USED TOURER SPECIALIST The Caravan Company says the deal to buy 165 tourers from Discover Leisure's administrators means there are bargains to be had at their four UK branches.
We reported in our January issue of Practical Caravan magazine, administrators KPMG were appointed to multi-site dealer Discover Leisure in October 2011. It has since closed the business and sold most of its assets, a big part of which were the 165 new and used caravans. These were bought as a package by The Caravan Company. The firm is jointly owned by long-term business partners Andrew Scott and Paul Clarke. It operates from sites in Leicester, Northamptonshire, Reading and Wimborne and specialises in used caravans. We visited Leicester in early January to get the latest news from Andrew Scott.
Andrew Scott with some of the former Discover Leisure stock in Leicester
Andrew knows a lot about administrations. He and Paul learned the hard way in 1991 as directors of Quality Caravans of Leicester, then one of the biggest dealers in the country. The business was highly dependent on borrowings following a big investment in new premises and could not survive the sudden withdrawal from the market of one of the major providers of stock funding. Receivership followed within days and they had to watch as the company was dismantled.
Although he doesn’t say it, Andrew must be justifiably proud that 20 years later, The Caravan Company has the strength to buy such a big package of caravans from an administrator and offer them as bargains to its customers.
He tells the story of the new company's growth; “In 1993, two years after the closure of Quality Caravans, we started again, with £7500 working capital from my grandmother. We bought and sold used caravans, usually paying for them after we got the money! Eventually sales grew enough to support the premises here in Leicester and we developed the business based on a strict model of selling only used vans and keeping overheads low. In 1996 we increased geographical coverage by buying Wimborne Caravans in Dorset but it was 10 years until we had generated enough profit to fund our next expansion, which was at Finedon in Northamptonshire. The last piece of the jigsaw was put in place in 2009 with the purchase of the Reading site, the largest in the group.”
Doing the deal
Turning the conversation back to the Discover Leisure vans, Andrew explained that administrators prefer to sell stock in single packages rather than allow potential buyers to cherry pick. He said, “We were able to secure the £1.5m deal because we could pay immediately. We also had to collect all the vans within a week and that was a big logistical challenge. They were spread around the Discover sites and we wanted a selection at each of our four sites. We didn’t get much sleep that week!”
Countering the suggestion that buying a mixed bag of stock could threaten The Caravan Company’s image for quality vans, Andrew said he knew Discover had a policy of retailing only prime used vans and selling others off to the trade; “The vans on offer ranged from 2005 to 2011 and 25% of them were un-used Swift, Bailey, and Elddis. I also knew that they had been through Discover’s workshops before being put on show. We checked all 165 before putting them on sale and found very few problems”.
Clearly this is a good deal for The Caravan Company, but we wanted to know how customers could benefit. Andrew explained that the proposition for customers is no different to normal, except that a greater choice of vans is now on display
“We always focus on buying well; that is what we specialise in because used caravans don’t simply arrive in part-exchange for new ones like in most dealers. We buy popular product in good condition and our volume of business allows us to offer low prices – we aim to be £500 to £1000 cheaper than others.”
One of the Caravan Company’s operating principles is unusual but we can see why it works. The workshops do no servicing work. Instead, customers are put in touch with reputable mobile servicing units which are convenient and usually cost less. “It keeps overheads low and staff focused on vans for sale”, says Andrew.
To ensure good quality and low warranty costs on sold vans, the workshop staff are instilled with the mantra “We only want to see it back in part-exchange” but Andrew stressed that any after-sales issues that do arise are dealt with promptly. “One of our workshop staff does a detailed hand-over of every van and he remains that customer’s contact in case of problems. We rarely have vans back here but, if we do, the target is to fix the problem while the customer waits.”
When we visited Leicester, about 25% of the ex-Discover vans had been sold and Andrew was quite bullish about the market this season. He believes manufacturers will be cautious due to the economic situation and there will be a shortage of new vans. Dealers will turn to used sales and prices are likely to rise as the season progresses as stock levels dwindle. If you agree with him, start looking for your bargain van soon!