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Nationwide takes AA sites

The AA is to completely withdraw from service and repair after selling 50 of its loss-making centres to Nationwide Autocentres.

The deal, for an undisclosed amount, will be completed “within weeks” and will take the Nationwide network to 227 centres, according to managing director Tom Dunn. It’s the latest move in the company’s expansion strategy.

“This is an exceptionally good deal for both companies,” says Dunn. “Nationwide is now on the doorstep of the majority of motorists right across the UK – it’s another key business relationship for us and at the same time protects the jobs at the centres we are acquiring.”

The AA, meanwhile, has announced that its remaining 72 centres will close subject to consultation, although a spokesman says it is “highly unlikely” that any individual purchasers will come forward. The CVC-owned company will also shut the AA Tyre Fit mobile fitting, which has 130 vans on the road, and the used car Vehicle Inspections operation, both of which were losing money.

Tim Parker, the AA’s recently appointed chief executive, says: “We believe this will provide a better service to our members and customers. We are unable to provide a comprehensive service across the UK. The AA centres have not been profitable and we believe the arrangement we are proposing is the best long-term solution for our members and customers.”

Nationwide will take on 400 staff as part of the purchase, leaving 900 employees facing redundancy. The AA hopes to relocate some within its other operations.

Dunn was able to cherry pick the best sites, resulting in minimal overlap with his existing network, though there will be one or two consolidations. “We acquired the centres that fit the business profile where there is proven customer demand and to fill in geographical gaps,” he says.

Several sites are losing money, thought to be caused in part by the AA’s huge central cost base.

Realigning these and other costs, such as the management wage bill, and improving efficiencies will help Nationwide to turnaround the business over the next few months. The centres will be branded AA for at least the next year, after which they will be renamed Nationwide Autocentres.

Under the agreement Nationwide will become the approved service provider for AA members and customers and will also provide fleet maintenance for the AA’s own recovery fleet. The AA, which acquired the Service Centres from Halfords three years ago and the Tyre Fit business in 2002, will now focus on roadside recovery, insurance and finance.

Formed in January 2001 by the management buy-in team, Nationwide Autocentres has turned around under-performing Lex Autocentre outlets spread across the UK. Last year it acquired Stop ‘n’ Steer and performed a similar resuscitation. The business will turnover more than £54m this year – the 50 AA centres will add £20m next year.

The purchase does not come as a surprise. Back in July, Dunn told AM that he was “looking to buy a national” (AM speculated that the AA service network was a possibility). The AA purchase fills many open points, but Dunn does not rule out further acquisitions. He still wants 300 sites.

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