Interview: Peter Backhouse

the OEM strategies have changed and there has been consolidation of dealerships. The technology environment isn’t that different but the enablers and architectures are much stronger now. For me, what was necessary was to bring stability and bring sense to all this noise that I found when I came into the business.”

Fraikin also has a new group chief executive in Yves Petin and Backhouse says they have had “long conversations about what is Fraikin”.

“I’m not going to deny that the UK hasn’t quite been reaching its full potential for the last four or five years,” says Backhouse. “I’ve come back to this business and I’ve said ‘Why are we the way that we are? Because at its heart, this is a good business’. My conversations with the shareholders and the board have been around ‘We just need to bring back control, bring back discipline and bring back diligence to our processes and procedures’.”

Managing volatility

In these uncertain times when input prices – especially new vehicles – are seeing unprecedented volatility, that also means having the ability to vary the prices customers pay throughout the life of the contract.

“I can’t have a five, six or seven-year contract that’s fixed in an environment where price volatility means that that revenue suddenly becomes loss-making,” says Backhouse. “Over the last six months we have really had to change our mindset on the commercial terms that we are prepared to do business on.

“For us to be a long-term sustainable partner to our customers, we have to make money. That’s the reality. Even if large customers say ‘We’re not going to expect any increases in our supply chain costs’, what’s going to happen is people are going to stop supplying them.

“We can’t be a charity. I’ve got shareholders to satisfy, I’ve got staff that we have to pay the right salary or they’ll go somewhere else, and I’ve got suppliers charging me 15% or 20% more for parts and labour than they were 12 months ago.

“The main driver of volatility in our pricing is the cap-ex. It’s the price of the vehicle, and because we’re on 12- or 18-month or even two-year lead times, the price of the vehicle can change within that period of time.

“I can’t shoulder that without passing it through to my customers. The old adage of fixed pricing, I’m afraid, has got to go.”