is highly likely that the government will seek to preserve internal unity by not tackling a divisive issue in its coalition party room when possible.

Continued next page

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Wiser heads may also see little point expending political capital on legislation that is unlikely to be passed in the Senate.

There is plenty of wriggle room in the government’s statement on this issue and it seems that a face-saving reason to water down the reforms would be welcome.

Such reasons are traditionally devised by backbench committees who could do worse than

to study research on global right-hand-drive (RHD) car pricing published by GoAuto Premium in May this year.

Using the Big Mac Index devised by authoritative international business magazine, The Economist, where the price of a Big Mac is used to show the true value of international exchange rates, it was found that Australia actually has the lowest RHD car prices in real terms. The only exceptions were when the federal government-

imposed luxury car tax came into play.

While only the most wildly optimistic observers would expect any move to lower or abolish the anomaly that is the luxury car tax, there is every reason to believe that reforms to parallel vehicle imports will quietly fade away.

Daniel Cotterill is the associate publisher of GoAutoMedia. He is a former chief-of-staff to the minister of defence.

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Audi reaches back to show customers a rich history in technology and motorsportBy NEIL DOWLING

n AUDI is stepping back to the future, launching a brand campaign tied heavily to the company’s strong history in technology and motorsports.

Audi Australia managing director Andrew Doyle said the new campaign shows people the passion and commitment behind the company and what is driving Audi forward.

Though Audi is the youngest German luxury brand on the

Australian market, Mr Doyle said: “We’ve spent more than 100 years striving to ‘out-do’ every milestone, every piece of technology we have ever created, to deliver the best in premium quality and craftsmanship for our customer.

“Recent research by us shows that luxury car buyers don’t have a clear understanding of the way Audi has consistently challenged conventional thinking through the ages and

this is what the new campaign seeks to address.

“The campaign details the aspiration, inspiration and sheer hard work of the people who build Audi vehicles, for the pleasure of those who own and drive them.”

The advertising campaign, which uses archival film, is in three parts:

– ‘Challenges’ refers to Audi’s technological milestones

– ‘Details’ which looks at

attention to detail and quality– ‘Audi versus’ which

combines its heritage as an innovator.

The campaign, voiced by Audi brand ambassador Richard Roxburgh, will be launched as three separate 60-second TV spots and followed up with a 30-second version of each. It will be supported with a social media push, online videos and screened in Hoyts Lux cinemas.

Audi Australia general

manager of marketing Kevin Goult said the campaign did not require any new material to be shot.

“Audi and the creative team at 303MullenLowe found that the archival footage was comprehensive, detailing so many innovations throughout the ages that nothing new was needed,” he said.

Audi’s new brand television campaign started last week and can be viewed here.

Audi goes back to its future




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By IAN PORTERn FRANCHISED car dealers have been warned that their vehicle retailing industry is ripe for disruption and, if they do not improve the customer purchase experience, someone else will do it for them.

There are already signs of significant fragmentation in the product, the ways to market and the consumer solutions on offer

said Mazda Australia managing director Martin Benders.

“This is something that always seems to happen when ICT (information and communications technology) companies stick their noses into another industry,” Mr Benders said last week while delivering the keynote address at the Australian Automotive Dealer Association (AADA)

national dealer convention in Melbourne.

He said ride-sharing and car-sharing applications were growing as consumers change their transport preferences.

“There is no doubt that these types of operations will fragment ownership and car-use models and possibly result in a reduction in the number of cars sold, but key

to their success is providing a human an easy way to transact solutions to their immediate transport needs,” he said.

“I think we sometimes fail to come to grips with just how much the industry is ripe for disruption to its value chain, not only upstream in manufacturing, purchasing, distribution but also downstream in retailing.”

Mazda boss: streamline the purchase process or have it done for you


READ MORE ONLINE:

• Outsiders can grab control of customers

• Benders names potential disrupters

• Could dealers be removed from contact with their customers?

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Dealer disruption looms

Martin Benders



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New sponsorship is a first for Australian men’s and women’s cricket teams

Mazda stumps up for Big Bash League

By NEIL DOWLINGn MAZDA has become Australia’s first company to sponsor a men’s and women’s Big Bash League (BBL) cricket team after signing on as principal sponsor of the all-female Sydney Thunder side.

It has a similar sponsorship role with the men’s Sydney Thunder team since 2014, who won the BBL5 title when it defeated the Melbourne Stars at the Melbourne Cricket Ground (MCG) in January.

That same day, the Thunder’s women’s team won

the inaugural WBBL series, beating Sydney rivals, the Sixers, by three wickets.

