The timing was good. Motor Trader was talking to Duncan Chapman, managing director at Volvo specialist. Ray Chapman Motors shortly after the group had won the Investor Dealer Group accolade at the annual Volvo dealer awards. It won for good reason.
In early 2022 Volvo came knocking at his door. Ray Chapman bought Clive Brook and its two Volvo dealerships and went about integrating them into the group, sorting out the staffing and turning two separate businesses with different cultures into one.
The Volvo investor award for a dealer that’s got more than one site, so the investor award is based on multiple KPIs, including car sales, service visits, Google reviews, overhead absorption, a multi a multitude of KPIs, and we come out top.”
Ray Chapman has been with Volvo since 1969, and the group now has outlets in Braford, Huddersfield, Malton and York.
It’s now a bigger company, operating in a climate like other dealer businesses beset with rising costs after a tough Budget with hikes in National Insurance and wage costs. So, what’s his take on the current market?
“From a Volvo perspective, it’s very strong. You know, I understand the Budget and there’s a lot of worry out there with regards to the cost base within the industry, whether it be minimum wage, national insurance and additional costs that just keep creeping up.
“In order to mitigate that, we need to maintain and grow volume. And from Volvo’s perspective, we are achieving that. Volvo last year had over 3% market share. We’re on track to grow that further this year. We’ve just come out of a three-week sale event, both for new and used.
“And quite frankly, our order take, I’ve never seen it as strong. Whether it be, retail, fleet, or Motability. Volvo is a credible alternative for some of these alternative German brands that have been competing against for many years.
“Volvo as a brand has come through a massive transitional period. The cars are appealing to a wider audience now, from a demographic perspective and coupled with all the new facilities around the UK, in terms of showrooms, it’s attracting a lot more people and we’re selling more cars.”
The figures bear it out. Volvo sales in the UK last year were 66,408, up 32.3% on 2023. Market share has grown to 3.4% from 2.6% last time. According to Chapman when it came to the ZEV Mandate Volvo dealers were ahead of the game. Last year, almost 27% of the cars it sold were EVs while the minimum target was 22%. This will stand it in good stead for 2025 when the ZEV target rises to 28%.
“We’ve introduced the new EX 30, which is fully electric and did tremendously well in its segment, and that was a huge contributor to achieving 27%.”
But Chapman is conscious that most of the sales have come from fleet and salary sacrifice business side and there are still range and other issues relating to EVs.
“When I look at where that [EV] share is coming from, I think in the main its fleet and its salary sacrifice. That’s been a significant player from our perspective. From a retail perspective the public, I think, you know, the mindset has always been around anxiety with range, and people are slowly getting their head around that there are significant cost savings with electric.”
“We’ve introduced the new EX 30, which is fully electric and did tremendously well in its segment, and that was a huge contributor to achieving 27%.”
But Chapman is conscious that most of the sales have come from fleet and salary sacrifice business side and there are still range and other issues relating to EVs.
“When I look at where that [EV] share is coming from, I think in the main its fleet and its salary sacrifice. That’s been a significant player from our perspective. From a retail perspective the public, I think, you know, the mindset has always been around anxiety with range, and people are slowly getting their head around that there are significant cost savings with electric.”
Chapman is signed up the NFDA EVA scheme which offers dealers training on EVs and communicating the issues relating to EVs to consumers.
“We as a retailer have a huge part to play in influencing and re-educating the public with regards to electric. Many households have two cars and one of those cars is generally your runaround vehicle. How often is that vehicle going to do more than 200 miles in a day?
“Why would you not have an electric car. We work out that for every 12,000 or 13,000 miles, it’s, on average, a saving of £1,500 a year on fuel. And then when you factor in some of the additional maintenance savings from service perspective, it’s just a win-win, really. The cost of EVs are coming down. We feel we’re in a strong position, but that’s because of the far foresight of the brand many years ago.”
That said, Chapman acknowledges that the public charging infrastructure is inadequate.
“The acceleration in public charge points is not where it needs to be. But, you know, there’s a lot that we can do outside of that with home charging points. Volvo has offers on now with recharge boxes and a lot of people are taking advantage of that,” he says.
Much has been written about the cost-of-living crisis and the higher costs imposed on business in the last Budget which comes into force in April. Is Chapman seeing a falloff in aftersales revenues as a result as customers trim budgets?
“No, we’re not. As a business, we’ve been around for over 50 years. We pride ourselves on giving really high levels of customer care with great value for money. And if you look after customers, they come back.”
That said, for Chapman the big issue in the future, as sales of EVs ramp up taking a greater share of the used car parc, is the fall-off in revenues and the need to find other profit streams to counter that.
“We need to be mindful of how we can compensate for that loss and look at other areas within the business where we can generate additional revenues that may come as a consequence of volume and growth, efficiencies and economies of scale through acquisitions of other sites,” he said.
“The group does maintenance on Geely-owned Polestar vehicles. We’ve seen an increase in amount in our workshops, which is something that can mitigate some of the threats with regards to service revenues in future years.”
Ray Chapman has held the Volvo franchise for over 50 years and is a serial award-winning group, a Volvo specialist with its own very well-defined business culture. In February 2023, it had two dealerships, and these were joined by two Clive Brook Volvo dealerships. This is reflected in its financials. In 2022 turnover was £124.9m with pre-tax profits of £2.8m. The following year turnover was £180.4m with reduced profits of £2.09m. It made significant investments in Volvo Bradford Volvo Huddersfield.
What challenges did Ray Chapman face in acquiring a different dealer with a different culture, different staff?
“The opportunity presented itself to us. Volvo knocked on our door and we took it because we could see what the future holds. We recognized that it needed a significant investment, not just in facilities, but in people and in process.
