The problem
Phase 1: The fleet had grown considerably but was still managed like a small fleet rather than a contract hire company. The re-marketing department was unable to cope with the volumes of duplicate stock, resulting in too many stock days, too much stock and the depreciation was effecting the profitability of the business.
Phase 2: The business is a subsidiary of a larger contract hire company and many of the functions were being unnecessarily duplicated with cost implications. There was a need to review which areas could be successfully integrated into the parent company and which areas were unique to the subsidiary. There had been a steady decline in the return on investment which required investigation.
The solution
Initially retained for 3 months to recommend options for the development of the re-marketing and in-life management areas; which included the development of a direct trade sales programme.
Retained for a further 9 months to support the production of a revised operating model for the business. Presented the proposal to the Board which was approved and implemented, including re-negotiating all agreements with vehicle manufacturers, dealer networks and preparation suppliers. A commercial review of pricing policy was undertaken to ensure profitable, attractive monthly rentals were being offered and all unprofitable rentals ended converted to new profitable contracts.
Client benefit
- Reduced stock volumes
- Improved performance against residual values
- Accurate rental calculations resulting in profitable rentals
- Saved over £1 m in procurement costs making rentals more profitable
- Moved appropriate departments to head office to reduce costs and improve customer experience.
r2automotive.co.uk 