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AA plans move into car retailing

The AA is planning to diversify into car retailing after acquiring the Halfords car service/repair network from Boots for £5.75m.

Alistair Cheyne, AA deputy managing director, said Halfords gave the company "a base to introduce more motoring-based services".

The 129 outlets - to be renamed AA Service Centres - would be a "key step" in fulfilling the AA's ambitions to become a car retailer, he said.

Daewoo already uses 41 Halfords outlets to retail cars. It said the six-year relationship would continue, though inside sources claimed Daewoo was looking to withdrawal as it sets up its own network of franchised dealers.

A Daewoo spokesman said the first dealers would be appointed within weeks, with 20 planned by the end of the year.

Research among the AA's 11.6m membership supported its involvement in new and nearly new car sales. It already provides an online buying service, in association with Autobytel, on its website.

The AA, which is owned by Centrica, is having discussions with manufacturers and retailers about six strategic options for direct involvement in car retailing. Mr Cheyne said a decision would be made by the end of the year, with trials to begin early in 2002.

"We will not be making any substantial changes or big moves into motor retailing for six or twelve months," he said. "Timing for future action is of course influenced by the ending of Block Exemption in September next year. The Halfords garages could represent a valuable platform for car sales."

Centrica, through its British Gas and Goldfish credit card operations, has a massive database of customers, estimated at 20m, which could be exploited by the AA.

The move would raise the heat on beleaguered franchised dealers, already under pressure from new entrants like Virgins Cars and Oneswoop.

Ian Lancaster, Virgin Cars chief executive, said car buyers needed to "deal with a familiar, trust-worthy brand with a reputation for customer focus".

He added: "Consumers should expect and receive a genuine free market with normal retail channel choices."

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