23 December 2018

• STONEACRE TARGETS £1 BILLION TURNOVER
• BURROWS EXPANDS MAZDA REPRESENTATION
• RENAULT IMPROVES BUSINESS DEMO RESPONSE
• DRAGON2000 OFFERS RETAILERS LIVE-CHAT
• END OF THE ROAD FOR MPVs?
• WORLD NEWS – VW spends on virtual showroom sales
• STOCKWATCH – BCA up, Caffyns down
• COMING UP – NAMA National Executive meeting
• LAUNCH DIARY – Renaultsport Megane Trophy
• MONEY MATTERS – £17 billion loss for UK retail
• OUR BLOG – Life after Trevor

Stoneacre targets £1 billion turnover with more buy-outs

The Stoneacre group is eyeing further acquisitions as it builds towards achieving its target of a £1 billion turnover.

Since January it has taken over a Mitsubishi dealership in Nottingham, Burrows Hyundai in Sheffield and later added its Volvo site, Platts Stafford (Kia, Renault, Fiat and Dacia) and in September incorporated Mill Garages in the North East which it says could become the UK’s biggest Volvo retailer.  Stoneacre now operates from 46 locations and has 78 franchise sales points representing 20 manufacturers.

Reporting a pre-tax profit of £10.6 million, up from £7.9m in 2017 on turnover of £786m (£721m), the directors said: “Despite the continuing political and economic environment, particularly in respect of the future of diesel vehicles and negotiations surrounding Brexit, the Group continues to perform at record levels. The Group’s target of achieving £1 billion turnover will be achieved in the 2020 financial year and further acquisitions are currently being considered by the board of directors.”

Burrows expands Mazda representation

Mazda retailer Burrows is looking to recruit after taking on a second franchise and has vacancies in various departments.

Burrows, which also represents Toyota and Kia throughout Yorkshire and has one site in neighbouring Nottinghamshire, will absorb York-based Turnbulls Mazda into its operations.

While all the current staff there will retain their jobs Burrows has openings for customer consultants, a technician and a full-time valeter.

Renault improves business demo response

Renault is to place some of its central demonstration vehicles with its network of 68 Pro+ retailers from early next year in an attempt to speed the turnaround time on business demo requests.

The move coincides with the launch of a business user-orientated three-day test drive programme on the Megane, Kadjar and Koleos models.

“Rather than having our demonstrators in one central place where we deliver them to businesses all round the UK, we’re splitting that out so Pro+ centres will become integral to our corporate demonstrator fleet so we get more cars out on the road for people to test drive,” explained Renault’s fleet and remarketing director Mark Dickens.

Dragon2000 offers retailers live-chat services

DMS specialists Dragon2000 has teamed up with two live chat service providers, Talkative and Click4Assistance, to give a 24/7 response.

It’s Attended Live Chat has a UK-based agent who can put leads in the DragonDMS regardless of which website service the retailer has. The average live chat lasts 17 minutes. Non-Attended handles live calls taken through dealers’ websites in working hours.

A Dragon2000 spokesman said: “Figures show that 56% of automotive enquiries are made outside of 9am-5pm office hours, so this feature could make a real difference to your lead conversion.”

End of the road for MPVs?

Mid market MPVs face being driven to extinction by the popularity of SUVs with only the VW Touran still selling more than 100,000 units a year in Europe.

From a peak of 2.4 million sales p.a. in 2005 the market has dropped to around 1 million. In 2010 there were still 45 MPVs on sale but by the end of this year both Opel and Toyota will have dropped them, Hyundai and Kia follow by 2020 and Fiat by 2021.

Premium MPVs such as the BMW 2 Series AT and Mercedes-Benz B-class look stronger and are likely to survive.

https://bit.ly/2DHsbAc

WORLD NEWS

VW spends on virtual showroom sales

VW is targeting an extra £750 million in revenue by 2025 through a cloud-based marketplace for extra vehicle functions and online services. It expects revenue from connected vehicles and bundling parking, car-sharing and delivery services to start trickling in from about 2020 and wants to connect its entire fleet via an automotive Internet cloud together with partner Microsoft.

