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Tesco talks continue while Inchcape expands with quality volume brands

Talks between Inchcape and Tesco are ongoing, but the supermarket chain has made no decision whether to enter the car retailing sector post block exemption.

Peter Johnson, Inchcape chief executive, believes supermarkets will stay out of retailing unless they can convince manufacturers to reduce supply prices because the margins aren't sufficient.

He suggests the less successful volume brands and some of the ambitious Far Eastern manufacturers might be tempted to go down that route by offering discounts on bulk deals.

“We've been circumspect in investing with the premium marques that value good customer service,” says Johnson. “We laid out our strategy 18 months ago - and we called it right.”

Inchcape plc, which posted first-half profits in the UK up £700,000 to £9.8m, this week acquired Gowrings' remaining two Ford dealerships, in Bracknell and Wokingham, for around £3.9m. The deal completes Gowrings' withdrawal from motor retailing. Inchcape plans to expand with key partners, including BMW, Toyota/Lexus, Audi, Mercedes-Benz and Ford PAG (opportunities with Jaguar and Land Rover have already been identified).

“We won't seek to grow like Vardy and Bramall by acquiring volume brands - our expansion will come through the quality volume marques,” says Johnson. The company looks to set to offload its 40 per cent stake in MCL Group, which has recently relinquished its Mazda and Kia importer operations.

“The company was set up to import Mazda and this is no longer the case,” says Johnson. “The purpose of our investment is no longer there so we will be having discussions with Itochu on the forward strategy.”

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