Britain's largest motor retail groups are losing their influence and the trend will continue, according to analysis and research during the preparation of this year's AM100.
The combined turnover of the top 20 has declined in a development which goes against normal business movements, says RSM Robson Rhodes which produced the list in partnership with Automotive Management.
Total turnover of the AM100 published in this issue is £24.861bn, a £1.073bn decline over last year's £25.934bn. It follows a £107m decline in 2000, the first since 1993.
The double-dip reflects the huge problems faced by dealers last year as car users delayed purchases during the protracted debate over prices.
The biggest casualties were HMG Holdings and DC Cook which between them had a £809.1m turnover in the 2000 list. Part of their turnover has been added to groups which acquired dealerships from the receivers.
Piers Trenear-Thomas, of RSM Robson Rhodes, said that in such a difficult market, the top 20 should become more dominant in view of the pressure towards consolidation in terms of both manufacturing and retailing, and on margins.
“But this industry doesn't follow the rules,” he said. “It has had plenty of time for the normal pattern to evolve but it won't in the foreseeable future.
“Pendragon is still the No1 group though its turnover has shrunk significantly. I believe the group is still unmanageable in its present form, however gifted its senior managers. Manufacturers are now favouring strong medium-sized groups which are on the way up.
“The solution for Pendragon could be to spin off its Ford dealerships which seem to be causing it the greatest problem. Pendragon should follow the example of BT which has been divided into several businesses.”
Pendragon has ceased to be the colossus of the AM100. The group which in 2000 became the first and only UK motor retailer with a turnover topping £2bn has shed 49 outlets over the past year as chief executive Trevor Finn has sought to get it into shape.
Now its turnover has slumped from £2.089bn to £1.637m, putting it only slightly ahead of Lancaster which again has a turnover put at £1.6bn.
Mr Trenear-Thomas said: “It's tough at the top, and the motor retailers at the top have the toughest managers. They cannot though react quickly enough in an industry where so much is happening.
“Medium companies can fix a strategy and rapidly make it happen. It's all about pressure – if something is going one way in a large business, it takes a great deal of effort to change direction.
“The manufacturers know this. They like the financial strength of big groups but are all trying to grab the medium groups which are making good returns on capital.”
Mr Trenear-Thomas said the most effective motor dealers were producing a 40% return on capital invested, whereas Pendragon could manage only 3%.
Privately-owned groups were in the best position because they did not have to answer to shareholders.
The biggest of these is now bigger – Arnold Clark dominates the Scottish motor retail scene and has risen to No5.
“Arnold Clark is the best example of the effectiveness of a regional motor retailer,” said Mr Trenear-Thomas, “but makes a return of only 6%. That's good but it should be more.”
He said the prospects for 2001 were much brighter than last year and expected the 2002 AM100 to show a bounce-back in total turnover.
In this year's list Sytner Group has made the most significant rise, from 22nd to No15 with a turnover close to £600m. Dixon Motors advances again, from ninth to No6, and Ryland Group goes up from 11th to No7.