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Breakaway Scots form savings 'clan'

Twelve leading Scottish motor dealer groups with a combined annual turnover of more than £500m are forecasting big savings through a buying consortium.

They are joining forces to drive down the price they pay for goods bracketed as "controllable costs". Each group believes it can save more than £1m a year which could double the profit of some.

Already plans are being made to extend the consoirtum south to northern England. The Scottish groups already committed to the Scottish Motor Dealers' Buying Group are remaining anonymous until an official announcement later this year. They intend to buy tyres, batteries, exhausts and many other supplies and will defy a similar programme devised the Scottish Motor Trade Association.

Heading the web-based enterprise is Paul Barnett, managing director of Dundee-based Barnetts Motor Group. He said growth in the strength of 'Scotland plc' signalled the unification of dealers in Edinburgh, Glasgow, Aberdeen, Dundee, Inverness and elsewhere.

"We aim to deliver substantial savings of around 5% to everyone on board," said Mr Barnett."The response to the initiative first muted in August has been positive. One reason we're all keen to be on board because we're competing against each other on car pricing.

"It is a pure cost-saving exercise. Barnetts has a turnover of £30m and will see a saving of at least £150,000 in our first year.

"We want as many dealer groups as possible in Scotland to benefit in the same way before we take the idea further afield and approach dealer groups in Newcastle upon Tyne, Carlisle and further south."

Mr Barnett, who will pass over the running of the group to an elected management team, is eager to see the group expand further.

Dealers will pay a £750 join-up fee and then a percentage - believed to be between 10% and 20% of the cost saving - to cover administration costs. Douglas Reid, who formed Motor Dealership Group to negotiate on behalf of SMDBG, has opened talks with major suppliers.

Initial proposals from the SMTA asked that dealers pay a percentage of the invoice price rather than percentage of the saving.

The SMDBG's targets for savings include credit card charges, telecoms, system maintenance and support, utilities, fire extinguisher servicing, skip hire, tyres, batteries, exhausts, workshop consumables, cleaning chemicals and branch maintenance goods.

The group is targeting everything which does not need to be purchased through their manufacturers and early examples of savings are impressive. Two leading tyre makers have indicated significant savings for an annual order of around 100,000 tyres. Longterm plans will see SMDBG open negotiations with two leading petrol companies with a view to agreeing exclusive use by the member groups.

The new internet-based system, which officially starts operating on November 1, has been designed to allow online bidding. Suppliers keen to offer deals to the consortium will be password protected.

Members will be able to enter the volume of goods they want to order, the price they are paying and when they wouold be free to start the new contract. It will also ensure dealers do not have access to confidential information supplied by other members.

Once ordered, the goods will be delivered to the individual dealerships and the groups invoiced separately.

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