Interview: Ken Choo

INTERVIEW ‘To be in football and then high-end luxury cars is a dream job’

H.R. Owen chief executive Ken Choo talks to James Batchelor about life at the head of the dealer group loved by the rich and famous.

Proposed design for the Bentley Surrey showroom

H.R. OWEN

Position: 17th 2019 turnover: £532m 2019 EBITDA: £13.7m ROS: 1.5%

Locked-down buyers know what they’re getting when they ‘click’ to buy a new Ford Fiesta. Let’s face it, a Fiesta is a Fiesta and it’ll be no more complicated to get familiar with than a new kettle, but for the supercar buyer lockdown car purchasing must be next to impossible. Surely a Ferrari customer wants to test-drive the new SF90 Stradale first? Play with every feature it comes with and prod every body panel before taking delivery?

‘Some Lexus and Volkswagen dealers tell me they have customers who are spending £30,000 on a brand-new car and they want to test-drive it first – can you imagine a Lamborghini Sian customer asking the same thing?’ says Ken Choo, chief executive of H.R. Owen – the dealer group loved by the rich and famous.

‘None of the customers of the new Ferrari SF90 or the Monza SP1 or SP2 have tested the cars – none of them,’ Choo chuckles. ‘We have studied the figures and 90 per cent of our customers do not test drive – before the pandemic it was around 50/50. Why? Because they know the product is good. If you ask for a test drive of a Ferrari SP1, Ferrari ask “What is there to test drive? What’s wrong with it? Don’t you like it?”’

‘The fantastic part of all this is that you might expect customers to say “Business is bad at the moment so I’m not picking up my new Sian or my SF90” but it’s not true. I haven’t had a single drop-off on cars worth £1.6m and above – not one.’

Choo admits that lower down the pecking order of supercars there have been some cancellations, and the new car order bank in 2020 was down by 25 per cent compared with the year before. However, in general, the rich are still buying cars regardless and in readiness for a happier, more normal-feeling summer this year.

While new car sales understandably slipped in 2020, used cars remained consistently high for the dealer group. ‘When people can’t buy new they turn to used cars and this pushes up prices,’ says Choo. ‘One-year-old Lamborghini Uruses are selling for a £5,000-to£10,000 premium at the moment, but the used market has a bandwidth. If you look at cars above £150,000 to £160,000 it starts to get tough, but cars around £100,000 to £150,000 are selling really well. We can’t get hold of some cars because nobody is selling.’ 2020 will go down as a year of false starts and sudden lockdowns, and for H.R. Owen it was a painful one. It recorded £1.9m profit before tax to the end of June 2020 – down from £8.2m the previous year – and revenue declined from £532m to £389m. It should be said, too, that the 2019 figures were over a 14-month period. The firm had to cut 20 per cent of its workforce, too, and relied heavily on furlough, with around 90 per cent of staff on the scheme in the first lockdown – but there were some high points.

‘In June, July, August 2020 we had the most fantastic months ever in the history of the company,’ says Choo. ‘We’ve never seen so many people coming back to buy. And the reason is people had the fear factor. A lot of customers are saying, “You know, tomorrow I could leave the world and I have £100m or £200m and I’m not enjoying life – what the heck, I’ll just buy a bloody brand-new Ferrari and drive it!’

An artist’s impression of how H.R. Owen’s dealership planned for Hatfield may look

Choo reveals that business from July to December was ‘just amazing’ – up by around 200 per cent – and Brexit really helped things too as some manufacturers pushed product into the UK before the December 31 withdrawal agreement deadline.

While Choo has modest ambitions in terms of increasing the circa-1,000 cars per annum it currently sells, the 48-year-old – who’s also CEO of Cardiff City Football Club – is focused on expanding H.R. Owen’s reach.

It already has a reputation to die for. Captain Harold Rolfe Owen started his business in 1932 in Mayfair, and over the years it has grown to become one of the most respected names in the global luxury automotive business. It’s the largest dealer in the world for Ferraris and Lamborghinis on units sold, for instance, and is the biggest retailer for Bentley and Rolls-Royce in the UK. Choo has been in the CEO’s chair since 2017 and under his watch H.R. Owen has expanded its insurance services division, while its Rolls-Royce Motor Cars of London showroom was named by the BMW-owned firm as its Global Dealer of the Year in 2019 too, but there’s more to come.

While business and the market may have been down in 2020 it’s full steam ahead for the future, with Choo laying out substantial investment plans for the 89-year-old company while giving more back to his workforce.

‘To be in football and then high-end luxury cars is a dream job,’ he says. ‘There are a lot of people on a waiting list who want to do this job, so when you’re given an opportunity you need to do it well and you need to appreciate what you’re given.

‘I’m trying to turn the company into a very profitable and asset-based company,’ Choo explains. ‘Our return on capital for the last four or five years while I’ve been in charge is averaging at about 20 per cent and has been 25 per cent for the past three years. We’re trying to use as much of our generated profits to acquire land and give our staff more security – to make them feel that H.R. Owen is their home.

‘We are a company where there’s a lot of love and a lot of emotion – we are not looking at numbers alone. If we sell 1,000 cars this year, for instance, we are not looking at 2,000 next year and 3,000 the year after. We would rather be small and very strong and powerful than be very big and very stupid.’

GROWTH

Sites for sore eyes as expansion plans start to take shape

KEN Choo is leading a time of massive expansion for the storied H.R. Owen brand.

In December 2020, the business bought a 5.4-acre site in Hatfield. Along with being its HQ, the £30m development will house Bentley and Lamborghini showrooms and be a place for well-heeled clients to escape to from London at weekends (it could even be the base for Ferrari aftersales too, but Choo wouldn’t confirm that to Car Dealer).

Along with Hatfield, H.R. Owen has also bought a 0.7-acre site in Ripley to relocate its Bentley showroom, which is currently based in Byfleet.

In addition, it will cut the ribbon at a state-of-the-art RollsRoyce showroom in Berkeley

Street, Mayfair. The new multimillion-pound dealership will be double the size of the existing showroom in Berkeley Square.

There are a lot of people on a waiting list who want to do this job.