SG Contract - Evaluate commercial issues by Kirsty Walton

SG reputation for slow payments and high excess charges.

2025-07-11 13:24:01 UTC

Contract with SG is only for bodywork. Staff who carries out bodywork has to be specialised and RYC is not big on bodywork at the moment

2025-07-11 13:24:22 UTC

Increasing demand for bodywork - strain on specialist staff

2025-07-11 13:24:42 UTC

Rising demand for bodyworks and, shortage of bodywork trained staff

2025-07-11 13:24:54 UTC

Going to impact utilisation KPI

2025-07-11 13:25:35 UTC

Investment required for body work. The equipment only lasts for 5 years and is probably very costly to acquire. If it can only be used for SG work (and not other clients) the cost of the investment might be too high to justify the contract

2025-07-11 13:25:48 UTC

Staff utilisation

2025-07-11 13:25:53 UTC

The additional work may improve staff utilisation, increasing KPI 2

2025-07-11 13:26:20 UTC

The exclusivity to SG only will restrict growth in bodywork in the future.

SG is low cost, this doesnt align with RYC who take a more premium stance

2025-07-11 13:26:30 UTC

If successful then may allow them to get more insurance contracts in the future

2025-07-11 13:26:58 UTC

RYC have reputation for transparency and clear pricing, so SG may not align with their values

2025-07-11 13:27:04 UTC

Fixed pricing on proposed contract, what's the margins for us on those numbers? Should we charge more than Fixwell did?

2025-07-11 13:27:14 UTC

Fixed contracts

2025-07-11 13:27:16 UTC

SG want RYC to use their existing prices, maybe Fixwell are under-performing because they cannot generate a profit at these prices. As such, RYC may find that costs exceed revenues and losses are incurred.

RYC may not be able to hire someone of sufficient skillset given the labour shortage

2025-07-11 13:27:16 UTC

Fixed prices

2025-07-11 13:27:28 UTC

Prices have been benchmarked against Fixwell. RYC is known for its quality which attract more premium prices, therefore, this will put pressure on margins.

Exclusively have to perform bodywork for SG. Restricting RYC from other potential Bodywork opportunities which may arise.

2025-07-11 13:27:45 UTC

Hidden costs vs transparent pricing

2025-07-11 13:27:56 UTC

SG customers have uncovered hidden costs whereas RYC has a transparent pricing policy.

Expertise

2025-07-11 13:28:20 UTC

RYC and its management have no experience in bodywork

2025-07-11 13:28:32 UTC

Wide range of bodywork, do we have the right skills and staff for the work needed? Need to know what vehicles the contract would require

Slow payout times, are SG going to be the same for RYC's payments?

2025-07-11 13:28:52 UTC

Could damage cash flow given the investment and hiring of new staff required

SG seems to lack transparency on its pricing (e.g hidden charges). Potential damage to RYC reputation if associated with SG practices

2025-07-11 13:29:02 UTC

Will staff want to be trained in bodywork? there was push back on EV training

2025-07-11 13:29:10 UTC

RYC wants to invest in EV, if it directs its resources to train staff for the SG contract, it may lead to a delay in the EV related services

2025-07-11 13:29:35 UTC

SG has grown 'impressively' in its 18 months since setting up. There may be concerns that they have grown too fast and that this growth is unsustainable

2025-07-11 13:29:49 UTC

Limited availability of specialised staff required for bodywork (other garages have been struggling to find personnel too)

2025-07-11 13:30:19 UTC

Effect on cash position. Currently enough cash for the 90k + unexpected flex of 25%, but what about cash needed to get ev to 15%?

2025-07-11 13:31:06 UTC

May need to offer higher wages to attract mechanics of a sufficient calibre. Hit to margins and profitability

2025-07-11 13:31:12 UTC

SG Terminating contracts

2025-07-11 13:31:29 UTC

SG is able to terminate its contract immediately with Fixwell. Implies the willingness to do this again for RYC if they deem unsatisfactory. Need to review contract terms further.

Doesn't assist with increasing utilisation of garage's regular personnel. Need to assess if the garage has space and capacity for increase in usage from this client, or if this would impact being able to increase revenue from private customers.

2025-07-11 13:31:48 UTC

Staff will demand higher wages in light of recruitment crisis - making hiring expensive and SG contract unsustainable

2025-07-11 13:32:41 UTC

If customers have good positive experience with RYC when having to attend for insurance issue, this may lead to conversion to a private customer.

2025-07-11 13:33:16 UTC

With the proposed expansion of the business (a plan for 10 garages in total). The terms will limit the ability for other garages to take on this type of work even if there is capacity.

2025-07-11 13:33:33 UTC

Fixwell will now have more capacity for other work if their contract with SG ceases - might lead to further competition for other services, which RYC won't be able to combat due to lack of staff available

2025-07-11 13:33:40 UTC

Wants to retain Strongwell pricing however calculations based on regular mechanic rate - may be challenging to recruit high quality specialists and if so may require a larger salary hence increase in labour cost and decrease in contribution per job.

2025-07-11 13:35:15 UTC

If existing customers of RYC (who are also customers of SG) have a bad experience with SG, RYC may inadvertently be associated, leading to a drop in repeat business on which RYC relies

2025-07-11 13:35:28 UTC

If looking to make redundancies or forced relocation of staff in Camberley, may not look great that separately hiring two new staff members at the same time. Can current staff be upskilled instead?

2025-07-11 13:36:11 UTC

Our average price per job is £310 for repairs which is approximately 40% higher than the price SG requires.

2025-07-11 13:36:54 UTC

Cost of obsolete equipment if SG terminates the contract with us as well

2025-07-11 13:38:22 UTC

Re-training staff would result in further decrease of utilisation particularly in Garage C

2025-07-11 13:38:26 UTC

Slow payouts, along with the fact that SG was only incorporated 18 months ago might indicate going concern/liquidity issues at SG. Does RYC want to enter into this contract if SG is at risk of bankruptcy?

2025-07-11 13:40:47 UTC

If the Fixwell contract did not have a clause for termination, then SG is unethical in terminating the contract

2025-07-11 13:41:00 UTC

Article states that it has attracted 35k customers but SG told us 40k. Inflating figures to make Revenue and GP look more attractive to RYC?

2025-07-11 13:41:21 UTC

SG's slow payouts might also mean RYC's debts could be settled slowly - might cause liquidity problems? Need to inspect payment terms and enforceability in the contract terms.

2025-07-11 13:42:03 UTC

Investment in bodywork equipment (with life of only 5 years) may be a significant cost. This could be invested elsewhere for example in EV expansion project or opening more garages.

2025-07-11 13:42:06 UTC

Risk of being aligned with SG- bad press for SG may be bad press for us

2025-07-11 13:42:25 UTC

Due diligence needs to be performed on SG to ensure they are a customer RYC want to be associated with.

2025-07-11 13:42:40 UTC

Insurance has 21% industry revenue share which RYC is currently not involved in, opportunity to partner with a growing insurer

2025-07-11 13:43:36 UTC