Manufacturing cars is proving to be a difficult way to make money. In 2007, General Motors lost $38.7 billion on revenues of $178 billion with sales slipping 5.7%; Ford managed a loss of just $2.7 billion on sales of $156 billion; Daimler Chrysler a profit of Euro 2.8 billion on sales of Euro 150 billion; Toyota $10 billion profit on sales of $160 billion.

These are big numbers but will make finance departments weep; even Toyota, the best of the above, only managed to make just over 6% profit on sales. Margins are small and getting smaller – it can surely only be a matter of time before the entire car industry is effectively losing money.

There are too many cars chasing too few customers, discounting is rife and volume has not yielded needed profitability. Despite all of this, 2008 expects to see over 100 models launched in the UK alone – this is a record at a time when the stakes are getting higher. These new models will likely add to the confusion of the increasingly blurred categories that each model occupies. There must be a suspicion that these new dance partners have arrived at a time when the UK consumer is just about ready to go home. They can’t all succeed.

It is at times like this that company directors focus ever more closely on those areas that are generating a decent profit. One of those areas is After Sales.

After Sales has always been a key driver of the profitability of car manufacturers. But this area is itself under increasing pressure. Market forces are against increased profitability: increasing reliability of cars and greater service intervals means fewer parts sales; the greater initial specification means fewer after sales products (e.g. ten years ago, most cars needed a stereo to be fitted). Not only are the times when a customer visits a showroom decreasing, but the potential to up sell is too.

Add to this multiple outlets, thousands of products and significant turnover in staff at the dealer and this business is challenging to say the least.

Rob Calver, After-ales Director at Fiat UK was brought from Lex Automotive to help the efficiency drive that has enabled Fiat to move into profit for the first time in over four years. Rob wanted his team to be more pro-active in their sales effort. He admits the motor industry has been a little slow to embrace technology in this area:

‘Fiat has a large datawarehouse but it was proving virtually impossible to get the figures I needed from it’ he says. ‘We didn’t know which dealer was profitable, the numbers of cars they were selling, what parts were doing well or year on year product sales comparisons. We had the topline information, but no means of searching for trends or underperformance, stalled sales or stuff that was flying off the shelf. The first thing I needed to do was find a way of getting hold of that information – and then getting it to the people in the field who could use it.’

Fiat had existing business intelligence tools but they were only available for central corporate staff. It proved to be too cumbersome to get the data Rob needed so he started to look at a product he had previously recommended to clients whilst at Lex Automotive – VECTA.

This is a new breed of out-of-the-box sales intelligence technology designed for sales professionals working in wholesale and distribution. Sales intelligence solutions take information from existing back office and accounting systems and deliver insight into customer buying patterns. They therefore proactively keep the sales team informed of sales opportunities or potential problems with drifting sales.

The leader in this field is VECTA Sales Intelligence, which also incorporates those elements of CRM that are relevant to distributors and resellers such as contact, diary and activity management. It automatically delivers critical information about customer buying patterns that translates into real sales opportunities. It is also able to identify potential up-sell, cross-sell and switch-sell opportunities, in addition to highlighting customer drift. All this without relying on the user performing complex data analysis.

Rob admits that giving his sales people the right tools is only half the job:

‘It is up to them, with our encouragement, to use this technology appropriately. But if he or she can go into a dealership absolutely knowing what has sold, what hasn’t, which products are going to run out and where problems lie…well, they are in the driving seat. It is no longer about having a cup of tea and a chat – we need to be more professional in every way.’ He adds: ‘But it has to be easy for them. Too many sales tools are just about management pulling in data and controlling activity and are therefore incredibly time-consuming. I wanted something that helped them perform, which means I perform.’

Rob’s has had ten people using VECTA but expects this number to increase as results come in. Response has been positive although it is too early to tell exactly what impact its usage will have on the bottom line. VECTA is just one of the tools Fiat UK is using to drive profit, but smart thinking and knowledge is at the core of their recent resurgence – if the fact that FIAT can make money on 40,000 sales with no discounting (compared with 80,000 and a loss the previous year), it is clear that volumes are not the only thing on which a car company should be measured.

One thing though is certain: in the incredibly competitive world that is car manufacturing, every edge needs to be exploited.

Key Pressures:

Too many cars chasing too few customers.

Greater initial specification means fewer after sales opportunities.

Increasing consolidation and price pressure.