Paul Barker grabs a cuppa and a chat with one of fleet’s most influential figures – Nick Laird, Managing Director, Ssangyong UK
Nick Laird was appointed managing director of Korean brand Ssangyong in January, having been running the company as acting MD since October. He’s aiming for a 100-150% growth in sales over the coming years, and fleet will for the first time form a part of the firm’s aspirations.
QWhat were your first impressions of Ssangyong and what changes have you made?
I hadn’t given the brand anywhere near enough respect; the product I’ve come across is good. I think there are very few manufacturers that sell poor vehicles today, but I underestimated how good the Ssangyong vehicles were.
We have hired a couple of people into the team, particularly with regard to fleet, which we want to push forward and professionalise, but the team we have are good people who have been working in the industry and know their stuff. It comes across to me as a company with unfulfilled potential. And certainly when I look at the future product coming from Korea, it’s a very strong product roadmap; the basics appear to be right, and my job is to try and put them together in the right way.
PICKING UP MORE VOLUME
The new Musso pick-up launches this summer, and Laird describes it as “hugely important” for Ssangyong.
“It could help us with a large chunk of that leap towards our volume aspiration, so making sure we launch the vehicle well, and have it at a competitive price point, is vital.
“Also, we need to make sure the dealers we bring into the franchise are ones that understand the importance of these local business customers and are quite comfortable selling pick-up trucks. It’s different selling one pick-up truck to a farmer who you might have previously sold a Rexton to, versus selling pick-ups in volume to businesses around a conurbation.
“We know that as a challenger brand, as a less well-known brand, we need to do everything a little bit better than the more established makes – list price, service, specification – and a little bit better in each of those areas adds up to a lot better. We know we need to do this in order to bring people over from the more established products. We need to make sure we are cheaper so there is a reason to walk away from a perhaps better-known brand to us.
QWhat are your volume goals over the coming years? Is there an opportunity to be growing?
Yes. The vehicles that we have and the business that we are building is one focused around rugged, value-for-money SUVs and crossovers. We are not trying to create a reputation or a product line up to do other things, and we’re fortunate at the moment in that the market seems to be coming towards those types of vehicles. As a less well-known brand, what we need to do is to get that awareness up that firstly we exist, secondly that what we do is quite good and thirdly that it’s extremely good value for money. Our aspirations over the next three to five years would be to get to somewhere between 8,000-10,000 units. We’re at about 4,000 units today.
Our brand and our dealers really get the retail customer very well and we are just embarking on a fleet programme with our dealers to help them better understand the opportunity that comes from dealing with targeted fleets. We envisage that fleet will eventually account for about a third of our sales; we are not trying to expand it more than that but what we are looking for is those fleet users that need a more rugged, potentially off-road, certainly all-weather, kind of vehicle, because these are precisely the kind of vehicles we have. That means we will stay shy of certain bits of the market where we would be playing to a weakness and we will push much harder into areas of the market where the customer’s needs and what we supply are more aligned. We are looking to work with a smaller number of the contract hire companies whose own strategies align with that well.
QWhat sort of fleet business will that one-third of your total volume be made up by?
We think that the three channels – dealer fleet, contract hire and direct manufacturer selling – will be of equal importance. So we certainly want to encourage our dealers to do more local fleet business. The dealers we have are quite well-rooted in their own communities, but many have not really penetrated the businesses local to them and we need to support them to help that to happen, hence us rolling out a fleet programme now. When dealing with the contract hire and leasing companies, their demand may come nationally so we need to be able to credibly fulfil that.
We will do some direct fleet, particularly for amber light-type activities, again where our vehicles fit well. We won’t go and try to win business where our vehicles and our line-up doesn’t sit well.
If you need to get up a hill in a vehicle, or need to get to somewhere remote and need to do it all year round, then our vehicles are very good for that. These are the kind of places where having a much tighter relationship with those [lease] companies, and therefore us placing a lot more of our resource there, allows us to have a much higher profile than we could afford to do if we decided to go after everybody.
QWhat other specific changes are you making to the way you approach the fleet sector
We are doing a lot of work at the minute on residual values with Cap where, because our volume is low, hardly any of our vehicles go through public sales channels such as auctions. Therefore, it’s very difficult for the guides to value the vehicles accurately because they don’t see public data. For example, what we are doing at the minute is feeding back to Cap the retail sale prices of a three-year-old Korando that our dealers are telling us they are selling cars at, and Cap can turn that back into an implied trade value for the vehicle, which is starting to improve Cap’s perception of where our RVs should be. To give you an idea, Cap has moved up the values of some new Rexton derivatives by four percentage points in the past month, which will be great for us because it will allow us more competitive contract hire rates. It’s also combined with us making sure the work we have done on SMR is flowed through correctly to those contract hire and leasing companies that we want to deal with. Certainly we have noticed that the variance between the highest and the lowest for our SMR data is enormous, so therefore we have not done a good enough job of getting a consistent set of information out to them about what our SMR costs really are. We have got to take that on the chin and do a better job at it.
QWhat’s coming in the future from a product perspective?
As well as the Musso pick-up truck,(see panel, left) at the Geneva show we had an electric SUV concept that has proper 4×4 off-road capability, and that electric vehicle is based on the same platform as our new C-segment SUV that comes in 2019, replacing the current Korando. So there is good strong product investment going on as C-segment SUV is perfect for fleet and contract hire buyers.
There is a very strong investment in product over the next four or five years and every vehicle in that period is either entirely new or a facelift, so there is a real feeling of coming of age about the sophistication of the product that is going to be coming through.
QBut the SME and job-need functions is where you see the largest opportunity over the next few years?
Yes, and what we also find is that some of our customers buy us because they don’t want to be seen to have conspicuous consumption. We have some customers, for example, where they want a 4×4 because they need one to get around for their business, but they don’t want to be seen to be turning up in an expensive Range Rover. So for them, having a vehicle like ours where the customer isn’t sure how much it has cost means it can go under the radar a bit more and not expose them to their customers thinking they make too much money.
We think clean diesel will be an entirely credible powertrain for many years. Clearly all vehicles will need to start to have some sort of hybridisation, but we see the torque profile of diesel engines, when they are clean enough on emissions, as having a competitive advantage over petrol. Nevertheless, we are also investing in new petrol engines, as every manufacturer is doing.