Juergen Stackmann, VW brand head of sales, said Volkswagen wants to transform itself from a mass manufacturer of cars into a provider of transportation services. In August, the VW brand unveiled a car-sharing service and promised digital acquisitions as part of a £2.75 billion push into next-generation automobiles. It recently bought a controlling stake in fleet-connectivity provider WirelessCar from Volvo for £850 million.

https://bit.ly/2Rb0t54

STOCKWATCH

Closing prices at December 21 and weekly movement

BCA 213.5 (+13.5p)

Cambria 54.5p (+2.0)

Caffyns 375.0p (- 30.0p)

Inchcape 540.0p (+9.5p)

Lookers 88.0p (-5.8p)

Marshall Motor Holdings 155.0p (n/c)

Motorpoint 199.0p (-3.0p)

Pendragon 21.5p (-2.2p)

Vertu 35.5p (n/c)

COMING UP

January 22: NAMA National Executive meeting (London)

LAUNCH DIARY

February.

Renaultsport Megane Trophy. 296 bhp range flagship. From £31,810

MONEY MATTERS

£17 billion loss for British retail in 2018

Around £17 billion has been wiped off the value of the British retail industry after a brutal year for both high Street and online businesses.

The FTSE 350 general retailers index which includes household names from Marks & Spencer and Next to Debenhams and Dixons Carphone has fallen 27% this year.  Asos and Boohoo, online fashion retailers not included in the index, have also suffered, falling 66 and 16% respectively.

Laith Khalaf, analyst at savings and investment firm Hargreaves Lansdown, said: “Consumers are spending more on experiences rather than products, and when they are making purchases, they’re increasingly doing so online rather than wandering down to their High Street. We’ll get a host of Christmas trading updates in January, and the hints we’ve seen so far suggests it’s not going to be pretty.”

https://bit.ly/2RcLUOj

OUR BLOG

Life after Trevor

When I first started writing about the auto retail industry, just over 20 years ago, Pendragon was already established as one of the leading players. Its chief executive, Trevor Finn, was our ‘go-to’ guy for quotes and background on which way the business was heading.

Several years later, I was working as a consultant to Lookers during the bitter takeover battle over Reg Vardy –and subsequent attempt by Pendragon to buy Lookers itself. When we were launching Auto Retail Network in 2004, the first outsider I showed a dummy copy of Auto Retail Bulletin was Trevor Finn. So, one way or another, Finn has been alongside me through some major turning points in my life –though he never has subscribed to Auto Retail Network!

Whatever else you may feel about him, Finn has always been an innovator. Under the guidance of his original chairman and mentor, Nigel Rudd, Pendragon plc was always City-focused. Share price and shareholder value seemed to matter more than operational excellence and, while the share price may have had its ups and downs, major investors have always backed him. Finn believed he could achieve economies of scale and take cost out of running auto retail groups. He believed in centralised services and strict operational control. The downside was that staff at dealership level had little decision making freedom and many of the best people got frustrated and went to work for other groups.

When news of his retirement broke, it was not really a surprise. Rumours that the board were looking for a replacement had been circulating for some time; profit warnings have taken the shine off the share price; and the recent shift in focus towards used cars makes sense operationally but is not necessarily a message that shareholders want to hear.

So, where now for Pendragon? The share price rose briefly on the news but has since dropped back, making the group more vulnerable than ever to takeover. We know people are looking –buying the whole and then breaking it down into its trading divisions to add value would make some sense. The issue is unpicking the complex financial arrangements that the group has in place. Pendragon has dominated the auto retail industry since the demise of Lex but big groups do come and go.

Trevor Finn will have earned his retirement and the board may be looking for a successor. But, without its driving force, I think the writing is on the wall for PDG.

Rupert Saunders

Managing Director

Auto Retail Network

Trevor Finn to retire as PDG boss

Tags: Auto Retail Protect, Burrows, Renault, Stoneacre, Trevor Finn