The Waylands Volvo and MG dealership on Cumnor Hill just outside Oxford has a long motoring heritage. Tom Walkinshaw occupied it in the past. So did Sytner, Marshall, Ridgeway and now, Waylands Automotive.
We are here to see CEO John O’Hanlon who has a strong record in motor retailing. O’Hanlon headed up the Ridgeway Group before it was sold to Marshall in 2016 for £107m. He subsequently created Waylands which now represents Kia, MG Polestar and Volvo and has outlets in Reading, Oxford, Bicester, Newbury, Swindon and Bristol.
Last year was a challenging one for all dealers hit by rampant inflation, high interest costs and a big hit on used car values in the second half. Waylands tackled these head on. The company delivered pre-tax profits down 19.4% to £2.5m on turnover up 19.3% to £200.9m. That said, trading in 2024 had improved significantly and the group is forecasting good levels of probability in the forthcoming year.
“We’re seeing the green shoots for the first time. Interest rates have come down, inflation is lower, and growth is returning. We’ve got reasons to be cheerful. We’re in good shape, I’m optimistic.
“A lot of our optimism is driven by product. Overall, it’s been a harder year, but we planned for this. We’ve had to take on rising costs. We put in a lot of investment in our used car operations,” said O’Hanlon.
The results are good. New retail volumes in the first half of 2024 are up 3.5%, used retail volumes up 36%, service hours up 15.2% and parts sales up 16.9%. Pre-tax profits in the first half is £1.1.
According to O’Hanlon the market has now normalised after the pandemic. Sales are up: there is more push marketing: the Motability and daily rental channels have been maxed.
“We had much smaller new car market on the past few years, and it has now recovered to pre-term pandemic. I would say it’s a much more normal market. There is more product around.
“There’s some Incredibly attractive, some might say aggressive offers around the market today. And this is at a time when we’ve still got high interest rates and employment costs,” he said.
“You could look at Auto Trader and you can see, there’s a level of pre-registration and forced registration to the market, which is never good news for any brand, which is affected. We’re mortgaging our futures if we pre-register. Pre-registrations always drive the wrong behaviour. Our focus should be dominate our markets, providing fantastic customer and employee levels of satisfaction not laundering and distress-selling.
For O’Hanlon the market has already pumped volume through low profit Motability and Daily Rental sectors. “You can only use these a limited number of times. And the market has gorged on those routes to market,” he said.
ZEV Mandate
What is O’Hanlon’s take on the ZEV Mandate, which stipulates that 22% of cars and 10% of vans OEMs sell in the UK in 2024 are BEVs. What sort of pressure is this putting on dealers? On a wider front, he believes it is having a negative impact.
“My fear is the disruption of the ZED Mandate and what that’s going to do to the market, over the next four to five months.”
But he believes his choice of franchise will stand him in good stead. According to O ‘Hanon the company positioned itself to benefit from EVs through its choice of car franchises. MG, Polestar, Kia, and Volvo have strong propositions in EVs.
“I ask O‘Hanlon if he had expressed an interest in BYD. “I’m just not sure. We have enough exposure to Chinese Brands without looking for more. If you’re asking me who do I want to expand with? I would love to expand what the brands that we’ve got. That makes sense.
“But we’re clear. It’s got to be a brand twith which we can work. It’s got to be a brand that can demonstrate an electric future. We positioned our business to benefit from electric vehicles,” he said.
O’Hanlon has been an enthusiastic backer of EVs since he started up Waylands. He was a strong advocate of the National Franchised Dealers Association (NFDA) and its Electric Vehicle Approved (EVA) scheme. The EVA scheme was developed in 2019 to encourage retailers to enhance their expertise in the electric vehicle sector and support consumer confidence. EVA certifies the efforts and investments that retailers are making in the EV sector to meet the consumer demand.
EV Challenge
I ask O’Hanlon what can be done to boost sales of BEVs to retail buyers? There is currently a lack of incentives for BEVS for retail buyers, which is in stark contrast to the fleet side of the EV business, which has boomed?
“That’s certainly what the SMMT figures show. The market is just not growing fast enough. I’m a huge advocate of electric vehicles. EV is part of the solution that we need to be walking towards. You talk about sustainability and air quality. We need to have more EVs on the road,” he said.
“They drive better. And with the range that we’re now beginning to see and more charging in and around the country, there’s more reasons to have an EV than ever before. The pricing has come more in line with ICE vehicles. There’s lots and lots of reasons why you would buy it.”
O’Hanlon believes the former government was inconsistent in its approach to car emissions and the environment and hopes the new regime will do better.
“We played politics with electric cars, by maintaining the ZEV Mandate at the same time as moving out the deadline ending ICE sales to from 2030 to 2035. This sent the wrong signal to consumers. It confused consumers at the same time as holding manufacturers’ feet to the fire and that said the wrong messages. I’m hopeful the new government will do something,” he said.
