The £226m turnover AM100 group, which is part of North Eastern Co-Op, has decided it has insufficient buying power to compete effectively in the current market, and is unable to make the significant investment needed to achieve a critical mass.
The Co-op plans to concentrate on its other more profitable non-motor businesses. Bill Oliver, who took over as managing director last month from Tom McVinnie who is retiring, says the decision follows a strategic review of the group’s operations.
“We have had to face a difficult choice of whether to invest heavily in the business or to take advantage of the current acquisitive market. Unfortunately, even major investment could not put us within reach of the market leaders,” he says.
“We have a strong customer base and have developed an excellent reputation over the years but we would need to treble the size of the business to achieve the scale we believe is necessary to achieve long term success. We do not have the funds available to grow at that rate.”
A spokeswoman for North Eastern Co-Op says it has been in discussions with several dealer groups – the business is believed to have been on the market for the past couple of months – and hopes to have completed the disposal by the end of the year.
It is prepared to sell its businesses piecemeal if necessary in order to get the best deal, but it hopes the staff and management at its dealerships will be able to transfer to the new owners.
Priory sells more than 14,000 new and used cars a year from its sites in the north east, south east, Nottinghamshire, Cambridgeshire and Cheshire. It has 13 franchises, all with volume or value carmakers except one BMW/Mini outlet.
At its heart are two large multi-franchised autoparks in Bedford (Honda, Nissan, Fiat and Mazda) and Urmston, Manchester (Fiat, Ford, Nissan, Chevrolet and Kia).
Strong interest in franchises
Reg Vardy plc is rumoured to have its eye on Priory’s businesses in the north east. Although the company has declined to comment on any looming acquisitions, it has publicly stated its goal is to add more than 60 dealerships to its portfolio by the end of the decade. It purchased Priory’s MG Rover showroom in Newcastle last December, which it has since reopened with a Jaguar franchise.
The BMW and Mini dealership at Wallsend is likely to spark a bidding war, however, as other dealer groups fight for the valuable franchise. East Anglia’s Marshall Motor Holdings is actively seeking a BMW outlet and recently declared it will look anywhere in the UK for the right business.
Priory has a Honda dealership in Marshall’s back yard of Cambridge, which will fit its franchise portfolio (Marshall already has Honda outlets in Peterborough and Reading).
Bedford autopark could also be a suitable acquisition for Marshalls as it has been looking for a cluster of dealerships for a volume brand.
Sunwin Motors, which has businesses in Derbyshire and Nottinghamshire, is expected to be interested in Priory’s Fiat and MG Rover sites in Mansfield.