Car boss Vardy puts pleasure before profits

There is no single reason why visiting Peter Vardy's Car Store in Hillington, Glasgow, is more akin to shopping in a high end department store than a draughty forecourt.

But what is clear is that the company is doggedly forging a new way to sell cars to drivers in Scotland.

"We're trying to learn from hotels in terms of the experience," said Peter Vardy, who set up the company in 2006.

"The best hotels - the six and seven star places - don't talk about people as customers. They talk about guests, don't they? So we're trying to learn that language."

That kids can be seen engrossed in PlayStations on customised car windscreens shows there is a different way to sell cars, Peter said. Of course there is a financial method at work here, for his experience suggests people will spend more when they are feeling relaxed.

Indeed, the Car Store model has proved to be so popular that Peter has opened talks over opening a second, though he was unable to reveal the location.

"Most people tell me they hate buying cars, that the car buying experience is awful," Peter said. "And part of it is because it is a pitch full of cars outside in Scotland, which is cold, and it is a very transactional sales process. But we are retailers."

The focus placed by the business on customer service goes straight to the heart of the culture Peter Vardy has sought to embed since launching the company.

By that stage it is fair to say he already knew the motor trade inside out. The family home in the north east of England backed on to a forecourt, and the young Peter would often come home from school to find customers having a meal in his house.

He began working in the trade at an early age, too, dispensing petrol from14 and quickly moving on to the parts and finance departments during time off school.

Peter would go on to work for Reg Vardy, the business his father, Sir Peter, successfully built into a listed company. But when the time came to venture out on his own he was determined to do things a little differently, much as he had admired his father's achievements.

Peter took the decision to establish the company after Reg Vardy was acquired by Pendragon for £506 million in 2006. Asked by Sir Peter to draw up a business plan after he agreed to fund his son's venture, Peter recalls that many of his ideas centred on creating a new kind of company culture.

"We've really started this company on having some fun, making sure people want to work here. Our whole mantra in the company is 'best place to work, best place to buy,'" he said.

"And in our group objectives we never set anything about profit. It's not interesting. It's all about creating a world class company to work for - and for the guests."

"Yes it's got to be a smart business, yes it's got to make money, but it's not the be-all and end-all."

While it can be perceived that some companies view corporate social responsibility as an exercise in box ticking, it is fundamental to Peter Vardy's operations.

The group, which employs about 800 people in its 12 franchises across Scotland, devotes 10 per cent of any profits it makes each year to a range of un-named causes.

It also builds voluntary work into its recruitment process. Recruits to its "rookie academy" must work in a Bethany Christian charity shop for a week as part of a three-month training programme.

"We give them a target of improving sales by 20 per cent for the week they are in and it's basically a Lord Sugar, Apprentice type thing," Peter said. "It's absolutely brilliant.

"Some of my senior managers now started on that programme six years ago."

The three-day induction devised for new starts, meanwhile, involves new hires spending a day working in a charity, which could mean doing up flats for people recently re-housed.

Not that he believes the motor trade is an environment where everyone can flourish.

"In our culture I suppose we are running fast - it's only an eight-year-old company so it's fast-paced," he said. "So if you want an easy life it is probably not the place to be."

The financials for Peter Vardy would indicate that its customer-centric approach is reaping dividends. Its most recent accounts showed the dealer made pre-tax profits of £6.5m on turnover of £340.7m in the year ended December 31. This compared with profits of £5.6m and turnover of £234.8m the year before.

The company is broadly split into three divisions - traditional franchises selling volume and premium brands such as Vauxhall, Land Rover, BMW, Jaguar and Porsche; "supermarkets" such as the Car Store in Hillington selling used vehicles, and an e-commerce arm for people looking to lease cars.

Peter said the company takes great pride in the level of preparation that goes into cars presented in the "supermarket," and feels it's an area where the business can further burnish its reputation.

Asked whether customers are now favouring leasing over buying cars outright in his experience, he said: "People are just choosing the most affordable finance route to get the best car they can, just like they have always done.

"At the minute, some of the manufacturers are supporting leasing a car and that route to market in terms of the biggest deals, rather than through straight finance. Yes, you can lease some cars very affordably, but one size does not fit all people.

You still have people paying for cars monthly. About 75 per cent of our customers would take some kind of finance package with us, which is actually pretty high."

He added: "Now guests have more information than we have a lot of the time. We try and research every car in every area, and every finance agreement in the area.

"We have to be as transparent as we can."

Turning to the broader economic picture, Peter said the motor industry is generally performing well.

But he warned the statistics on new car registrations should be treated with some caution, as they relate to vehicles which have been taxed as opposed to sold.

"The market is good - it is not fantastic. I'm always kind of cautiously optimistic," he said.

He also notes the car trade can quickly tell how confident consumers are feeling. When interest rates fell he said more bought cars because they saved on mortgage payments, and suggested the falling price of oil will have an influence on the market, including the type of cars people buy.

He will be particularly keen to observe how this plays out in Aberdeen, where there are four Peter Vardy dealerships and plans to add more in the long term.

Peter acknowledges the lower price of oil will have an impact but remains optimistic for the long term.

"I've not been in Aberdeen long enough but I have heard it goes in cycles," he said. "Aberdeen is still doing very well - its low point is still the rest of Scotland's high point. I think Aberdeen will be fine."

But while there are no immediate plans to expand the company south of the Border.

"You never say never - you don't know what opportunities might come up down south," said Peter.

"There's definitely some value in being able to drive round the dealerships.

"I look at the guys who have been the best in our trade - like Sir Arnold (Clark) and my dad - and they were always in dealerships, like I am now."

The approach taken by Peter led to him being named Entrepreneur of the Year by Entrepreneurial Scotland last year, with Mike McGregor, judge and partner at Deloitte, describing him as a "very impressive individual who is always open to new ideas of how to compete in the marketplace."

While the accolade was welcome, Peter is not motivated by personal glory.

He believes the results follow if the company culture is right - and has no aspirations to follow his father's footsteps and float Peter Vardy on the stock exchange.

"Not a chance," he said.

"Big businesses are incredible to watch and see what goes on. But no, that's not my motivation, really.

"I'm not actually motivated by making money, not even in the slightest."