Keep counting the costs

  25 July 2011

Quick trip this week to the McLaren Technology Centre in Woking for the launch of Mobil’s new Business Performance Programme. Along with a group of current and potential Mobil customers, we were treated to a tour of the Formula 1 collection and development areas – basically, an F1 enthusiast’s dream.

Walking round, it struck me that this clinically clean facility is about as far removed from the cut and thrust of a race weekend as it is possible to be. It would be wrong to call it a factory and it’s certainly not a workshop, which I guess is why they call it a ‘technology centre’.

In fact, it reminded me of some dealerships I’ve been to where the size of the glass walls and the cleanliness of the floor are in inverse proportion to the number of actual customers.

It’s also a great example of how a huge investment in premises doesn’t guarantee success. The Centre was completed in 2003 at an estimated cost of £300m and McLaren haven’t won a constructors’ championship since (if you ignore 2007, when they were excluded). There has been one Drivers’ championship, of course – Lewis Hamilton in 2008.

One very knowledgeable motorsport business commentator suggested to me that this was because the team principals had taken their eye off the ball. There was more focus on the premises and less focus on the business of racing. Whether that’s true or not, it’s a potential lesson to us all.

Over-zealous franchise standards are always a sticking point between car manufacturers and franchised retailers. And all the research indicates that expensive floor tiles and fancy lighting (to name but two regularly quoted issues) cut very little ice with the customers. They’d prefer good service and competitive prices.

I’m told many of the new sales contracts being prepared for 2013 include more restrictions on franchise standards and, of course, the removal of any rights to multi-franchise – one sure fire way of reducing property investment costs. Let’s hope somebody, somewhere takes a look at the McLaren experience and at least asks whether the costs justify the results.

Rupert Saunders

Are you facing a new franchise contract and added cost? You can always spill the beans. E-mail me: rupert@auto-retail.com

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