CHRISTMAS may be a time for festive cheer but at the LDV factory in Birmingham last December, there was little sign of celebration.
The plant had stopped producing vans temporarily and the bosses were hoping for a smooth ride while the firm was being taken over by American private equity consortium Sun Capital Partners. It was a tense time for LDV’s 1,200 employees.
Then the Sunday Times got wind that something was afoot and – sensing another MG Rover sensation – the baying hounds of Fleet Street descended on the British van maker, blowing the whole deal wide open and making some wild and unsubstantiated claims about the firm’s viability.
But that was three months ago – and three months is a long time in the world of big business.
Speaking to Tony Lewis, executive director, sales and marketing at LDV, one could easily believe it was all a storm in a teacup. He said: ‘It hasn’t been as traumatic as it was reported in the media I’m delighted to say. Towards the end of last year we were working alongside our existing investors in the LDV business and a new investor in assisting the transition of ownership from one group to another. This process took a relatively short period of time to complete, our new owners are now in place and we move forward, positively, from here.
So exactly how much harm did the Sunday Times story do to LDV?
Lewis said: ‘Let’s not underestimate the power of the press. There is no question that the speculation in the media regarding the status of the business was not helpful, particularly as much of was ill-informed and of a sensationalist nature. The article which appeared in the Sunday Times led less responsible members of the media into publishing articles with very little factual content.
‘During that period I can’t say the reputation of the business, which took years to develop, wasn’t damaged. Both dealers and customers expressed concern at what they were seeing and hearing but we’ve now put all that behind us.
‘We have an open policy as a business and we kept those who needed to know what was going on fully informed. Our National Dealer Council members worked alongside us through this period and key account customers were aware of the transitional nature of the business.’
LDV’s sales in December were little short of disastrous, dropping 48% from 763 units in 2004 to 391 in 2005.
Lewis said: ‘Sales were affected by the speculation, particularly in the weeks running up to Christmas, and we did not have the strong close to the year that our registration performances in September and October would have suggested.
‘Going into 2006, with new owners, we have gone through the process of setting up a new company, LDV Group Limited, and have issued new franchise agreements to those dealers we want to work with in the future and without exception they have all signed and we can move forward to the all important March sales month with the full backing of the dealer network.
‘We’ve also been in contact with all of our key account customers who have re-affirmed their commitment to the business and we’ve picked up some new fleet business in the last few weeks.’
So are Britain’s fleet buyers putting their weight behind the newly-formed company?
Lewis said: ‘We have built our reputation in the LCV market on putting the customer first. That’s why we have such a loyal customer base and that’s why they are keen to continue their relationship with us.
‘We believe that when you buy a product from LDV, you enter into a relationship where the customer, genuinely, comes first. It is that philosophy that has paid dividends in recent weeks. We have not lost any business with key customers.
‘A good example of this is with those customers who had orders in the system for Pilot and Convoy prior to our decision to cease production. We have had discussions and they are switching their orders across to an equivalent Maxus rather than defect from the LDV brand.’
With the old Pilot and Convoy models now gone, LDV has just one van to sell. So does Lewis think this will affect his firm’s ability to sell to fleets?
He said: ‘Our 2006 planning base had always assumed the run-out of both Pilot and Convoy. Through the change of ownership we have brought the run-out forward and at the same time accelerated the Maxus minibus programme that we plan to exhibit for the first time at the Commercial Vehicle Show in April.
‘We see this a clear win-win position both for LDV and the customer base. We are introducing our bi-purpose and MPT range of vehicles this month and later this year we will be revealing our chassis cab range, so we have a busy year ahead of us.’
So what of the future? With Americans now at the helm of LDV, there are expected to be quite a few changes ahead.
Lewis said: ‘When the change of ownership was announced, we were clear that there would need to be a number of changes. There will be redundancies, primarily associated with the earlier-than-planned cessation of Pilot and Convoy, but all areas of the business will be affected to various degrees.
‘Talking with our new owners I know that they relish the challenge ahead as much as I do. They want to grow the business to realise its true potential and that is something every one of us at LDV can get behind.
‘We have an owner that has vast experience in developing businesses. They are one of the top 100 private companies in America with an annual turnover of $22 billion.
They have a stated policy of investment and development within their business portfolio and that philosophy carries across to LDV. We look forward to a period of investment and a resulting period of sustained growth.
‘We have done extremely well as a business over the past 12 years – we now need to use the positive platform of new ownership as the springboard to delivering a strong future. Our new owners have invested heavily in acquiring the business, they are investing heavily in accelerating our product programme. That bodes well for us all.’
All LDV’s dealers have had to sign new contracts and there were initial concerns about this. Lewis said: ‘We have a first-class dealer network that has led this industry for many years. I’d be lying if I didn’t say that they weren’t concerned at what they were reading in the press. We have held a number of dealer events throughout the country, introduced them to the new owners who have shared their vision for LDV Group business growth.
‘We needed to change all dealer agreements so that they could trade with LDV Group Limited and I have been delighted with not only the speed of their response to change but also that every dealer who we want to sell and service Maxus in the future has signed their new agreements. The dealers are as excited about the new model programme as I am and I know that we will work in close partnership and continue to deliver the best sales and aftersales package in the industry.’
LDV faces a huge array of new rivals this year – Ford Transit, Mercedes-Benz Sprinter and Volkswagen Crafter are all due on the market this year. So how confident is Lewis that the Maxus can match these contenders?
He said: ‘I am under no illusions about the challenge we face this year. What gives me confidence that our overall proposition can and will continue to be competitive is that we grew the Maxus sales volume to become the third best selling van in its sector last year.
‘We did that through having a class-leading product proposition backed by the strongest aftersales programme delivered through a first class dealer network. That’s a winning combination and that’s the platform we will be building on this year. That’s what grew the Maxus van volume from a standing start in April last year to over 1,000 sales in September and October.
‘We know that we cannot stand still and we will strengthen the end-user proposition through our ‘Additions +’ aftersales programme, which this month is enhanced by a tailored light commercial vehicle insurance proposition.
‘This market has become extremely competitive over the past five years. I believe the key to success is how you deliver a package of product and aftersales benefits that gives the customer a complete ‘peace of mind’ package that is tailored to meet their exact business needs. LDV does just that.’
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