Volvo dealer network goes into profit

Monday, 25 January 2010

Volvo aims to boost dealer profitability this year on the back of increased sales which it predicted would give the brand a 2 per cent market share.

Sales increase
Volvo was one of the few car franchises to increase volumes in 2009 with sales up 4.5 per cent to 34,857 units.

Speaking to Motor Trader Kevin Meeks, network and business development director, said dealers returned to profitability in 2009 and he expects levels to rise this year.

"We started 2009 struggling to turn a profit in the network, which was totally unsustainable," he said.

Boosted revenues
Meeks said a combination of network programmes implemented in 2008, including encouraging a number of dealers to turn underperforming sales sites into servicing outlets, and the market success of the brand's DRIVe low emission cars, fitted with stop/start technology, helped boost revenues.

Dealer profits
Meeks said dealer profitability hit a 2.1 per cent return on sales by the end of November 2009, equating to an average profit of £200,000 per site.

"At the end of 2008 the lower quartile were losing tens of thousands of pounds but they turned a small profit by the end of 2009. Now a third of the network are making 3 per cent RoS or more and that's where it has got to stay.

"A 2 per cent RoS is now our base line. We want the network to be profitable long term. I don't want any dealers to be in a loss making position and if they are then there must be something wrong with their business model," he said.

Open points
The network currently has 104 sales sites and 21 authorised repairers and is in negotiations with businesses to fill open points in Bristol, Cardiff and Stockport.

The brand is also asking all its dealers to submit a three year business plan to make them focus on future areas of growth.

Meanwhile, Geely, the Chinese carmaker is in negotiations with Ford to buy Volvo.