Auto Retail Agenda: 23 May 2022
20 May 2022
- MERCEDES TO SELL LONDON SITES TO SYTNER
- RETAILER ROLE TO ‘COMPLETELY CHANGE’ FOR SMART
- COST OF LIVING CRISIS WILL IMPACT CAR SALES
- AUTO RETAILERS ON SUNDAY TIMES RICH LIST 2022
- CARVANA WOES CONTINUE
- FORD CONNECTED CAR SALES BANNED IN GERMANY
- STOCKWATCH: Pendragon down 15.3%
- COMING UP: Auto Trader results
- MORE INTEREST RATE RISES FORECAST
- M25 ULEZ PROPOSED FROM AUGUST 2023
Mercedes to sell London retail sites to Sytner
Mercedes-Benz is nearing its aim of exiting retail in the UK with the sale of most of its London franchises to Sytner Group.
US giant Penske Automotive Group, which owns Sytner, is understood to have signed an agreement to buy the north London dealerships of Mercedes-Benz Retail Group, with completion of the deal expected in the third quarter of 2022. The sale is also thought to include the aftersales operations in Chelsea, Heathrow and Stratford.
Mercedes first stared the sell-off of its owned dealerships in 2016 when it sold the Manchester and Birmingham market areas to Chinese-owned LSH 14 years after it was formed. Rumours of the sale of the London dealerships had been circulating ever since. The manufacturer had stated early in 2021 that it was examining the potential sale of the Mercedes-Benz Retail Group.
Mercedes operated nine showrooms in London until the end of last year when it sold its Epsom business to Sandown Motors.
Mercedes-Benz World in Weybridge, which is part of the manufacturer’s retail group, and the south London sites in Croydon, West Bromley and Dartford, are not included in the sale to Sytner.
Sytner is currently Mercedes biggest partner in the UK with 14 franchises.
While Penske has not been a proponent of the switch from franchised to agency agreements, Auto Retail Network’s sources have suggested Mercedes planned move to agency agreements could have helped the sale. This is because under the new sales model, not only is a fixed fee paid by the manufacturer to the retailer for each new car sold, but there should also be a fee paid for the costs of the sale.
In reality, this means not only will stock be financed by the manufacturer, but also the locations at which the stock is held – something that is particularly high in urban areas.
Retailer role to ‘completely change’ for Smart
Mercedes-Benz sister brand Smart will relaunch in the UK this week with an all-new family car and a “complete change” for the retail network, according to Smart CEO Dirk Adelmann.
Speaking at the FT’s Future of the Car conference last week, Mr Adelmann set out the brand’s approach to distribution, which will involve a partnership with leasing giant ALD.
Commenting on the future direct sales model for Smart, Mr Adelmann said that while he wasn’t “forcing customers to buy online”, ALD will be providing a full “digital capability” for Smart.
Mr Adelmann added: “The dealer role will completely change or evolve. In the past they were basically pushing metal for OEMs. So if you [an OEM] had a problem you could shift it to your dealer body and the dealer body takes care of it.
“In the direct sales model, that’s no longer possible. So you should, together with your partners, protect your residual values yourself. And to that you need more than just leasing, you need other models to spread the risk a little bit.”
He added that subscription and car sharing models were also being considered and that to achieve cost savings Smart needed to “rework the sales model”.
Smart’s new car, called the #1, is a fully electric small family SUV that will rival the Mini Countryman. The #1 has been developed with Chinese firm Geely which owns Volvo, Lotus, LEVC and a host of other brands around the world.
* Read more on agency from the FT Future of the Car Summit in next month’s Auto Retail Profit – subscribe here
Cost of living crisis will impact car sales
Almost 1 in 4 car buyers say they will delay their next purchase due to the rising cost of living. 7 in 10 car sales will be impacted in some way, according to research from eBay Motors Group’s Consumer Insight Panel. Nearly 30% will buy a cheaper car and 20% will buy a smaller one.
Auto retailers on Sunday Times Rich List 2022
Cargiant’s Geoffrey Warren is the leading auto retailer on the Sunday Times Rich List 2022, with a wealth of £2.5bn. This is up £1.1bn on 2021, moving him up from 114 to 68. Arnold Clark’s Lady Philomena Clark and family saw their wealth grow £126m to £1.2bn, moving them from 151 to 135.
WORLD NEWS
Carvana woes continue
Carvana has had its retailer licence in Illinois suspended, following the opening of a police investigation into consumer complaints. The investigation consists of around 90 signed complaints. It surrounds titling and registration issues, something it has faced in other states. It narrowly avoided having its licence suspended in Florida and has only recently had its licence to sell in North Carolina restored.
Ford connected car sales banned in Germany
A nationwide sales and production ban has been placed on Ford cars able to connect to the internet. It is part of a lawsuit over a violation of wireless technology patents, although it is not legally binding and can be appealed. Ford declined to comment.
STOCKWATCH
Closing prices on 20 May 2022 and weekly change
Pendragon down 15.3%
Auto Trader Group 550.6p (-9.2p / -1.6%)
Caffyns 550.0p (n/c)
Halfords 215.0p (-12.8p / -5.7%)
Inchcape 699.5p (-13.0p / -1.8%)
Lookers 68.5p (-3.7p / -5.2%)
Marshall Motor Holdings 395.0p (+1.0p / +0.2%)
Pendragon 22.9p (-3.8p / -15.3%)
Vertu 54.3p (+2.5p / +4.7%)
COMING UP
Tuesday, public sector net borrowing
Wednesday, Aston Martin AGM
Thursday, Auto Trader finals
MONEY MATTERS
More interest rate rises forecast
Bank of England chief economist Huw Pill warns further monetary policy tightening measures are planned to bring down the rate of inflation. Quantitative easing will be removed and there will be a return to higher levels of interest rates. “We still have some way to go in our monetary policy tightening,” he said.
M25 ULEZ proposed from August 2023
Mayor of London Sadiq Khan plans to extend the Ultra Low Emissions Zone to the whole of Greater London. Consultation is underway for the expansion to the M25, which would take effect from 29 August 2023. A further 3.5 million Londoners would be impacted by the £12.50 daily charge. Petrol cars that don’t meet the 2005 Euro 4 regulation and diesels that don’t meet 2015’s Euro 6 are affected.
Tags:
ALD, Arnold Clark, Auto Trader, Cargiant, Carvana, cost of living, Ford, interest rates, LSH, Mercedes Benz, Pendragon, Penske, SMART, Sytner, ULEZ 
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