RRG plans to add German brands and grow territory

14/09/2012 in News, Dealer News

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RRG is considering expansion outside its north west heartland as it looks to double in size over the next three years.

The strategy was announced as RRG celebrates its 45th anniversary.

RRG currently has six franchises at 20 sales centres and 600 staff across the north west, selling brands Toyota, Peugeot, Lexus, Mazda, Suzuki and Kia.

It aims to double its number of dealerships and grow annual turnover from £323 million (2010 accounts) to £500m.

RRG plans to move into other brands and will target dealerships within an hour's drive of Manchester.

Each new dealership adds around 30 staff to the group.

Joint managing director Tony Cliff told the Manchester Evening News: “At the moment we are very reliant on Japanese brands and we would like to diversify, although our main partners will always be Toyota and Lexus.

“We would like to add German marques to the stable and would like to do more business with Peugeot.

“Primarily, we are looking at businesses within an hour of Manchester. That could include Yorkshire, Liverpool, Warrington and Stoke.

“But if a business is further afield and is the right fit for RRG, we would also look at it.

RRG, based in Salford, was acquired by Japan's Marubeni Corporation in November 2000.

Joint managing director Arran Bangham said: “Acquisitions will consist of good profit-making businesses in keeping with our north west regional focus to create further growth opportunities as well as portfolio balance."

RRG's financial performance demonstrating its strong position to take the acquisition/expansion trail. Source: AMi

RRG location map demonstrating its north west focus. Source: AMi

Author
Jeremy Bennett
01733 468261

RRG Group

With a workforce of more than 650, the RRG Group has 19 dealerships across six franchises - Toyota (9), Peugeot (2), Lexus (3), Mazda (3), Suzuki (1), Kia (1) – and two accident repair centres.

In 2008 Norton Way Motors was bought by Japanese Marubeni Auto Investment.

This was the third large acquisition for Marubeni, which bought RRG Group in 2000, and acquired four Smith Knight Fay Toyota and Lexus dealerships in 2006 from European Motor Holdings. It takes its turnover to more than £420 million.

The acquisition of Norton Way added one Peugeot, one Mazda and two Honda dealerships to Marubeni's portfolio, which until then had focused on Toyota, Lexus, Peugeot and Mazda through RRG Group.

Norton Way's Chiswick Honda site was the UK's first Honda brand centre, selling its full range of cars, motorcycles, garden equipment and tools.

RRG latest acquisition to its franchise portfolio is Suzuki. The appointment came in 2010 with RRG Suzuki opening in Stockport in a purpose built facility.

RRG Group and Norton Way’s turnover exceeded £322 million in 2010 on new cars of 22,200 and used 1,080 units.

Toyota (GB)

Toyota has endured two challenging years which have seen its sales slip, caused by both internal and external events. The challenge now is to halt the slide in 2012 and return to growth.

A product offensive will go some of the way to delivering that increase, including the first full year of new Avensis and Yaris, along with a host of hybrid launches, covering Yaris, the Prius+ seven-seat MPV and Prius Plug-in.

There is also a focus on maintaining consistency of service across the retail network and ensuring dealers are profitable by ensuring customers stay in the franchised network for servicing work as their vehicles get older.

Retention of the 0-8 year Toyota parc is around 34%, compared to about 60% for Lexus.

Note: Manufacturers administer the franchised contracts for cars and LCVs in different ways. Broadly, for some the contract to sell cars and LCVs is managed through a separate dealer contract. For others one contract covers both vehicle types.

AMi seeks to acknowledge the difference and reflect it in the count of each dealer groups total franchised outlets (franchised businesses) and sites (locations).

Toyota administers car and LCV sales under a single contract.

Lexus

Lexus total sales last year were just behind where the brand was in 1999 but model development has recently seen a resurgence in demand.

The CT200h has been hailed as the model that Lexus 'has been crying out for' to ramp up sales through its dealer network.

The CT200h is the first compact five-door car from the Japanese prestige brand. This is also the lowest priced Lexus, costing from £23,485. The carmaker wants to ramp this up to 10,600 by 2012, and CT200h will account for more than half of that total.

Customers are expected to come from other premium brands as well as mainstream ones, including Lexus’s parent Toyota.

Toyota GB’s research shows that 10% of Toyota owners leave the brand each year to upgrade to premium models, but only 10% of these have bought a Lexus until now because there was no compact, lower priced cars in its range.