It was the first time a single BBL franchise had won both the men’s and women’s competition in the same season and was the catalyst for Mazda to expand its sponsorship.

Mazda Australia’s NSW state manager Daniel Morris said: “Interest in women’s cricket has never been higher thanks to the success of last year’s WBBL season, one that attracted great crowds

at grounds and a very strong television audience.

“Big Bash Cricket is arguably the most entertaining sport in the country and, as reigning champions in both competitions, we – like all Sydney Thunder fans – look forward to another big T20 season.”

The Sydney Thunder women’s team starts its WBBL title defence against the Melbourne Stars at North Sydney Oval on December 10. It will also be broadcast live on Network Ten.

Sydney Thunder vice-captain Alex Blackwell (right) and Southern Stars fast bowler Rene Farrell GoAutoNews

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By NEIL DOWLINGn THE Australian Automotive Dealer Association (AADA), while welcoming Australian Securities and Investments Commision (ASIC) report on car dealer insurance products, has questioned the commission’s “highly selective approach”.

AADA CEO David Blackhall said: “Our members believe that sound regulatory frameworks require consistency, equity and fairness across all products and channels within

a particular sector – in this case the insurance industry.

“The singling out of some point-of-sale ‘add on’ products and the exclusion of others – for example comprehensive insurance – is concerning for our members,” he said.

GoAutoNews Premium has independently found that the government agency responsible for insurance matters, the Australian Prudential Regulation Authority (APRA), regularly produces reports on insurance matters, including add-on insurance products that

are the subject of ASIC’s report.APRA’s data on insurance

products, on its website, includes all insurance products that have add-on policies at the point of sale.

These include motor vehicle comprehensive insurance that is not considered in ASIC’s report on car dealers. Yet both are charged to the consumer in an identical manner.

It appears ASIC did not consult APRA to gain full details of the insurance industry and the frequent use in other sectors of add-on insurance

charged at the point of sale.In response, the AADA said it

was concerned that ASIC may not have taken all factors into account when making decisions about the car retail industry.

“Our members consider that they have always complied with the regulatory requirements imposed by ASIC, APRA and ACCC in all aspects of their business operations, including the sale of insurance products,” Mr Blackhall said.

“Motor dealers sell insurance products created by the insurance industry at premiums

nominated by the insurers on the relevant rate cards.”

Mr Blackhall said he was also disappointed at the low level of direct dealer consultation from ASIC during the three-year study.

“This lack of engagement stands in direct contrast with ASIC’s handling of other important matters impacting franchised car dealers,” he said.

Mr Blackhall said the AADA welcomes the opportunity for further productive dialogue on insurance with the ASIC team in the future.

Regulator pings car retailers in a ‘highly selective approach’ to insurance products

ASIC targets dealers – again


David Blackhall

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ASIC threatens harsh action on insurance



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Major vehicle group will become Australia’s third listed automotive company after AHG and AP Eagers

Autosports close to listing

By NEIL DOWLINGn MAJOR prestige dealer Autosports Group is closing in on becoming Australia’s third listed vehicle retailer with a stock exchange debut expected in late November.

This week the group, headed by father and son Ian and Nick Pagent, appointed former Woolworths chief financial officer Tom Pockett as chairman.

Ian Pagent, currently chairman of Autosports Group, will become executive director when the company lists, while his son Nick will

retain the title of CEO and managing director.

Stockbrokers questioned by GoAutoNews Premium were positive about the listing, saying institutional and private investors took comfort from the success of Automotive Holdings Group (AHG) and AP Eagers.

“The AHG and AP Eagers model is simple to understand by investors and is a model that has proven to work,” said one stockbroker who did not wish to be named.

“Autosports is also dealing in luxury vehicles which have

shown to have a strong growth in the Australian market.”

With 17 dealerships in NSW and Queensland, Autosports sells nine brands including Audi, Mercedes-Benz, Volvo and Lamborghini.

It also has two dedicated used-car outlets and two smash repair centres.

A spokesman for Autosports said the total fund-raising or the share price at par had yet to be determined, although the value of the company is estimated at about $300 million.

He was not able to advise

where the funds would be spent, saying that the final details would be in the prospectus, possibly due to be issued in October.

Autosports recently sent background details of its operation to prospective investors. It said the company had revenue of more than $1 billion a year and, since 2014, had added seven dealership sites of which five were greenfields.

Mr Pockett retired from Woolworths in 2014 and is on the boards of the Insurance Australia Group

and Stockland.As chairman, he is expected

to be on the board of directors of Autosports with Ian and Nick Pagent. Non-executive directors may include Grant Thornton Australia accountant Robert Quant and former ANZ and Esanda executive Malcolm Tilbrook.

