10 minute read
Daksh Gupta Interview
James Baggott talks to Marshall Motor Group CEO Daksh Gupta about the impacts of lockdown, and his vision for the group’s future after Covid...
He’s the veritable pandemic poster boy. Whether it’s at the vanguard of rallying his troops during lockdown, chatting up investors or starring in front of the TV news cameras, no one could accuse Marshall Motor Group boss Daksh Gupta of hiding behind a desk.
Since the start of lockdown, the chief executive of one of the largest dealer groups in the UK has never been busier, working 14-to-15-hour days minimum.
Now, with his 117 dealerships getting busy once again, he faces new challenges. While lockdown was about preservation and emergency action, he’s turning his attention to planning for the future.
The coronavirus pandemic has been painful for many dealers, but it’s starting to present opportunities – and that means growth is back on the table for Gupta.
He predicts that within five years there will be an emergence of car dealer ‘supergroups’ – generating revenues of more than £5bn each – and he wants to be one of them.
‘I think in the next three to five years you might see a number of groups breaking away into that £5bn-plus category,’ Gupta told us in an exclusive interview video interview, covered here in full for the first time.
‘Whereas before I thought this might happen over eight to 10 years, I now think the emergence of five or six supergroups will happen a lot faster.’
Gupta has been acquisitive since taking over the chief executive role more than a decade ago, buying and selling 159 businesses in his 12-year tenure. The latest addition to the portfolio was VW Aylesbury, bought from Jardine.
But now Gupta is aiming for the stars.
‘This business absolutely has the potential to be one of those top five or six groups. I have no doubt we will be one of them.
‘But do we do that now or do we do that in the next three years, or the next five years? I don’t know, but what we won’t do is rush anything.
‘We are ready and in a great position to do it, but we will only do it when we are in a strategic position and when it makes financial sense to do it for our shareholders.
‘Has this business got the potential? 100 per cent it has, for sure.’
Covid-19 has drastically changed how Marshall operates
Gupta says he reviews acquisitions ‘every week’ but any purchases need to be the right fit for the group – a good mix of location and the right brands.
‘I don’t want to buy businesses to then close them,’ he explains.
‘We are in a really good position, we have virtually no debt, no pension liabilities and we have no nasty leases, so the business is in fantastic shape.
‘But when we review acquisitions it has to make strategic sense to our business. We want the right brands and right businesses and we won’t rush to grow.’
While his dealerships are performing well now, the listed dealer group boss is worried that sales might tail off later in the year.
During the lockdown, his sites were selling an incredible 13 used cars to every one new, but that is starting to level out – and he still thinks some form of stimulus from the government will be needed.
‘I think the government is waiting and watching,’ he explains.
‘They have got data coming out of their ears and they will have their ears to the ground – they will be monitoring transactions.
‘My suspicion is they are waiting to see what happens and whether the sector needs stimulus or not.’
Gupta says that currently the market is being driven by ‘pent-up demand’ and in the short term doesn’t need an incentive, hence nothing coming forward when the chancellor announced his package of measures at the start of July to boost the economy.
‘Quarter four and into 2021 is what people are anxious about,’ added Gupta. ‘I think some form of stimulus is needed, but I suspect that if something is to be done, if anything, it will be at a later stage once the government understands what the underlying health of the car industry is.’
Gupta says he has concerns about a scrappage scheme that would likely
HUMAN RESOURCES
Marshall staff on furlough
MARSHALL Motor Group still has around 1,000 staff on furlough, but boss Daksh Gupta isn’t planning on making any redundancies.
‘I want to have the best possible chance to understand the market, not panic, not rush and not make a decision just yet,’ he said. ‘Yes, it’ll cost me money not to take those decisions now and it will only go up from there, but I think that is worth it.’
He says the dealers that ‘went in weak’ to the pandemic will just get weaker and we’re seeing the results of that now.
He added: ‘If you went in weak with lots of issues and debt around you, then you’re going to have to make some tough decisions. If that means redundancies then I can understand that.’
unfairly incentivise customers into cheaper cars sold by volume manufacturers. Understandably – as a group that holds considerable premium brands in its portfolio – he wants a scheme that will help all manufacturers equally.
He said: ‘If we went to scrappage how would that benefit a premium brand like JLR? It’s a fantastic, UK-based manufacturer, but how does scrappage convince someone to go and buy a brand-new JLR product?
‘Is it fair to benefit one end – volume – versus the premium end?’
He’d much rather see a VAT cut by as much as 10 per cent to boost demand.
‘A VAT cut would be good, but it would need to be attractive because cars have gone up,’ he told us.
‘There is no point doing a 2.5 per cent cut – it would need to be 10 per cent.
