Fleet News

News special: LDV

JUST 90 days ago, British van manufacturer LDV closed its production lines, sent its staff home and went into administration. The press predicted ‘another MG Rover’.

Last week, the press was invited to the LDV factory in Birmingham to hear from its new American owners how the company had been rescued, turned around and was now heading for a bright future.

When Sun Capital Europe managing director Philip Dougall said it had been a busy three months at LDV, it was the understatement of the century.

Dougall said Sun had first become interested in investing in LDV back in November.

Sun Capital Partners is based in Florida and has a portfolio of 110 companies from zinc smelters to speciality retailing. It has 3.5 billion dollars under management.

But as LDV’s cash ran out in December, it turned from an investment opportunity to a rescue package for the US firm.

He said: ‘We invest in companies that are challenging. We can turn around a business in 30 days or less. We move quickly and provide certainty.

‘We are not in the business of buying businesses and stripping their assets.’

With three months hard work now behind him, Dougall said: ‘We are very excited about the prospects for this company. It has been hard work underpinning LDV again and investing in the future but we think it is a business which has terrific prospects that can benefit from our expertise. ‘We like the brand and its possibilities in the marketplace. There are obvious reasons why it made sense to invest in LDV. We believe we can build vans and sell them profitably.’

‘It’s business as unusual,’ says new American boss

‘IT’S not business as usual – it’s business as unusual!’ exclaimed an ebullient Charles P Megan, the new interim chief executive of LDV, as he unveiled his plans for the revival of the flagging van firm last week.

He said: ‘We have a deep and strong commitment to LDV. We’ve been busy stabilising the company and are now building 200 vans per week.’

Sun bought the company out of administration for £20 million and so far has injected a further £25 million getting the production line up and running again, paying outstanding debts to suppliers and settling warranty claims.

Megan stressed: ‘As a new firm we were not responsible for these last two but we stepped up and paid anyway.’

Over the past three months, LDV has reduced its workforce from 950 to 650 and the new firm has not taken on the pension commitments of the old one. But Megan said: ‘We are already a better, leaner and more productive business. You must understand that we had to change if we wanted to avoid letting the business get back to the state it was in before. It’s not business as usual – it’s business as unusual.’

First move was to stop production of the old Convoy and Pilot models, which have now all been sold. All dealers have now signed up to a new agreement while a more efficient parts distribution agreement has been agreed with Lex Auto Logistics.

The bosses are also looking at a new global parts sourcing programme in a bid to get costs down. While new Maxus derivatives are being rolled out this year, there are already signs that things are looking up.

After selling virtually no vans at all in December 2005 as the firm was being sold, LDV has recorded a remarkable 123% increase in February over last year, while overall in 2006, sales have risen 26%.

Fleet sales are very much the focus at present, with large customers including the Royal Mail, Wiseman Dairies, Europcar, TLS, Northgate, Arriva and the Ministry of Defence.

LDV is also looking to overseas markets and announced last week that it had clinched a £2 million deal in Turkey, with the first 100 vans already on their way. It has also secured business in Turkey, Malaysia and Denmark. Megan admitted, however, that this business was not highly profitable at present. He said: ‘We are trying to grow market share in Turkey so this first deal won’t be highly profitable.’

He also scoffed at claims that a van operation of this size could not possibly be profitable. He said: ‘It is very difficult to be a low-cost producer but we have to bring costs down and we can. For example we are a single-site operation so we do not have to pay for a big HQ somewhere and we also don’t have our own test track to pay for.

‘Our workforce is much more flexible than many others too.

‘We expect to be in profit by the fourth quarter of this year, if not even sooner.’

Maxus family set to grow

ANY doubts that the LDV Maxus – the firm’s single offering now – can sell against a growing band of red-hot opposition models were firmly quashed by sales and marketing director Tony Lewis. He said: ‘Running a van is much more than just buying metal. We have an unparalleled level of aftermarket back-up – no-one else in the marketplace can match it.’

He pointed out that 75% of LDV dealers have either 24-hour opening facilities or extended hours to suit the customer, parts come locally so can be ordered quickly and hourly labour rates are half that of some of the opposition. What LDV doesn’t have though is a full range of vehicles.

Lewis said so far, LDV offered short and long wheelbase models and derivatives such as camper vans, fridge vans, ambulances, a kombi and Royal Mail and police specials, along with a new ‘post office’ complete with counter which is at present being trialled for rural locations.

The CV Show at the NEC in April will see the arrival of a minibus, which will be making its world debut there.

Then in the latter part of the year, a long-awaited chassis-cab version should go on sale, allowing LDV to tap into a market which it reckons could be worth 5,000 units a year.

LDV also sees its Special Vehicle Operation (SVO) as a major weapon in increasing sales. It has already worked closely with the Royal Mail to adapt vehicles to its special specification and sees a new niche opening up here.

Lewis said: ‘Our SVO is one of our great strengths. We are going to concentrate heavily on this sector as we see it as a market which isn’t being served as well as it should be.

‘We are going to turn LDV into a customer-orientated business.’

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