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Banks move in on top dealer group

Speculation is rising that a fresh takeover bid for one of the UK's largest dealer groups may be just weeks away.

Analysts suggest that another bank may be trying to acquire a significant retail network following the Royal Bank of Scotland's purchase of Dixon Motors earlier in the year.

Some banks have been moving away from the unpredictable leasing and contract hire markets in Europe - with Barclays' sale of Dial and Deutsche Bank's disposal of its leasing businesses. But the less profitable - and less volatile - dealer sector is attracting bank interest, according to one leading analyst.

“Banks see dealers as ideal outlets for their finance packages: Dixon Motors and the Royal Bank of Scotland are in a strong position to help each other,” says the source. “Banks can also see the new block exemption rulings providing excellent growth opportunities in the retail motor industry.”

Professor Peter Cooke, head of the automotive department at Nottingham Business School, acknowledges the move by some banks to get out of fleet and leasing. “Obviously the banks have access to funds at the best rates,” he says. “A prime motivation is to find lucrative homes for their funds. If the returns from vehicle leasing drop, they look to move out.”

Analysts say a bank would be looking for a dealer group with sufficient “critical mass”. The Mail on Sunday suggests this could be CD Bramall, adding that Pendragon is likely to remain independent and Reg Vardy itself is looking for sizeable acquisitions.

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