‘VAT-free would be lovely, but I don’t think the government is going to be able to afford to do that, but I don’t know.’
Workaholic Gupta admits he has actually enjoyed the lockdown, as it has not only given him time at home with his family, but also the opportunity to work more closely with his management team.
He’s increased the number of times they meet via video calls and says the efficiency of meeting via video rather than in person has ‘given them back time’ they won’t want to lose again.
‘It’s an awful thing to say, but we’ve had a really good lockdown,’ explains Gupta.
‘We meet twice a week on Zoom and that has been revolutionary. The tight team has got even tighter.’
With difficult decisions facing car dealer bosses across the country – and many
CLOSURES
500 car dealers could shut within a year as restructuring and coronavirus take their toll
SOME 500 franchised car dealers could shut their doors for good as restructuring and the coronavirus pandemic take their toll on the car industry.
That’s the view of Daksh Gupta who believes there will be a 25 per cent reduction in dealer numbers by 2025.
Gupta said that manufacturers restructuring their networks – such as Ford, Vauxhall and Honda – as well as dealer groups realising that they can do business very differently will accelerate the closures.
‘There are 4,500 retailers in the UK and I could see that dropping to about 4,000 maybe in the next 12 months,’ said Gupta.
‘Most people think, and I concur with this view, that by 2025 there will be fewer retailers.
‘There is subjectivity as to what that number will be, but in my own mind I have always thought we’ll see a reduction of between 20 and 25 per cent naturally by 2025.’
Gupta said car dealer groups had realised that they can now do business very differently following the pandemic – and this will mean changes to dealer numbers.
‘You also have the dynamic created by lockdown as people are looking at the model and realising there are some efficiencies that can be driven.
‘Productivity is significantly higher with fewer people and some groups are taking advantage of that.’
Gupta said Covid-19 had ‘accelerated’ decisions by dealers to make closures, and he thinks there’ll be a lot of ‘smaller businesses’ that will close.
‘Fifteen to 20 per cent will happen in the next 12 months,’ he predicts.
‘There’s a lot of momentum on this.’
Gupta added that some of these changes would also result in job losses and says ‘market intelligence’ leads him to think ‘every dealer group is taking actions’.
It’s all hands on deck at Marshall’s Covid-secure showrooms
Marshall’s portfolio of premium brands is unlikely to benefit from scrappage, says Gupta
already shedding jobs to help balance the books – Gupta says he is not planning any cuts.
‘We are not making redundancies and there are no plans to do so, but you can never say never – if the economy is really weak in Q3 then you have to protect the business, but we will fight hard and do all we can to protect it and jobs for the long term.
‘We had a good reputation going in and I think our reputation has been enhanced. I think lockdown has genuinely been good for this business.
‘The love for the company right now has been amazing. I have been inundated with people who want to work here. I’ve had six CVs today.
‘It gives me pride to see the feedback we are getting from colleagues.’
So what’s next for Daksh Gupta? A break, or more of the same?
‘Personally, I’ve never worked so bloody hard in my life – it has been knackering,’ he says with a laugh.
‘My chairman calls me a junkie because I’m a work junkie, but I don’t believe that – work isn’t work for me.
‘Work is fun and it is a bonus I get paid to do it – the day I don’t enjoy it is the day I quit.’
But it doesn’t sound like Gupta is planning on slowing down any time soon.
He adds: ‘We are an ambitious business – and in my experience people want to work for exciting businesses, businesses that are going places and making changes.
‘I want to look back on my career and think “we did great things”.’ CD
STOCK
Used cars flying for Marshall
USED cars are the stars for dealers post-lockdown and Marshall boss Daksh Gupta says he hasn’t seen anything like it in over a decade.
The Marshall CEO said the auction performance he had seen recently was ‘quite frankly nuts’, with every single one of the group’s cars that had gone to auction selling.
‘In the last few weeks we’ve had a number of auctions and literally every single car has been sold. I haven’t seen that in the last 10 years.’
He said the prices used cars were achieving too in auctions had been incredible, with his stock’s current performance running at 114 per cent of CAP.
‘Usually it’s 97 per cent,’ said Gupta. ‘It’s simple supplyand-demand economics.’
He added that his dealerships were pushing out new car deliveries to generate more part-exchanges and were focusing on quickly turning around stock.
Gupta said his group had one of the best stock-turn averages last year and was on course to ‘significantly beat that’ in June.
He says he has definitely seen evidence that car buyers are ditching public transport and buying used cars instead.
‘Trains are dead from what I can see,’ he said. ‘Before lockdown, 62 per cent of buyers would come in with a part-exchange, but that has dropped by about 10 per cent. That is too big a drop to be coincidental and tells me more people are buying cars today that don’t already have cars.’
