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Lancaster's dream: the Harrods' factor

##Lancaster(3)--right##Nick Lancaster was sent down from the dealers' sons' engineering apprenticeship scheme run by Vauxhall because his boredom showed.

He was more interested in selling cars from his digs, knowing that was to be the basis of his business life.

The late Ronnie Lancaster gave his son a job cleaning cars at his dealership but the ambitious Nick left to work at a Ford dealership at Onger, Essex. Ronnie put in some money, then took control of the business and together they started to build what has become Lancaster plc, No2 in the AM100 with a £1.6bn turnover.

Lancaster plc is now controlled by Jardine Motor Holdings which first took a stake in 1981 and provided the capital to speed growth. Nick Lancaster became joint chief executive of the Hong Kong-based conglomerate's motor interests but grew tired of endless globe trotting to manage “a successful but soggy business”.

In 1992 he took control of Malaya, a USM-quoted Mercedes-Benz dealership at Gatwick which was highly geared and losing £1m a year. Mr Lancaster and some friends formed a consortium which attracted the investment needed for a business plan.

##Lancaster(1)--right## Two years later the group acquired the dealerships of HR Owen, long associated with Rolls-Royce/Bentley. The name of Malaya is retained for some Mercedes-Benz sites (including the original Gatwick business) but the group was renamed HR Owen, now equal 18th in the AM100 with a turnover of £480m.

Mr Lancaster, sitting beneath a painting of his father, outlined HR Owen's clear vision for the future. In the early days, people in the industry would say “Nick tells a good story”.

Some seemed to be willing its failure. But now a turnover close to half a billion pounds and a portfolio of retail interests heavily based on specialist marques adds weight to the words.

Mr Lancaster acknowledges HR Owen has yet to bring the returns in terms of profits to match the potential but is proud of the growth achieved in eight years. The group represents 23 manufacturer brands and operates from 40 sites, some devoted to aftersales.

The eager young car salesman has developed into a sophisticated businessman in his fifties with a small head office in a mews in London's Belgravia.

Last year Mr Lancaster was the catalyst for getting dealers to invest in Jensen if they wanted a UK territory.

In August HR Owen gained the Lamborghini concession for the UK at the fifth attempt. The sales figures are small - perhaps 25 next year - but a smaller model is being developed. The exotic marque also fits perfectly into Mr Lancaster's grand plan, strengthening the group's relationship with Volkswagen Group which owns Lamborghini.

With two-thirds of the shares in “safe hands” Mr Lancaster feels secure about HR Owen's future. The majority shareholding was taken back from financial institutions - run by people with a consistently jaundiced view about motor retailing as an investment - and now lies with a group of wealthy friends.

That might sound too cosy for comfort but they have four strengths - wealth, a passion for cars, global business interests and great contacts.

“I want HR Owen to become the Harrods of the retail motor industry,” Mr Lancaster said. “The store has not attained its status by accident and people have worked at it hard. “I believe there is a place for a motor group providing a premium service. First, you have to establish partnerships with the right manufacturers and we will do that, reducing the number of franchises we hold.

“Then you must establish new sources of revenue for your business. We'll announce the first of these before the end of the year, and some we are planning are not connected with motor retailing.”

An original approach is also promised for HR Owen's website which would be announced soon and not, said Mr Lancaster, to sell cars online. “We have put considerable time and money into developing something which encompasses a huge raft of ideas,” he said. “It will not be part of HR Owen, but a spin-off.”

Mr Lancaster said he was impressed by Dixon Motors' partnership with Direct Line, the car insurer, which is operating, the cut-price online direct delivery car business.

##Lancaster(2)--left##“Paul Dixon is right on the case,” he said. “I do not see the internet as a threat in the way it is being used by newcomers such as Virgin Cars which does not impress me. “And what disheartens me is the way institutional investors have rushed like sheep to give a great deal of money to internet companies but not to motor dealers.

“They will discover that traditional motor businesses are built to respond to what customers want.”

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