BMW dealer in pole position to exploit our rising economy
Eddie Cunningham meets Gavin Hydes, the man behind the Joe Duffy motor group
Published 17/07/2014 | 02:30
BACK in 1970 a man by the name of Joe Duffy set up a garage on Dublin's Ballygall Road East. He was joined by Bill Thompson.
I'm sure they had their dreams and visions but they could hardly have envisaged their seedling of the seventies branching out into such an extensive motoring empire today.
Mr Duffy has since passed away. Today the Joe Duffy garage group is owned by four people and, effectively, run by one - Gavin Hydes. He is the chief executive officer and he owns 30pc of the company.
He's from Glasgow, energetically enthusiastic and, as I found in a previous encounter, says exactly what he thinks.
Gavin and I have had a fractious phone exchange or two in our time.
This time it's different.
Like two footballers who've had a couple of digs at each other during a game it's forgotten (I hope) after the final whistle. A mug of tea helps and face-to-face is always different anyway.
I wanted to talk to him because lots of people have asked: "Who's Joe Duffy?" It is not Liveline Joe but the name helps, I'd say. Who or what is Joe Duffy?
He mightn't like it said about him, but Gavin Hydes is the Joe Duffy group. He's running one of the biggest motoring shows of its kind and is likely to make sure it stays that way.
In his own words, he is responsible for the operational, strategic development and future growth strategy of the group.
Back in 1972, the original Joe Duffy was awarded the first BMW franchise here. He personally sold 90 of the 180 bought in the 26 counties that year.
Now the group turns over €150-€160m and currently employs 267. It will have 300 staff by the end of the year (up from 188 last year) and they are taking on several apprentices.
Yes, it's good news but Gavin insists the confidence out there is fragile. He's not being a cautious Glaswegian; he's being a hard-headed businessman on this. He has seen both sides.
He remembers going to the banks back in 2010 when the country was on its elbows and recalls the reaction he got when he told them he wanted to build a garage. In retrospect I think he has enjoyed overturning their scepticism.
In fairness to the bank, after lengthy consideration, it did back him.
Now it is a bit different.
I note there is a buzz around the place as we talk in his office at his large, well-known premises off the M50. He agrees, but reiterates it remains a delicate time in the economy's cycle.
"Consumer confidence is still fragile. There is still a nervousness."
Nonetheless he is, like many others, forecasting 100,000 plus new-car sales next year and 120,000 the year after. Not bad, considering the number was only in the high 70,000s in 2013.
There is no sense of hoopla at the prospect of brighter horizons.
He reckons, pragmatically, that his projections for 2016 sales are still at least 20,000 below what they should be in ordinary healthy economic circumstances.
It is calculated that 140,000 new-car sales a year is the minimum needed to maintain a realistic refreshment of vehicles on the road and to keep the average age at a reasonable level. Despite what some might think, we don't own that many cars. The EU ownership level is 484 for every 1,000 of population; ours is 400, so there is some catching up to do.
Like many others, he is concerned about the number of rapidly ageing cars here. Of even more acute concern is the chasm widening between what an elderly trade-in is worth and the cost of a new model. That 'cost of change' is just too prohibitive for most.
Personal Contract Plans (PCPs) are going to be a big help and give people a way back in, but buying new may remain too big a step for a lot of motorists.
Which is why Mr Hydes laments the rejection of last year's proposals for a swappage scheme by finance minister Michael Noonan. That would have allowed people with cars of six years and older to get a VRT rebate worth €2,000 if they traded in against a new vehicle.
"Swappage was a no brainer," he says. But it just didn't happen. It almost certainly won't happen this year (my words not his) as sales have taken such a steep upward curve.
Given the amount of tax the Government takes from the purchase of a car, however, €2,000 doesn't seem excessive.
He has figures at his fingertips.
"The average Joe Duffy car pays about €10,000 in tax."
I ask him to repeat that: "€10,000 between VRT and VAT." It is a lot of tax out of anyone's pocket.
He is frank about the company.
He owns 30pc of the business. There are three others.
One-third of the current management staff started out with the organisation.Turnover this year will be in the region of €150m/€160m.
He says it is "important" that his group now has so many outlets and such a geographical mix of brands in the greater Dublin area.
But what about the man behind the Joe Duffy group name? What drives him?
He doesn't really answer.
Oh dear - are we heading for another showdown?
I have to repeat the question a few times. Finally he settles to answer. Now that I read it back it sounds a wee bit trite. Face to face he meant what he said.
"It's about doing a good job. It's not about the money, really."
I look deeply sceptical.
He senses the scepticism and counters: "There are easier ways to turn over €150m.
"(That's because) the average car retailer is doing well to take a 1pc margin on business."
And then: "The margin for failure is so huge that you don't make a lot - but you can lose a lot."
He reckons that 50pc of dealers across the country - whose numbers have plunged since the good old days - are still not making any money. "But if the market comes back they will make a bit more."
We return to Middle Ireland where people just can't make up the difference between the value of their car and a new one.
Facts again. Back in 2008 there were 826,000 cars in the relatively young under-five-year age group. Last year there were just 385,000 in that bracket. It's a stark reminder of just how few new models have been bought since the recession hit.
He is also conscious of the huge road tax some people are paying on the older, thirsty motors. "For some people with gas guzzlers, it would be almost as cheap to buy a new car."
And then the crystal ball comes out. "Next year is going to be different because there will be less of a stigma attached to having a new car."
And secondhand imports will continue because they are helping alleviate the demand for secondhand cars, especially for buyers who just can't reach to a new model.
It isn't so much about the price gap between the UK and here any more. "It's a by-product of not having our own (Irish) stock."
The increasing level of new-car sales should ease that problem in the medium term, he believes.
There is a long way to go and a lot of ground to make up for the lost years. He is certain of that.
And I am certain that, if he were to ask for money to build another garage today, it wouldn't take the bank as long to make up its mind as it did back in 2010.
That's what confidence does. And it is in plentiful supply when you 'talk to Joe'.