INTERVIEW: Peter Vardy, car dealer
‘Sharing profits with staff is the right thing to do’
Peter Vardy grew up surrounded by cars. His grandfather Reg launched the eponymous chain of motor dealers in north east England and his father, also Peter, took the business to the stock market.
Even so, it was never expected of the youngest son that he follow the same path.
“My dad tried to put me off,” he says. “He pressured me, my brother and sister to do something else. He didn’t want us to think we were obliged to do it.”
It didn’t work. He began working at Reg Vardy at the age of 15, serving petrol in his school holidays. At the age of 16 he had sold his first car.
The young Vardy was sent up to Loretto school in Musselburgh and from there went to Strathclyde University, graduating with a first class honours in marketing and human relations. Despite his father’s cautious advice, he decided that there was only one thing he wanted to do: run a chain of motor dealers.
After a brief spell as general manager of Rossleigh Jaguar Edinburgh his chance came with the sale of the family business to Pendragon in 2006. With his share of the £506 million proceeds he set up Peter Vardy Ltd in Glasgow and bought his first dealership in Perth.
Ten years on the Vardy name lives on with 12 showrooms and plans to grow from its current £48m valuation into one worth £100m in five years time.
Vardy is still a young man, just 37, and has plenty of time to do something else should the thought cross his mind.
“No, I don’t think about that. Not in the slightest. I have some great people around me and we’re making progress,” he says.
To mark the firm’s tenth anniversary he has just rewarded each of those people – his 800 employees – with a share of £5m in shares in the company. The scheme was announced to the staff annual conference in Perth in January but the size of the bonus was only revealed last week.
Vardy says he wanted his workforce to share the company’s success, although he admits some of the company’s advisers were not sold on the idea of giving away such a large proportion of its value. He argues that it makes commercial sense because it motivates employees, helps attract new talent, and retain them in the business.
Staff will be given the chance to buy share options and as long as they stay with the company for at least three years they will get the chance to cash in their options and benefit from a loyalty bonus.
There is also a philanthropic element to the scheme. Vardy hails from one of Britain’s wealthier families which also has strong Christian values. It has invested in charities and education. The ethos of doing good is built into him.
“I believe every life is worthy and I believe sharing profits with the staff is the right thing to do,” he says. He has carried this into his own business philosophy. Every year the company donates 10% of its annual profits to charities and similar organisations,
However, none of this is possible unless the firm is successful and the shares scheme is being implemented on the back of buoyancy in the car buying market. Profits are rising by between 30% and 40% a year, despite margins of just 1%.
Growth is achieved through “lean” processes. Seeking out more efficiencies is partly behind plans for the next phase of development which will take the industry deeper into the online market.
He’s not giving much away, although he said in a previous interview that his aim was to make the group a “virtual motor company”, similar to the strategy of other retailers who are “following the consumer”. He wants to integrate the showrooms with an online platform in what he describes as “a concierge service” and says details will be unveiled soon.
For now he is hoping sales start to resume their three years of growth after a recent softening of the market, caused mainly by the European Referendum.
“It always happens when there is uncertainty around. Consumers choose to hold off until things get clearer,” he says.
Education: Loretto School, Strathclyde University (marketing and human relations)
Career Highlights: Sold first car at age 16; set up Peter Vardy Ltd in 2006
What is your company mantra?
Healthy discontent. The idea is that you can always get better.
You want to double the value of the company to £100m over five years. Is that realistic?
Buying other dealerships is clearly part of the plan. But, oh yes, I am going for it.
What drives you?
I am competitive. I want to win. But it isn’t about the money. There are a lot of causes we can help.