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Showroom Radical change sees Ford cuts prices and discounts Dealerships will carry some of the costs as showroom prices are set to fall by up to 12% By Daniel Attwood Ford has introduced the most radical change to its pricing policy in almost four decades. It has abandoned high list prices and high discounts, in favour of reducing list prices and cutting discounts by a corresponding amount. Transaction prices will be unchanged, but cust- omers will see list prices fall by up to 12%, which typically means £ 2,500 to £ 3,500 off a large car. The decision will have a major impact on Ford's dealers who will not only carry some of the cost of the manufacturer's decision, but will also undergo new training to shift their sales focus away from discounts. " We want dealers to sell what's on the car not what's off it," said Ford UK managing director Nigel Sharp. " A huge training programme involving all salesmen will start next month." The new ' Blue Tag' pricing policy, which initially affects Mondeo, S- Max and Galaxy, but will even­tually be rolled out to all Ford's cars, will see dealer discounts and margins hit. " Dealer margins are down, but what a dealer sells a car for is still up to them," said Sharp. " We have reduced the headroom for dealers, but we have to provide sufficient margin for dealers to operate." The decision to bring list prices closer to trans­action prices was only taken after " lengthy discus­sions" with Ford's 550+ dealers. Ford argued that its previous pricing structure was losing potential customers. " The retail buyer looked at the list price and didn't go any further," explains Sharp. " In the world of car comparisons, we were very often judged on list price." It was also having a negative impact on Ford's fleet sales, which account for 70% of its large car sales, because benefit- in- kind tax is calculated on a car's list price, not the price a fleet actually pays. The risk of such a dramatic change of policy, if done badly, is harming residual values. To counter this, Ford and its dealers must be absolute in their conviction that they will not return to heavy discounting. " Provided we do what we say we will do, we will reaffirm residual values," said Sharp. Ford is also investigating how to ensure its dealer demonstration cars are high spec models so salesmen can show off new technology. " We need to find an economical way to get high- spec Christmas tree demo models into dealers," said Sharp. Nigel Sharp

New car market Aftersales conference News Showroom AM contacts Used car market News digest Recruitment Tustain Motors buys first two dealerships John Tustain, who sold his Bristol Street Motors dealer group to Vertu Motors in 2007, has revealed plans to build another group in the midlands and north of England. His new company, Tustain Motors, has just taken its first step, acquiring two Vauxhall dealerships in Northumberland. Now Tustain aims to acquire more dealer­ships in the north, particularly those with Ford franchises although he also wants to increase market share with Vauxhall. His objective is to build a group of around 10 to 15 dealerships. Tustain has a long history with the Ford and Vauxhall franchises. Since the 1990s he and Paul Williams, now Vertu Motors' chairman, were joint chief executives of Bristol Street Motors, which had become a £ 500 million turnover group with 32 sites when it was sold to Robert Forrester's Vertu Motors in 2007. Tustain has taken the chairman's role at his new venture. He has been joined by managing director Brian Baxter and financial director David Storey, both formerly at Vertu. The purchases of Ashington's Vauxhall site from Milburn Motors Garages and Alnwick Vauxhall from Willis of Alnwick was funded by Lloyds Bank. John Tustain Principles of Management AM promotion Arsène Wenger: Castrol Professional global brand ambassador The holder of a Master's degree in Economics, Wenger developed and led one of the English Premier League's most successful teams, and is renowned for managing talent and achieving success by nurturing strengths and addressing weaknesses. Similarly, in the motor industry, managers of franchised dealerships need to make regular analyses of their business' performance to achieve success. By focusing on the minutiae of his team's performance on pitch - number of passes made, percentage of shots on target, number of tackles missed and so on - Wenger can identify areas for improvement. It is exactly this approach that managers at franchised dealerships need to take in order to drive profits. Nigel Head, Castrol Franchised Workshop and OEM Marketing Manager - UK & Ireland, comments: " While the KPIs may be different, there are clear parallels between the roles of managers of franchised dealers and those of professional football teams. In the aftersales department, dealers should be regularly assessing their business to identify areas for improvement." In the run- up up to the 2010 FIFA World CupTM, Castrol Professional will be bringing you a unique insight into the management principles of Arsène Wenger, through AM magazine and video interviews with Wenger in the AM e- zine and on the AM- online website. To find out how Castrol Professional can help you analyse your business' performance, call 01793 452 280