For O’Hanlon the current government’s decision to reverse the 2035 decision and bring it back to 2030 might indicate a shift or a hint of something more significant but he is mindful of the financial pressures the government is under. For O’Hanlon there need to be incentives for retail sales, just as there are for fleet business with salary sacrifice.
And what about infrastructure. The zero-emission vehicle (ZEV) mandate also has a target of 300,000 public charge points by 2030. For his part O’Hanlon has pushed hard to get the EV infrastructure in place The group has now completed its major facility developments with some final touches on EV charging and solar in the pipeline at certain site. That’s the general picture but O‘Hanlon makes it clear it has been, at times, tortuous.
“I have been waiting more than15 months now to get EV charging on site at Swindon. And I’m willing to write the check, putting in the substation. It just takes too long. Everything tastes too long. You’re dealing with Government organisations who have very long, minimum standards to respond. You can send an email and even if it’s the smallest change or small request, they can have 30 days to respond,” he said
Expansion plans
O’Hanlon helped drive Ridgeway before it was sold. Now he is building Waylands, choosing franchises carefully, keeping to contiguous territories where he can keep close eye on the business.
“We have been getting us fit for the next stage of growth. When we began in 2017, the plan was to get to £100 million. We completed that within two and a half years and then said our strategy was to get to £250m. And, if you give me the benefit of the Volvo agency sales, we did that last year. We’re now ahead of that and have redefined our strategy to £500m, we say 16 000 car sales because with agency.”
O‘Hanlon had been working hard to get the infrastructure in place, the sites, buying the businesses, upgrading the dealerships. It has invested £11m in site CI programmes over four years.
It is now getting new people in place to refine the processes. These include sales director Dom Gouldsbourough and head of marketing and digital Vicky Hart who came from Hendy, replacing April Wyatt who had been with Waylands from the outset.
The group has also put a lot of effort into its used car business, investing in people. It now has a group used car manager and has a dedicated used car manager on all its sites. This has boosted sales volumes. In the first half of 2024, it sold 2,130 units compared to 1,565 in the same period a year ago. Gross profit on used cars was £3.9m for the same period compared to £3.7m the prior year.
The group has also invested in systems and processes to boost overall performance and intra dealer performance. It now has Spark Data Systems and Swedish company Car Care on its books to improve its used car performance, With Car Care, cars are put in order faster – and sold faster. It also tracks which cars are easy to sell and which are difficult, increasing the profitability of the used business. “We can see exactly how much each car is costing us,” said O’Hanlon who said it had digitised its sales processes and is looking to do the same with aftersales. In aftersales it is migrating its business to eDynamix. which will digitalise the customer journey.
How did O’Hanlon deal with the crash in used EV values in the second half of 2024. Cap hpi figures say BEVs have fallen in value by 60% in two years. In August they continued to fall albeit at a much lower rate, down 1%. According to O’Hanlon the group, like everyone else, was impacted.
“We suffered. When the market moves you’ve got to move with it. You can’t buck the market. it was about taking on losses, reinvesting and going again. Where’s no guarantees trading cars, he said.
O’Hanlon changed the profile of the Waylands Approved used cars in stock. Whereas before they were all EVs, now they are a mixture of EV and ICE. And it has also reduced its exposure to EVs outside its core Kia, Polestar, MG and MG brands.
With the changes to management and the introduction of new systems and processes,
O’Hanlon is looking towards the next stage of growth. He points out that companies cannot continue to grow without pausing at key points to bed in the systems and make sure everything is working well
“There are times when we’re doing a lot of growth and then it will quieten down. We are Looking around for opportunities again,” he said.
On the market generally, O‘Hanlon believes there will be more consolidation as small businesses cannot compete with large dealer groups
“It’s inevitable. That, there’ll be more and more consolidation. It will become more difficult for stand-alone retailers to compete with the large groups. I There’s a sweet spot where you can be big enough. That you can enjoy some of their economies and some of their buying power, but you can still control it,” he said.
“There’s a lot more activity. Whether it’s the consolidation or even some worries around about capital gains tax and what’s going to happen in the Budget, or whether it’s just the fact that people have had a good couple of years.”
Agency has been in the headlines over the past year with some brands pushing forward with their dealer networks, notably Mercedes-Benz. Others have changed tack – Ford and JLR – taking a pragmatic approach and adapting or changing their approach. O’Hanlon believes agency is good in principle but difficult to successfully implement.
“It’s fair to say, I’m an advocate of agency. Done well, you need to have fantastic customer focused systems, fantastic timely offers and a strong level of communication between the brand and the ret
It’s time to wrap up. What is the biggest opportunity for Waylands in the coming year? For O‘Hanlon it is the whole process of growing, assimilating, growing again.
“How we fulfil our ambitions on growth? It’s a combination of continuing to maximise our existing sites and looking at what new opportunities will come our way,” he said. And the biggest challenge?
“The challenge for dealers is some of the market disruption caused by EVs and the ZEV Mandate,” he said.