28 November 2016

Through the first six months of this year the level of acquisitions by large groups of smaller groups was significant. The deals just kept on coming and group statements kept pushing the ‘growth through acquisition’ line.

However, in recent months takeover activity has been much quieter and almost non-existent.

At first I put this down to the Brexit vote being a turning point. Not in terms of the current economy and consumer spending, but in terms of business certainty and exchange rates.

In the past week I’ve heard, from two different sources, that at least two take-overs were put on (possibly permanent) hold.

However, speaking to one senior retailer there is another factor to put into the mix. Those groups that have been on the acquisition trail of late are still being offered viable (and some less viable) businesses, but like the new car registration figures, it’s possible we’ve reached a peak for the price of an auto retail business. Apparently the deals are still being negotiated, it’s just that those doing the buying won’t pay top dollar.

Backing up this theme is the SMMT’s prediction of that next year’s new car market will be down 5% to 2.5 million in 2017 from the 2.7m expected this year. And unlike recent years where if you added up all the individual OEM targets for retailers you’d get to something like 3.5m new cars, I hear that, with one or two exceptions, the average target figure is inline with the SMMT forecast.

So hopefully we’ll see a few more acquisitions in the near future which, I think, will give the market a bit more confidence for 2017.

Tristan Young
Editorial Director
Auto Retail Network

Tags: acquisitions, Blog, Brexit, SMMT