They are worried by Ford-backed Pendragon's powerful position within PAG after it bought seven Jaguar and seven Volvo dealerships in last week's multi-million pound deal with Lex Service. Pendragon now has 24 Volvo and 16 Jaguar dealerships, alongside its 30 existing Ford outlets. Lex has pulled out of new car retailing.
The enlarged Pendragon will account for 15% of all Volvo sales in the UK and, according to inside sources, up to 25% of all Jaguars.
One Jaguar dealer told Automotive Management that independent franchise holders were “feeling vulnerable”. He believed Ford wanted to reduce the number of companies handling Jaguar sales to “only three or four people”.
Ford Motor Company already has a 49% stake in Pendragon's Ford dealership business and the company is committed to reducing costs in its distribution chain. Dr Wolfgang Reitzle, PAG vice president, is looking for consolidation between Jaguar, Volvo, Aston Martin and Ford.
Rob Thomas, Volvo network director for the UK and Benelux who sits on the PAG strategy committee, said: “There was certainly an awareness within PAG about the deal and we did discuss it prior to the agreement. Obviously Pendragon had to inform us at some time.”
But he moved to reassure Volvo dealers. “I don't think they need to be nervous,” he said. Andrew Lester, Jaguar UK operations director, said he was looking to build a network around the best possible franchise holders and the dealers were supportive of that strategic direction.
The deal, which saw Pendragon buy 32 Lex dealerships and four bodyshops for an initial £78m in cash, has made the company the dominant force in UK new car retailing. It will take Pendragon turnover above £2bn a year, give it more than 180 dealership locations and take its debt above £170m. Trevor Finn, Pendragon chief executive, said PAG was “not involved” in the takeover negotiations and decisions had been taken at “UK franchise level”.