Autosports Group was last year awarded Audi’s Major Metro dealer of the year for the fourth consecutive year. It was also a dealer of the year for Volkswagen in 2015 and was Mercedes-Benz dealer of the year for 2015.




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By NEIL DOWLINGn TWO Sydney brothers have turned used-car buying into a digital experience with a startup called HelloCars that deals online and promises a money-back guarantee.

Paul and Michael Higgins laid the framework for HelloCars in December 2015, based on a

growing trend in Europe and the United States to buy and sell used cars online with players including Carvana and Beepi.

In an exclusive interview with GoAutoNews Premium, Mr Higgins explained the unique approach to buying and selling used cars through HelloCars, which involves

customers trailing vehicles for seven days to ensure the integrity of the sale.

“We have a seven-day money-back guarantee for buyers,” he said.

“That gives the buyer time to ensure the car is what they want because every car is different.

“We haven’t had a car given

back to us, so it’s going well. We’re happy to take the car back if it’s within seven days and less than 500 kilometres, but no, nothing has been handed back.”

Buyers are well prepared, however, before committing to a car. The online site has details of each car – it’s

mechanical condition, any defects, photos of faults and a full mechanical and body report – compiled by HelloCars’ inspectors.

The business only buys vehicles that have covered less than 100,000km and no older than six years.

Continued next page

US and Europe concept hits Australia as two brothers open a virtual used-car showroom

Used cars now online


Paul and Michael Higgins



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“We’ve been buying vehicles for several months now in order to get our stock levels up,” Mr Higgins said.

“We do a 230-point check so our inspectors go out and do a 90-minute check and the results are put up on our site of individual listings.

“It even has an interactive mode so prospective buyers

can click on photos of defects and it will come up and show them where that is on the vehicle. So customers know exactly what they are getting.”

Mr Higgins also explained that there is protection in place for people selling their cars to HelloCars.

“Cars come from customers who approach us,” he said. “We have a 30-day guarantee

like a delayed sale. So we inspect the car, give the seller a price upfront and they can keep driving their car.

“The car is listed and if a buyer is found, we pay the seller and are in turn paid by the buyer. If the car is not sold within the 30 days, we buy the car ourselves, store the car and continue its listing.

“We do buy and sell

every vehicle – it is not a consignment.”

Two weeks ago they started trading and though they won’t reveal sales numbers, Mr Higgins said that “it’s far better than we expected”.

“It’s been a smaller mountain to climb than we expected,” he said. “The money-back guarantee really helps.”

Mr Higgins said that the

margins at HelloCars are four to nine per cent which compares with used-car businesses that can have margins of 20 per cent or more. That makes it cheaper for the buyer to get into a car and can have a higher sale price for the seller.

“We’re running on a low-margin model,” he said.

Continued next page






“To work it requires volume and so we have a rather ambitious growth plan throughout Australia in the coming year.

“Obviously we have no showrooms and no sales people which keeps the cost down.”

Backed by experience in the automotive and banking industries – Paul is a former risk management executive with the Commonwealth Bank and Michael was previously a business manager with Subaru Australia – the pair is now targeting national growth from their Sydney base.

HelloCars will be expanding to Melbourne, Brisbane and

Adelaide over the next few months and into 2017.

Asked if the concept could be integrated with a used-car dealer, Michael said the margins were too small to make it commercially viable.

Michael and Paul Higgins are the sons of Mortgage Choice founder Rodney Higgins, who started the finance company with his brother Peter.

In starting the business, Michael said the HelloCars name came from testing.

“HelloCars came up positive, particularly with women, and we all just liked it because it’s so simple and easy to remember,” he said.

Paul and Michael Higgins

By NEIL DOWLINGn THE Czech-car company Skoda believes it is not smart to use cliches to advertise cars.

So it turned the tables on what it believes is a cliche-ridden industry with an actress talking directly to the viewer, confirming that what is being seen in other car commercials is make believe and that Skoda cuts through

the make-believe.The Skoda TV advertisements

were the product of the DDB agency and filmed in a New Zealand winter.

DDB managing partner Amanda Wheeler said the message was “not anti-category, but anti-cliché”.

Skoda Australia managing director Michael Irmer said he thought the ad was “brilliant”.

“Initially we wanted to do a more conventional ad which points out the merits of the car, but another way of doing it was found and it’s one we couldn’t resist,” he said.

“I think now that this will make you think of Skoda every time you see on of those car brands that uses the clichés.”

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AP Eagers sells used cars from shopping centres -...

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