PROFILE Peter Vardy: Super salesman without the spiel
Richard Phillips meets a car dealer who is worth pounds 51m but proud to earn a salary of just pounds 46,000
Sunday 30 July 1995
No longer. As the bottom fell out of the market, car dealers approached August in a more cautious frame of mind.
Peter Vardy, who runs motor dealer Reg Vardy, fits few, if any, of these stereotypes. For a start, he is looking forward to August.Gloomy forecasts that car sales will barely improve on the 452,000 cars sold last August do not faze him. "For us, the August numbers are coming in very well, on specialist car sales and in our volume franchises," he says. The Mercedes and BMW dealerships especially are where Reg Vardy can clean up, as company man flocks en masse to buy his new N-reg car on 1 August.
Mr Vardy defies convention in other ways. When he took over the business after his father's death in 1976, there was just the one showroom in Stoneygate, on the edge of Sunderland. Its roots were in the pit communities of the North-east, but Mr Vardy took the unusual step of expanding the business into luxury car marques. "I thought, 'If I'm going to sell cars, then I ought to sell the best cars there are'."
At one time, his Sunderland showroom was the world's biggest dealer in Aston Martins - not the sort of car you readily associate withmining villages. The success of this move was, in part, down to the absence of any real local competition. The early Eighties saw a growing class of entrepreneurs, eager to mark their arrival with the purchase of a Ferrari, Rolls-Royce or Aston. The company now has 40 showrooms across the country, including franchises for nearly all the volume car manufacturers.
Nearly-new cars have become an important part of the business, a market Mr Vardy was one of the first to exploit. The collapse of the new-car market in 1989 created this segment. As manufacturers found it increasingly difficult to persuade dealers to stock their models, they asked car rental firms if they would prefer to change their hire cars twice a year, rather than once. Soon it became possible to buy an ex-rental car three months old, with much of the instant depreciation that new buyers suffer removed.
Other than selling expensive cars, and occasionally driving the ubiquitous Jaguar, there is precious little that could be called flash about Mr Vardy. And unlike the Arthur Daleys of this world, he is very rich. His 42 per cent stake in the company is worth pounds 51.07m, on Friday's closing price of 262p a share. The company has come a long way with Mr Vardy, now 48, at the wheel. Reg Vardy's value has risen four-fold since it floated on the Stock Exchange in 1989, when it numbered 18 dealerships. It is now the the 11th largest dealer in the country, according to figures from the Retail Motor Industry Federation.
Last month, it unveiled remarkable full-year figures, announcing a 31 per cent rise in pre-tax profits to a record pounds 11.02m. Shortly after the results, Mr Vardy sold shares in the company for only the second time, when he disposed of 3 million, after the institutions had clamoured for stock.
So how has Reg Vardy managed to grow, right through the longest recession since the Twenties? Britain's motor-car dealers have always been in an unusual position vis-a-vis the manufacturers, who have traditionally called the shots. Manufacturers decide if a dealer is awarded a franchise, and impose strict rules on how the cars can be sold, unlike other retail businesses, where the end seller exerts the influence over its suppliers.
But manufacturers have been impressed by the Vardy approach, not least its commitment to volume selling. Franchises, or "opportunities", as Mr Vardy calls them, soon began to pile up. This year, six new franchises have been added.
The downfall of Octav Botnar, the Nissan king of Britain, was also a stroke of luck. Reg Vardy was appointed a Nissan dealer in 1991, and opened a flagship showroom near Nissan's Sunderland factory. It now has three Nissan dealerships.
Physically imposing - he stands 6ft 4in - Mr Vardy is a man not many would trifle with. He has few detractors. There is a strong City fan club, based on his down-to-earth approach, and a track record of delivering on promises.
He is proud that his annual salary is just pounds 46,000. Of course, he is compensated by his dividend, which topped pounds 1m last year. But he says the money from the dividend goes to a charitable foundation: "I have never wanted to live the high life, so I don't need the money."
Mention of the shenanigans of the Greenbury Committee draws a rueful response, and a faint bewilderment that such confusion ever arose. He is angry with the committee's original recommendation. When Reg Vardy was floated at 90p in 1989, it was a chance for staff, not just institutions, to buy into the company, he says. He feels the Government let down managers with small share option packages. "The news that our managers would be taxed on their gains gave rise to a lot of ill-feeling," he says.
If he has been disappointed by the Government's current performance, he hides it well. "The time of Margaret Thatcher created an environment where small businesses could flourish, and we did" is his only hint that things might be better managed nowadays.
As Mr Vardy's wealth has grown, so has his influence. He has struck up a close friendship with Sir John Hall, the moving force behind the remarkable resurgence of Newcastle United football club and the Gateshead Metro shopping centre. Like Sir John, his outlook is tinged by idealism, inspired perhaps by his religious faith - he still plays piano at the evangelical Bethany Church, which his father attended. With Sir John, he struck a sponsorship arrangement with Newcastle United. It was probably this that prompted stories that he was poised to emulate Sir John and step in as saviour of the club on his own doorstep, ailing Sunderland. But he says he has never had time to develop an interest in much outside work.
As a schoolboy, Mr Vardy went to Durham Choristers and then Durham School, leaving at 16 with one O-level in music. Perhaps it is his regret at lacking qualifications that his charitable interests are focused on education. He helped found Emmanuel College, a City Technical College in Sunderlandwhich now teaches some 900 children, two-thirds of them from deprived backgrounds. Local response to his involvement was hostile initially. "I was pretty battle-scarred after the first few months, but it only made me more determined to see the thing through."
While the response to the CTC concept nationally has veered from yawning indifference to condemnation, Emmanuel's exam results make it one of the best CTCs in the country.
There is one more reason why Mr Vardy is unlike other car dealers. He didn't try to sell me a car.
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