The UK’s huge share market-listed motor vehicle dealer groups – unmatched for scale and size anywhere in the world – look as if they have abandoned brand partnership and geographic strategy and are now in a dash for mass.
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Ken Surgenor, the chief executive of Lookers, gave a very clear idea of his own outlook on the future when he told just-auto that he thought that the final position for car retailing in the UK would be “five or six dominant players.”
Given that the largest player – Pendragon – still only has less that 3% of the market, there is a way to go before the market leader has the sort of dominance that supermarket giant Tesco – whose dominance is coming under increasing criticism – enjoys in food with 30%.
Lookers, though, knows the flavour of market dominance. It has 25% of the car market in Northern Ireland and creates a model for how the rest of the UK might look one day with 14 brands all trading from one 20 acre site.
But to get to a Tesco-type position, the dealer groups first have to come up with a Tesco-type name. At the moment most of them are saddled with as many as three brand names per site – the historic owner’s name, the group name and, dominantly – the car maker’s name.
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By GlobalDataThe Lookers approach has been to retain its best-recognised names in England, Northern Ireland and Scotland, namely Lookers, Charles Hurst and Taggarts.
Other groups, which only recently were deriding the need to develop retail brands, have started their own overhaul.
Pendragon is a company with sales of £3.2 billion earned from 244 dealerships on 213 sites in the UK, making pre-tax profit of £60.5 million.
Yet the name is barely known outside the motor trade and the City [London’s financial centre]. Now the 50 trading names that are used across the group are to be trimmed back to six and the Pendragon name will be highlighted.
Stratstone will be the luxury brand, CD Bramall and Evans Halshaw will be the name over the door for most of the mainstream makes.
Reg Vardy, with just under 100 dealers, has gone into battle with Mercedes-Benz. Vardy has already decided to use its name across all locations and is miffed by Mercedes’ refusal to allow the Vardy name over its own door. Vardy is otherwise down to just four brands – Reg Vardy, Victoria, Bushley and Trust.
The Office of Fair Trading is keeping a close eye on developments as a results of the rapid consolidation that has occured over the last 10 years. But the fact that buyers can find deals in neighbouring territories for a car of specific brand, and even shop across the channel in Europe suggests that there is not likely to be an issue for years to come.
The greatest hurdle is the speed at which growth can be achieved. An indication of maximum manageable annual growth is Listers of Coventry. It earned itself a place in the Sunday Times Fast Track 100 league by virtue of doubling turnover to£400 million in four years. At that rate it needs four more years just to get 1% of the national market.
With most of the ‘biddable’ mid-sized groups already gone, the league leaders face a series of piecemeal acquisitions to finally reach the position that they now believe will pay the richest price – national scale.
Rob Golding
