10:28 am, March 29, 2023
The man who set up Ineos Automotive’s UK dealer network says the door is now closed to new partners as the brand prepares to roll out its 4×4.
Following a series of delays, customers are set to get their rugged SUVs – built by the British brand as a spiritual successor to the Land Rover Defender – in the coming days.
Speaking to Car Dealer exclusively at Goodwood, where the brand will feature at the estate’s events in 2023, Gary Pearson, the head of sales and marketing for the UK, Middle East and North Africa, talked candidly about setting up the new dealer network in the UK.
Pearson hand-picked dealer partners as he looked to cut up the UK into sales zones and says he wanted to find passionate partners who ‘finished each other’s sentences’.
Dealers are being run by the likes of Endeavour Automotive, Cambria Automobiles and the recently acquired Jardine. In total there are just 25 outlets across the UK operated under an agency agreement by 19 partners.
Pearson, pictured above, tells Car Dealer the brand was very relaxed with partners about where they put showrooms. In some cases, Ineos shares space with other car makers whereas some partners have decided to build dedicated showrooms, or ‘boxes’, as it likes to call them.
‘The partners are very happy because there’s no £8,000 reception desks and there’s no £14,000 signs,’ Pearson explained.
He said most of the dealers had been able to repurpose existing buildings or plots of land they already owned to set up their sites. It’s this unusually relaxed attitude that has led to Pearson receiving a lot of interest from other dealers wanting to get involved.
‘I probably get two or three calls a week from people asking if there’s an opportunity,’ he told Car Dealer.
‘We think the shape and size of the footprint of the network is right for now. We have a volume cap of 6,000 sales in the UK, so that’s important in terms of the opportunity for existing partners.’
Because of strict emissions regulations for car manufacturers, Ineos Automotive is limited to 6,000 sales per year in the UK.
If it tips over that, it has to meet a 95g/km overall fleet average for its range, and with only a diesel and petrol in its current line-up that isn’t possible.
Pearson said the firm has already announced an electric version of the Grenadier will join the line-up soon and this will help bring the brand’s emissions average down and allow more sales.
But it was this sales limit that meant Pearson could have frank conversations with the partners he signed up.
He said: ‘One of the first things I gave them was a business plan and I said “Look, I’m gonna have this many partners, this is a map, this is roughly where the dots are gonna be on the map and I’d like you to do that dot. Here’s a five-year business plan, this is the share of that 6,000 on agency terms you will get, they are fixed commissions and this is your profit progression”.
‘These guys have seen these glossy manufacturer brochures a million times before, but they don’t often see someone who says “I’d like you to make some money out of this”.’
Grenadiers are sold on an agency basis, with dealers given a fixed commission on sales made either on the manufacturer’s website or orders taken in store.
Additional revenue can be earned from the sale of add-ons, dealers get a small amount for setting up finance documents and they take any profit on the part exchange.
Orders are not automatically allocated to a dealer depending on the customer’s location. Instead, the manufacturer lets the buyer choose which dealer they want to deliver their car. That means a buyer in London can choose to collect near to their country home in the Cotswolds, for example.
‘We do agency, but we do it our way,’ explained Pearson.
‘Having done this for over 20 years ago, the best dealerships I’ve ever worked with I could have given them any contract I wanted and they would have still done brilliant things and still wanted to make money and still look after customers.
‘Our model keeps dealers competitive. I don’t want to remove that competitiveness, and with some agency agreements it can be lost.
‘I want dealers to compete, I want them to want to be the best and be better than the one down the road, and they can do that by being more highly rated.
‘Customers can choose which dealer delivers their car and dealers have this notion of wanting to nick each other’s customers and they can do that here by giving better service.’
Ineos has a widget on its website for part-exchange valuations which Pearson hopes will ‘take the heat out’ of deals.
It offers customers a price based on details they input and Ineos asks its partners to treat that as the ‘base price’ as long as the details are accurate, so customers are not later ‘chipped’ on the value when they walk into a showroom.
‘That’s the painful side of buying a car,’ Pearson tells Car Dealer.
‘By telling our partners they can only go up on these part-exchange prices means customers don’t have to worry they’ll be getting less than they thought for their car. Dealers can also be competitive here because they can offer more for the cars if they want.’
Pearson – who previously worked for Audi and McLaren – told Car Dealer that the conversations with potential partners about the model weren’t always smooth.
‘A lot of the ones we didn’t end up with didn’t like it,’ he explained.
But with a dealership network that’s sewn up (for now), those conversations don’t need to be had for a while.
‘It’s quite a closed door to new partners at the moment,’ added Pearson.
‘The partners we have will like to read that on your website because they’ve made their investment and they’ve been allocated their space on the map.
‘It’s about having respectful partnerships. Nothing’s hidden.
‘So the door is pretty closed, because we’re very happy to have the dealers we’ve got. They’re all doing what they said they were going to do. Barring some delays we’ve had in terms of starting to deliver, they’re pretty happy that we’re doing what we said we were going to do.’
The Ineos Grenadier starts at £55k and has a huge range of options. It is available with either a BMW 3.0-litre straight six petrol unit or the same-sized twin turbo diesel. There’s no price difference between the two powerplants.
Residual values for models after three years have been set between 62 and 68 per cent, and Pearson added he expects dealers to buy back as many as they can for their used forecourts.
He says dealers will be able to build a decent used 4×4 business off the back of the part-exchanges that come in for new Grenadiers and ‘six or seven’ of the partners had already set up their dealerships to capitalise on this opportunity.
Demo cars are owned by the manufacturer and dealers are charged a monthly fee for them, but at the end of its time showing off the model to customers, they get the first option to sell it as a used model. Dealers will have a ‘couple’ of demonstration models each.
So, when do the doors open again to new dealers? Well, says Pearson, that could be some time.
‘I’d like to think our existing partners will always have the opportunity to expand with us first,’ he said.
‘There’ll be people reading this who are disappointed the doors are closed. But I also want to make sure the first 19 or 20 partners know it’s them we’ll go to first.
‘It’s the same thing I would say to their face, which is, “if we do a great job by you, you won’t want to get rid of us. And if you do a fantastic job, we won’t want to get rid of you. And if there’s an expansion opportunity, and we’re both loving it, then they would be the first go-to conversation”.’
