The group's Exeter-based car supermarket was bought in late 2005, with a £14m turnover and 1,600 units sold annually.
Used cars of mixed brands are stocked, ranging from pre-regs to four-year-old models, with an average mileage of 40,000-50,000 and an average price of £5,500. A smaller supermarket operates in Salisbury, with 50-60 cars on-site.
“The ethos of selling supermarket cars is to get them in and get them out fast. Its volume selling at a cheaper price,” said Vince Mann, operational group director.
There are two permanent buyers at Hendy in Exeter. Cars are bought through lease companies, mainly at closed-sale auctions. Mann has noted a growing trend of lease/fleet cars being lower in mileage.
The company has a volume contract with the auction houses, an arrangement that has proved beneficial for the supermarket.
Around 80 per cent of cars are bought at auction. The rest come through Hendy Group dealerships or direct sales from manufacturers, using established ties.
Sometimes cars are bought with up to 70,000 miles but are only two years old and in good condition. “One example is that we acquired a two-year-old Mondeo diesel. It had done 60,000 miles but looked immaculate. That would normally retail at around £9,000-£10,000 but we were retailing it for £6,000,” explained Mann.
He was happy buying at auction as it gave the supermarket more choice and flexibility. “We sell at around 4 per cent less than trade. Our buyers can buy the cars in bulk cheaper through the auction. We choose what we want – not group leftovers. I want to avoid this becoming a dumping ground.”

Price guides
The supermarket uses industry guides, particularly Cap, as Mann believes it is the most accurate with auction prices.
Margins are always low at supermarkets and, after selling 300 cars this year, Hendy made £3,000 profit, which is tight. “So we have to be accurate when valuing and buying,” said Mann.
Hendy operates a 90-day stock policy and holds 200 cars on site. Cars are almost always disposed of at auctions after 90 days, usually at minimal prices.
With a budget of up to £12,000, Hendy has been heavily promoting a marketing campaign.
The company has a two-page spread in Autotrader every week and is due to begin a three-month local radio advertising campaign as well as launching a website soon.
Additionally, there is a regional advertising campaign running, with the supermarket promoted on the back of 30 buses in the south west, from north Devon down to Exeter.
Another avenue the supermarket is using is direct marketing, as well as email and SMS texting for servicing and MoT business.
Mann said the company has concentrated on finance, to sell at huge volume but at reasonable rates. “Finance is important but its not the be all of our business. We want to give value at a fair price.”
The company uses Capital Bank for financing and achieves 30 per cent finance penetration, with a long-term target of 40 per cent.
Since acquiring the site 18 months ago, 90 per cent of the staff have changed. All new staff had retail industry experience and the company looks for personality, energy, enthusiasm and good first impressions when recruiting.
Unlike other supermarkets, Hendy has a big aftersales and servicing business. There are four technicians in the workshop and 90 per cent of business is pre-sale servicing.
Additionally, the company has its own MoT testing station on-site. Tests are carried out for the Honda business and Mann is looking to expand MoT and servicing to the general public. There is a Smart repair unit too, dealing with small and medium-sized repair work.
The supermarket offers its own warranty, with a three-month policy on all used cars out of manufacturer warranty. Mann said the company was successful with warranty sales, citing a 50 per cent penetration for warranty upgrades.
Hendy also sells Diamond Bright aftercare products but penetration is low at around 10 per cent.
Additionally, the company sells Gap insurance, warranties for taxis and windscreen and tyre insurance.

Part-exchanges
Hendy boasts a considerable proportion of sales involving part-exchange, at 60 per cent.
“Ninety-nine per cent of those part-exchanges are disposed at auction and the average sale price is £500. When you take auction fee and transportation out, they deliver as little as £200,” explained Mann.
He went on to say he was happy to make little or no money on part-exchanges so long as customers felt they could come to Hendy, easily dispose of their old car and be satisfied buying a new one.
The supermarket conducts its own CSI, which Mann said shows vast improvement over 18 months.
“I deal with both franchise and supermarket customers and we have been able to break down perceptions of typical supermarkets. By taking the franchise practices from the group and using them in the supermarket, we have improved the calibre, age, mix and value of the cars, as well as the service we are providing.”

Fact file
Turnover: £14m
Sales: 1,600 units
Staff: 32
Locations: Exeter & Salisbury

Sponsor's comment
Customer focused
As the oldest Ford dealer in the UK, Hendy has for many years enjoyed a significant profile in its home area in Dorset and Hampshire. Recently it extended beyond the Ford badge and 18 months ago took the interesting step of acquiring the long-established Exeter Car Supermarket, a move which took it into new territory, both geographically and in terms of business model. This benefits the group's wider business in terms of stock acquisition and profile.
In the car supermarket sector, Hendy brought with it many of its customer-focused values from the franchised arena. This is likely to provide long-term value in enhancing its reputation and improving customer retention but short-term profitability appears to be somewhat challenging. To counter this, the firm is taking the right steps, widening marketing into more accountable areas and looking to added-value products.
Added-value sales have never been more important. With tight margins it is important to ensure that the buying experience makes every customer want to buy finance, insurance, warranty and paint finish from the same source.
Where these are priced attractively and presented professionally it should be possible to make a little from a lot of products. The end results are more profit and a happy customer too, who hopefully will become an advocate of the firm and create future business through recommendation.