Cash-rich Inchcape, celebrating an 85% rise in first half pre-tax UK profits to £52.5m, will spend £60m on doubling the size of its premium British retail network.
Chief executive Peter Johnson plans to push up his company's British market share of four brand targets to as high as 10% with up to 80 outlets. Inchcape will focus on BMW, Toyota/Lexus, Ford's Premier Automotive Group and VW/Audi.
Mr Johnson said: “In the UK we are talking to several companies about acquisitions as we move towards doubling involvement with our specialist manufacturer partners. There will also be organic growth from within the group.”
Inchcape's UK operating profits for the opening half rose to £8.7m, against £4.7m during the corresponding period last year while the group generated £154m in cash after returning £45m to shareholders.
Mr Johnson is enthusiastic about duplicating Inchcape's Norfolk Premier Automotive Group site, which retails Jaguar, Land Rover and Volvo under the Mann Egerton banner. He said: “I endorse PAG chairman Wolfgang Reitzle's philosophy of grouping brands on one site, with shared 'back-office' resources, but different brand experiences. I plan to replicate what we have in Norfolk, but only when opportunities with our partners arise.”
A parallel Inchcape expansion programme involves spending another £40m within the UK on its business service division, covering the Eurofleet division, fleet management, logistics and remarketing operations.
Business services also include the loss-making Autobytel internet subsidiary, which Mr Johnson claimed “has not been a problem” despite not growing as rapidly as originally anticipated.
Autobytel's losses during the first six months of this year were halved to £2m and the bullish Inchcape chief executive said: “The internet is about the future and it is a brave man who says it will not play a part in the retailing sector. It will have a major impact. Companies like ours, which strategically look five to 10 years ahead, realise that.”
He said UK car buyers remained reluctant to carry out transactions via Autobytel but increasing numbers were using it for “automotive related purposes”.
He added: “We have the brand, the accumulated experience and the back up to make Autobytel happen.” A revised European Block Exemption system, offered Inchcape “challenges and opportunities - more pluses than minuses”.
“I believe there will be a good old-fashioned compromise from the EC,” said Mr Johnson.
“It should produce more of a balance between retailer, the manufacturer and consumer. For us the challenges and opportunities include accelerated consolidation in the premium retail sector.”
He doubted if manufacturers would follow Mercedes-Benz's example of taking more direct control of retail networks. “I talk with senior manufacturer executives and the message is that they know people like us are better at retailing then they could ever be, particularly in the premium sector,” he said.
On the higher volume front Mr Johnson believed his company could exploit major growth in providing remarketing, logistics and fleet management services.