The group, which recently posted record turnover at £1.61bn making it the UK’s second largest group, is talking to carmakers about purchase prices that can make the scheme viable. Chairman Sir Peter Vardy has believed for years that personal leasing – popular in the USA – will form an important sector of new car provision in the UK in the future.
Recent changes in block exemption give more power to retailers and Vardy wants to find a way to win orders inside the M25, where it has no dealerships.
Privately leased cars would be delivered to customers (possibly for a nominal charge) and Vardy sees great potential among company car users in the South-east opting for a cheaper alternative.
Sir Peter and Robert Forrester, the Reg Vardy finance director, have worked out the basis for agreement with manufacturers, though final details have to be finalised. The group is on course for a full-scale launch in November or December and a short-list of manufacturer names has been drawn up.
Forrester says: “We believe Pendragon and other major dealer groups will be getting into personal leasing in a major way over the next 12 months and we want to be in the lead. Our pilot scheme with family and friends of employees has revealed a large potential demand.
“The target is to offer a car from as little as £99 a month, plus VAT, but we won’t know whether that’s possible until we complete negotiations with manufacturers during the autumn.”
Customers would never own the car, and Vardy has found that for a 12-month agreement people are unlikely to be too fussed about colour or even make.
Under PCPs, retail buyers can operate a new car for around £100 a month but the deposit is likely to be 50%. Vardy wants the deposit to be as low as one or two months’ payment under the agreement. Users would be bound by conditions on mileage and fair wear and tear, with penalty payments where necessary.
Last year, Reg Vardy sold 76,000 new cars, demonstrating its buying power with manufacturers. The group is in bullish mood after announcing pre-tax profits up 17.5% to £45.6m in the year to April 30.