“In the last two years, I think it’s fair to say it’s been quite traumatic. It’s been stressful, but we’ve refurbished our Huddersfield site. Last year, in 2023 we relocated to an old Jaguar site in the centre of Bradford, whose footprint was double the size of the original Volvo site. We have invested millions of pounds in those two sites.
“Probably one of the biggest challenges for us has been people and process. We were spreading ourselves over four sites, rather than two, and it meant that we needed to have a more robust management structure in place and that the process was clear. We have integrated all our accounts functions into one site. We’ve built new systems from a sales perspective and it’s now consistent, making it easier to manage, monitor, and make people accountable.
“And we rebuilt the teams There were some people that wanted to come on the journey and are still with us. There were some who wanted to come but we didn’t feel that they were up to it. And there’s some people that have just left in those two years. We feel that we’ve now got two good teams that complement our existing sites.”
Chapman has invested heavily in the used car business, in the sales function, photo booths, buyers and stock controllers. The sales manager focuses on sales rather than administration.
“All the other bits and pieces around that, in terms of buying cars, stock management, preparation, valeting, photography, disposing of trade cars, all of that is completely taken out of their hands, it distracts them from dealing with customers and converting inquiries. Those changes which we put in place have made a significant difference to our volumes, which have grown 40% to 50% in the last three or four years.
“To make a dealership successful, it’s not all about the size of the showroom and the facility. It’s more about what space you’ve got and what back-end resource you’ve got. We’ve just opened a new storage, valeting and preparation and photography centre, which is all the stuff that a customer wouldn’t see. The vehicle does not need to be on the forecourt. It needs to be presented correctly on the web at the right price.”
Most used cars sold by Ray Chapman are Volvo but of course it does carry other brands. “It’s additional revenue, which would be foolish to throw away in view of the cost base,” he said. Last year Ray Chapman sold 3,400 used cars and 4,000 new.
Now that Chapman has assimilated the two dealerships, does he have plans for further acquisitions? For Chapman, that question inevitably points to future generations expanding the group.
“The fourth generation of the Chapman family is in the business and Nathan, our son, is mightily enthusiastic and driven. His involvement and input in the business over the last three or four years has been instrumental. I’m 54 and I’ve been in this business 38 years. We are first and foremost, absolutely dedicated and committed to the Volvo brand,” he said.
“If there was an opportunity that came along, I wouldn’t say no, but at this moment in time, I feel as if I just want the dust to settle a little bit on the back of what we’ve gone through for the last two years. Let’s just enjoy some of our hard draft for a while before we start to put ourselves through yet more pain, both financially and mentally.”
Ray Chapman has won the Volvo National Retailer of the Year three years on the trot, in 2020, 2021 and 2022. That takes some doing given how competitive these things are and how they are judged. What’s the secret?
“It is teamwork, absolute dedication to the job and being focused on what we need to do and then having the right people in the right place to do the job. I always say that not one person within our business is more important than the other. We’ve got different responsibilities, and we’ve got different titles. I don’t care whether it be a car cleaner or manager, we’re all equally as important as each other. And that rings very evident right throughout the business. It breeds loyalty, it breeds retention,” he said.
Earlier, Chapman had cited the importance of fleet when it comes to EV sales and it was notable that the group won a procurement award for customer service, outperforming other brands up for a title. Ray Chapman is a business centre for Volvo for fleet sales.
“We are very proud of our fleet team. They do a phenomenal job with significant volume going through that department year on year, and it continues to grow,” he said.
I ask Chapman about the agency and how it impacted his business. Volvo switched to agency model in mid-2023 with cars being sold direct to consumers, the stock coming off dealers’ books and dealers earning a fee on cars sold and standards achieved. Money wise, while turnover fell, the impact on profitability was neutral, said Chapman
“The commissions that are now paid is in line with what we were retaining previously. I think it’s fair to say, we had some pretty stressful, traumatic times in the first year of agency. We had gone from a point where we dealt with everything. We were in total control. And then to flick it in June of 2023, to the point where we were facilitators. We provide the experience for the consumer.
“At the back end, we’re heavily reliant on Volvo and their administration function. And despite all the preparations, effort and work that was put into that to make it seamless, there were always going to be teething problems, which caused significant amount of frustration, to the point where frustrations boiled over on occasion. Relationships were challenged.
“But we’ve come through that. Volvo work so hard behind the scenes and in collaboration with the network to try and overcome some of these system issues and the general issues that we’re encountering on a day-to-day basis. We don’t really come across many issues now.
“In the early days, the biggest challenge for us was keeping our staff happy, because, you know, the pressure that we’re under to try and appease customers and keep them happy was significant. But we’re through it, and, you know, signs are all good. So, there’s lots of development with systems ongoing to improve it further, but the network and Volvo are completely aligned on this,” he said.
Looking ahead, what does Chapman see as the biggest challenge for the business?
“The biggest challenge, obviously, is cost base within the businesses but we consider ourselves to be entrepreneurs and there are solutions for most things. Pre-agency, it was a lot easier because everything was in our hands. Now we’re in agency, we’re limited in terms of how we can use that entrepreneurial flair.
“That said, we have still got lots of things within our power that we can do, whether it be additional used cars, add-on products, cosmetic and smart repair centres, tyres, four-wheel alignments. There’s lots of things that we can do which are under our control and which we are doing.
“I think the short- and medium-term threats we can manage. It’s the long-term threat which is the biggest concern to me: the impact on service revenues through electrification.
“I think we’re in a good place. We’ve got a very strong relationship with Volvo who are very supportive of us. They listen to us. II would hope that this year, despite some of the issues, the threats, and the challenges that we’ve got, we’re in a good position to have another successful year.”