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VAUXHALL: Time for change
Date: 08 December 2011
Vauxhall is seeking to move itself up the desirability scale, helped by a new product surge in 2012. Fleet boss James Taylor talks Paul Barker through his plans
It will be a busy 2012 for Vauxhall. Unprecedented, in fact. The company has never before launched six all-new models in the same 12 months, which will make for a hectic time for fleet sales director James Taylor, who is now settled into the role he took on in April.
Taylor moved up from national fleet and contract hire manager to replace the long-standing Maurice Howkins, and has since reshaped the fleet team to put "more emphasis" on the leasing side of the business, as well as stepping up attempts to attract new business.
"We now have dedicated new business managers, which should bear fruit, although new business has always been a slow burn," Taylor tells BusinessCar. He says this year has been good in corporate sales and leasing, with the car side up one percentage point in market share terms, and the light commercial vehicle side up two percentage points. It's a pattern he's expecting to continue into 2012.
"The growth will come a little from everywhere, although a disproportionate amount will be from 200-750-sized fleets," he says. "It's where we've done particularly well over the past 12 months - we've always had a strong presence with the larger fleets, but the group that sits just beneath is where we've put in an awful lot of effort over the past three years. We've been working with these accounts because you can't just come in and quickly take new business."
Taylor says the firm has been particularly successful in acquiring business from competitors struggling to bring down emissions. "The core product is very good - Insignia or Astra - and with Ecoflex we have the best range of eco-branded vehicles out there," he declares. "It's a key message - high performance, low CO2 and not low CO2, low performance like our competitors; we're unique in the market."
While Vauxhall's fleet boss is expecting corporate and leasing growth, his overall volumes are likely to fall thanks to cuts in the number of vehicles going to daily rental. "We have significantly reduced short-cycle volume by another 10% and bought more vehicles back to have more control over disposal," he reveals. "We have seen results in the past couple of months - we now own most of the sub-12-month vehicles and we've seen positive residual value moves - relative to the market and normal seasonal activity."
Taylor says that will continue through 2012, with another 15% of rental units removed. The increased buy-back of daily rental volume will be linked to the "rejuvenation" of the used car brand Network Q. "Unlike others we have a used brand that stands alone in the marketplace," he says. "We'll take on more of the risk with the rental units because we want the long-term benefits. This year has been difficult as RVs have fallen, and if we'd sold all our vehicles as risk we would have made more money, but it is cyclical and over the longer term will prove the right thing to do."
He says that "sticking with the strategy is the most important thing to do" because it builds confidence with the residual value experts as Vauxhall proves it is carrying out the plans it has promised the industry.
But at least as important are the six new products coming next year. As well as the Ampera (see 'Positive about range-extender electric vehicle potential'), BusinessCar has already driven the Astra GTC and the Zafira Tourer coming in the first quarter of 2012, and there are three models coming in the second half of the year to fill gaps in the line-up.
The first is a small SUV designed to take on the extremely successful Nissan Qashqai. "Outside of the Ampera, this is the most exciting product from a fleet perspective - it will go head-to-head with the Qashqai," says Taylor. "There will be a lot of user chooser demand for that vehicle. It will be competitive on CO2, it looks fantastic and it is an alternative to an Astra type of vehicle."
Not far behind the as-yet unnamed SUV is a car currently named Junior internally, although that may change in the next 12 months. "It looks fantastic - I saw it for the first time last week," says Taylor. Designed to take on the Fiat 500, he says there won't be massive fleet demand for the car, but it will all be incremental sales as it will appeal to a different type of customer attracted to the Corsa, Astra or Agila.
Last of the three
The final car of the trio is a new convertible in the Astra class, dubbed Calibra by some. Again Taylor predicts "limited" volumes in fleet, but says the car looks very stylish and premium. "It will have relatively low volumes but it will do a job for the brand and get marque uplift and positivity. Any volume will be largely incremental because we've not had a convertible for the last year or so."
Taylor adds:?"It is an unprecedented amount of cars launching in such a short period of time and all into new segments, so places we are not today. It's a great opportunity to grow our share because people want the vehicles. It's a customer-pull strategy, which helps build the brand.
"Brands are notoriously slow in changing opinions - we want to be good value for total cost of ownership," he continues. "Our objective is not to be the lowest transaction price but challenging on BIK and running costs. We've got great design, we're great on CO2 and we've got to be market competitive, not the cheapest."
The change is deliberate from the perception that Vauxhall has historically been focused on the transaction price. "The price-led market is, over time, coming from the Korean brands, and competing head-on is not a sustainable business model," Taylor states. "It's hard to know where their volumes are coming from as their penetration of big clients is very poor."
But Taylor is certainly not just looking at the threat from Budget brands. "We've got to keep an eye on everyone - the traditional competition of Ford and VW," he says. "We want to be better than them on whole-life costs, plus the premium brands are coming down. We're not about cost - it's a hybrid of desirability and total cost of ownership."
Building that desirability is the challenge though. "We're trying as a brand, with the emotion of great-designed cars like the Insignia, Ampera, GTC, and saying that they are also very effective to run on CO2 and P11D value," says Taylor. We're trying to match the two together - it's a step-change from where we were 10 years ago where it was a price-orientated decision."
New models, such as the 99g/km Astra, will be key. "Unlike our competitors, this is the car we want to sell and we'll be going hell for leather. The sub-100g/km Astra gives customers the lowest WLC, and this is the car we want to go out and sell," declares Taylor. "This is the Astra we will be focused on through next year."
So next year's strategy is for a significant reduction in short-cycle business, which will lead to a deliberately reduced market share but improved residual values. Taylor is looking for another percentage point increase in corporate volumes as the firm's attempts to reshape Vauxhall's image in the fleet sector from price-led to desirability for fleet customers bear fruit. At least, that's the plan.
