Interview – Peter Smyth, Group Director, Swansway

peter smyth interview

Building and maintaining a £780m family business

THE SWANSWAY GROUP was founded in 2003 by Michael Smyth and his sons, David, John and Peter. Prior to that, Michael had built up and sold Britain’s largest collection of Toyota and Lexus dealerships.

Today, Swansway is a top 20 automotive retail group in terms of turnover, which is approaching £800 million per year, and remains family-run, headed by the three brothers with a focus on the North West, the Midlands and North Wales.

We caught up with Peter Smyth for his views on how the business is evolving and the opportunities he sees from a changing retail landscape.

How did Swansway come into existence?

“My father was always an entrepreneur. His first job was at Hoover, and he became a regional manager there at 27. He started to buy and rent out local garages for people in the 1960s to supplement his income, because he had a young family of four kids.

“He had no experience of the motor trade whatsoever, but what he did have was an absolute, undying belief in his own ability. We grew up around the garage. We’d help fill people’s cars and do odd jobs. It’s why we still pick up litter now if we see it.

“He was fortunate enough to secure a Toyota franchise in June 1970. He got it because nobody really wanted a Japanese franchise in those days. Little did he know Toyota was to become the world’s largest vehicle manufacturer. He grew with Toyota and took on some other franchises, but mainly Toyota ones. By November 2000, he was approached to sell the company, which he did.

“He had to stay with the firm for 12 months, and us brothers were involved for two years. After that, we sat down and decided what to do. We were in our mid-30s and needed to do something, not least because we were too poor to retire; our father made all the money!

“We searched around for a business to buy and came across a Volkswagen and Audi business called LC Charles Ltd. We were sitting in our father’s house – he’s a shareholder – and worked out the business plan, but we had no business name. Swansway was the name of his house, so that’s what we called the firm.

“We started in 2003 and it has since grown into a £780m-turnover business, representing brands including Abarth, Jaguar, Land Rover, Peugeot, Citroën, DS and more.

The set-up between us three brothers is one of our USPs. We are like-minded individuals who are quite happy to work together. We have a mantra: if we have a disagreement, it can only ever be two against one. We took a decision many years ago that if that happened, the person who didn’t back the decision wouldn’t do the political thing and go out of his way to prove the others wrong.

“And then there’s a final filter, which is the chairman: our father. He’s pretty aligned with our way of thinking too, and there’s no answering back. He has the final word.”

It can’t be easy working with so many brands through thick and thin?

“Everything is easy if it’s going well. In that instance, if the manufacturer asks us to do something, we just say ‘yes’ and get on with it. When the return isn’t as good as you want, then you tend to bash heads a little.

“As someone once said to me, we have the bath, but they have the plug. And so you exist on what is basically a two-year rolling contract. That creates tension, but if you want to get involved in a business that’s exciting and dynamic, the motor trade is great. If you’re purely in it to make as much money as you possibly can, I don’t think it’s the place to be. There’s probably easier money to be made, but it’s not as fun.”

‘We have the bath, but the manufacturer has the plug. That creates tension’

It’s also an industry in change. That must make it tougher…

“Yes, and it is tougher, but I’m actually quite excited by the changes, not fearful. Most people tend not to like change, but I can see areas where we can steal a march. The way that people are purchasing cars is changing dramatically. The company car market is evolving rapidly, with more people taking a cash allowance and doing their own deals. There is a burgeoning broker business, which will continue to rise. Change, change, change.”

Unusually, you also have two brokering businesses, right?

“Yes: Stable Vehicle Contracts and You Choose Vehicle Contracts, specialising in Audi and Volkswagen products. The fact is that you can go into the showroom and get virtually exactly the same deal as you do off a broker. But the perception is it’s going to be a cheaper deal. They operate on a low overhead – no showroom, just laptops – and the operations are set up to cultivate a database of customers extremely efficiently, as that’s all they have to work on. They have a focus that is enviable.”

Does that point the way to a future retail model, then?

“It’s one way. But I’m of the firm belief that there’s lots and lots of life left in the traditional retail model. Although the majority of customers will do their research online, they will still come into the showroom.

“They will arrive knowing exactly what they want, what they want to pay and exactly what the part-exchange is worth or how much equity or negative equity they have in their vehicle. That’s not a threat; it makes negotiation easier. We just need to then meet their expectations, be it with test drives, further details or whatever.

“People want to touch and feel the quality. The only place they are going to be able to do that is in a car showroom. But yes, there will be fewer dealers in future. I think the ideal number for any manufacturer is about 100. That means most people are within an hour’s drive of a dealership, and the evidence is that’s how far most of us are willing to travel to see a car.”

What are your thoughts on shopping centre dealerships?

“My belief is that it takes salesmen to close deals. So the idea of a dealership staffed by ‘product geniuses’ in a retail environment won’t sell you cars. It may be great marketing, and you might sell a few caps and keyrings, but beyond brand awareness, I’m not convinced.”

Are customers becoming more impatient?

“Some are, some aren’t – much as it always was. Some love personalising their car and are more than happy to wait 18 weeks to take delivery. Others want in-stock cars, and that gives us the challenge of pre-ordering what we expect to be popular. Our best managers are very good at that, and that means we’re adaptable to what the customer wants.”

Does Brexit hold fears for you?

“So far, I’m surprised by how resilient the market has been, and I don’t see many reasons for that to change. If new cars become 10% more expensive because the UK leaves with no deal, used values will shore up. We’ll close that gap. And most people buy on PCP finance these days, so 10% is really just a few quid per month. I can’t see that stopping many people from buying a new car.

“Every year, the Chancellor comes round and slaps a few pence on alcohol and cigarettes. Does that stop people drinking and smoking? No, because they’re addicted. And we’re all addicted to transport.”

How about electrification?

“Electrification is coming; I’m just not really sure at the moment whether it’s customer-led. I think it’s more about the fear from manufacturers that those that don’t make more zero-emissions cars will get whopping great big fines.

“And then there are the issues of metal mining and battery disposal and so on, plus where the energy charging the batteries comes from. If a battery has a 10-year life, what happens after five years? Is it going to be worth appreciably less? It’s certainly not going to be worth maintaining it, as you can with an engine.”

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