MT Dealer Insight: Llanelli Motor Company

Used car dealer Llanelli Motor Company is expanding its site to accommodate more stock as it looks to put in a strong performance in a buoyant used market.

West Wales-based Llanelli Motor Company (LMC) has begun work on a new development that will see its forecourt double in size over the coming months. The one-acre expansion will increase its used car capacity to 350 by the spring of 2023.

However, it has not been smooth sailing, as the business was looking at 2020 as a start date for the developments, but the Coronavirus Pandemic put the brakes on the project. Despite the hold-up, the business has performed strongly since the easing of lockdown restrictions, and the delay in obtaining new vehicles with the used car market seeing an unprecedented spike in demand.

Motor Trader caught up with Ian Jonathan, managing director, to find out his plans post-expansion, staffing strategies and overcoming stock challenges.

The business has been established for 20 years. Up until 2008, it dealt mainly with contract hire as a leasing company, but then the market changed. Jonathan explained: “We were forced to look at other options and selling the vehicles was obviously an important part of moving forward. About eight years ago we bought our site in Llanelli, and within three years we expanded it by moving our workshop into another building, which we acquired alongside the site. We increased our sales showroom capacity around five years ago, and we bought a 13-bay workshop with MOT facilities. That is going extremely well, we are constantly fully booked.

“We’ve have now managed to buy just over an acre of land to the rear of the property, which should allow us to stock up to 300 or 350 vehicles.”

And the business has caught up to its pre-Covid turnover levels, which is now in “excess of £11m”. Jonathan added: “We were doing that with about 130-240 vehicles on site. Over the last couple of months, we’ve taken that up to about 180-190. And now with the extension, we intend to take the stock up to 300 plus vehicles. And with that, we would expect our sales to increase. We are forecasting that our turnover will be £17-20m by the end of our next financial year (August 2023).”

Finding the stock

With this extension, how does Jonathan intend on finding the extra stock? He said: “Stock continues to be at a premium, but I think you must work hard at it. Our purchaser is constantly working to purchase and is aggressive in the market, and at the end of the day is getting the stock that we need. We’ve got some good relationships, and I think that is the key to it. It’s not just auction house relationships but having contact with finance companies and a couple of good trade relationships locally to help support us with our stock levels.

“It could still prove difficult to get our stock up to the higher level, so I think it is going to be a four-to-six-month period to get there. And we also need to put all stock through pre-site checks, which we do before any stock goes on site. So, it’s not something we are going to be able to do within a fortnight to a month. We have 10 mechanics on site now, and even with all of them it is still going to take time to prep these vehicles and get them on the site and develop interest in the stock.”

The workshop is a busy part of the business, and one that Jonathan feels puts the company in a unique position in the area. He said: “Our workshops are constant. I think we are competitively priced compared to the main dealer, and yet we have the same level of facilities and equipment. So, in most cases there’s a difference between a small garage, ourselves, and then a main dealership. I think we’re probably the closest thing to a main dealership, without being one, that the area has. People want to know that they’re dealing with somebody that can look after them, but we haven’t got the price tag that comes with main dealer repairs. I’m in a situation where if I could double the size of a workshop and take us from 10 to 15 mechanics, I would do that immediately.”

And how is LMC maintaining this level of return customers? Customer contact is high on Jonathan’s priority list. He said: “It’s all about service levels and standards. I don’t believe in cutting corners, we believe in doing a proper job from the sales cycle to the workshop. Customers are looked after throughout the warranty period as well as through the sales, whether they have a warranty issue or not.

Staying in contact

Our sales team will be in contact with the customer prior to the end of warranty to check in. It all goes towards showing a level of service, and then when the car needs an MOT in a year’s time, the customer will hear from us inviting them back, and we can offer servicing too, which will also helps to retain the customer. It’s about quality service and customer contact.”

To facilitate the growth, LMC is looking for from the expansion, the company will be entering a recruitment phase and looking to employ at least 10 new members of staff across its sales, workshop and admin teams as well as taking on new apprenticeships.

The apprenticeships are important to Jonathan. He said: “It is important that we have apprentices coming through to make sure that within our team of mechanics there are people learning new skills. We have just taken on our third apprentice, and we have two that are just about finishing their third year and will become full time mechanics with us. We pay a little bit more than your standard apprenticeship because we appreciate them, and we have been known to provide additional benefits, such as driving lessons if they have not passed. So, it’s a package of benefits; we are not just pulling in staff cheaply to change tires. And because of that they then want to stay to work with the company.

“We even seem to attract staff now. We know there are issues in the industry with staffing, but our reputation is helping our case, I believe. We treat our staff with respect, as we treat the customers with respect. So, we’re in a fortunate position. We tend to retain staff and not lose them. We are up to over 30 staff currently. For West Wales we are a relatively large employer.”

Looking forward, Jonathan was reluctant to make predictions, but overall felt positive about the year ahead. He said: “It is a little hard to forecast because of the volatility in the market. I think media coverage can sometimes talk down the market, but it is quite buoyant. We are carrying on with our preparations to be bigger and better, and we are achieving good numbers.

“We have a lot of repeat business because of the way we look after our customers. We are looking forward to a good year. I think even if the market does retract, we’re going to be in a position where the expected growth for us is still going to be considerably higher than the market. There is a lot of talk about interest rates, and that can influence customers. We have tried to absorb some of that impact, but we still need to be competitive, and there have been a couple of price increases. But from our point of view, we’re certainly expecting growth.”