Škoda: ‘The Superb is still incredibly strong on residual values’

Wholelife costs of the car really stack up according to Škoda head of fleet Henry Williams explaining Superb’s success

True fleet sales for Škoda are on track to be 10% up by the end of the year, following a record September, according to the brand’s head of fleet Henry Williams.

“It’s the best September ever,” he says. “We sold just over 2,700 cars into our ‘true fleet’ customers. We did do slightly more than that in March but March tends to be a little bit bigger so it’s our second best month ever.”

Williams has been in the job since February, having replaced Patrick McGillycuddy, who became head of group fleet at Volkswagen Group at the start of the year.

Williams ran Škoda’s national fleet sales team between 2013 and 2015 and prior to that was a leasing manager for Audi so knows the fleet market well. He has taken a “if it’s not broken don’t fix it” approach and is sticking with Škoda’s strategy of selling to blue-chip corporate businesses and leasing companies, and keeping daily rental and Motability sales “pegged to the market”.

“That’s well-founded and is the right thing to do for long-term sustainable growth,” he says. “I’m not of the ilk of going and doing something which may be distressful for the brand or hurt long-term residual values because that’s been a strength of ours for a long time and we’re getting more sophisticated with the way we manage that, which you can see in Superb.

“The Superb, when we launched it, had best in class residual values. It’s still incredibly strong on its residual values, which is part of the reason why it’s so successful – the wholelife costs on that car really stack up.”

The Superb hatch has grown its true fleet share from 1.2% to 2.8% year-to-date, while the estate is at 9.4%, up from 5.2%.

Williams points out that the Superb marks the start of the brand adding “emotional appeal” to its cars through its design.

This will be enhanced by a new Sportline trim level on the Superb, followed by the launch of the brand’s first seven-seat vehicle, the Kodiaq, which goes on sale at the start of 2017.

“Kodiaq opens other doors to us,” Williams says. “We sell 75% of our true fleet mix through Octavia and Superb so those are the real core models for us but what Kodiaq does give us is an element of the user-chooser market.”

Fleet News: What reaction have you had from fleet customers who have seen Kodiaq?

Henry Williams: I took 25 key leasing and fleet customers to the Paris motor show and the reaction was incredibly positive. I think people are really wowed by the design of the car and the presence of it. The feedback on the interior from customers was ‘this feels like a premium product’. We’re not targeting premium brands, that’s not the aim because that might suggest we’re going more upmarket. We’re trying to keep the value for money really strong but what we do see is an element of conquest from some of those premium brands, when we look at the trade-ins.

Some of the little things really get customers. There is a new feature on the Kodiaq, which is a door guard protector, which doesn’t sound very exciting but the way it works is really clever, ‘simply clever’, which is one of our key phrases that we use for a lot of things. What you see with Kodiaq is a lot of these ‘simply clever’ features, which a lot of people never think about but it’s there and it works and is easy, and that goes with the whole mantra of Škoda. It goes with the mantra of us as a fleet team. We want to be simple and easy to deal with.

FN: Are you planning to expand the fleet team?

HW: We’re not looking at improving the headcount but what we are looking at doing is resourcing the existing team up. By that I mean improving their training levels, giving them some of the key tools they are going to need in order to take this brand forward within the true fleet sales arena. And a big part of that is customer closeness and really getting to grips and understanding what the customer’s requirements are rather than just going out and trying to sell them anything, it’s more of a consultative relationship. A key area of focus for me is to make sure that we have the best relationships with our customers and our leasing companies of any car brand. That’s really where I want the team to get to.

FN: What part does the dealer network play in your fleet strategy?

HW: We really went in with a sophisticated LBDM programme three years ago. We said ‘right, we’re investing this money here, we want to increase our local business sales and we’re going to run it for three years and then we’re going to review it’. So that three years is now coming to an end and what we’re doing at the moment is looking at that and saying ‘well, is it the best in the industry? If it’s not then it needs to be’ and making the investment required to develop that.

At the moment we have just 20 LBDMs so these are dealer-based sales representatives, they are in that market of sub-25 so selling into local businesses. We’re going to increase that to 45 by the end of next year, and what we’re going to do for those LBDMs, and for those dealers that are taking this on board, is provide them with the resources they need to ensure the customers they are dealing with are looked after in the Škoda way so we’re going to be training those guys up.  We’re going to be managing national recruitment to ensure we have the right people, we’re going to be mentoring, coaching them through it, providing them with a class-leading lead management system so they can make the most out of their area and have the best relationship they can with their customers, in the same way we do with our own area fleet managers

It’s a key part of the market. It’s also one of the hardest parts of the market to get growth in because there are so many fleets out there and so many people to talk to. But I’m very clear that our route to that is through our local business development managers as people on the ground having those face-to-face conversations with end-user customers.

FN: How will you recruit those additional dealers?

HW: We’ve already been out to our network and asked for key dealers to come forward and say they would like to be part of it. That’s been successful already. We’ll also be going out to them through the rest of this year for that recruitment so we’ll get that number, that’s a certainty. Our dealer network sees the value in this programme. The dealers who are already on it are very vocal about how good it is and how it compares to the rest of the manufacturer world and so I don’t envisage any issues with that .

FN: What are your fleet sales expectations for next year?

HW: The market is a real tough one. If we look at the forecast for the market overall, it is due to drop and the fleet market within that is due to drop so anybody who is looking to grow is going to have a tough time. As a brand with new models you would expect us to grow but if the market conditions don’t permit that then we won’t be pushing it.

Williams expects to sell about 4,000 Superbs this year and says Kodiaq won’t be doing “that kind of volume”. The majority of sales will be retail with about 30% going to fleet.

A facelifted Octavia will also be available next year. “We’ve seen the car, we think it’s going to work really well for our customers,” Williams says. “That is our main product, 45% of our true fleet sales go to Octavia, so it’s important we get that car right and get it to our customers as soon as possible.”

Škoda will launch its first plug-in hybrid with the Superb in 2019, which will be followed in 2020 by its first fully electric vehicle. “Electric vehicles are always a topic of conversation with fleet customers, and rightly so, it’s such an important part of every manufacturer’s future,” Williams says.

“We don’t want to go too early with technology that potentially is not ready, we want to ensure we give a full Škoda experience.”