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Dealership development: Franchise acquisitions

When it comes to new showrooms, it is the vehicle manufacturers who are directing the style and form rather than the architects, says Richard Vardy, property development manager of Reg Vardy plc.

The group is listed at number three in the AM100 and has 98 dealerships across the UK, and an annual turnover of more than £1.3m. Despite being a major player in the industry, Vardy believes that dealers have very little say in showroom design.

“Everything is dictated by the manufacturer, from corporate identity to the size of, say, the showroom or workshop bays,” says Vardy. He adds that fulfilling these criteria is essential and dictates the bonus received from the manufacturer.

Because of the lack of leeway a franchise has on the specification of its site, it is the issue of acquisitions and disposals that Vardy feels is of real pertinence.

When it comes to acquisitions, it considers the property market and the constraints of the site, together with its opportunities and business needs, such as revenue expectations. But there are also factors such as legal issues and town planning, along with transport links.

All of these points were carefully considered recently when Reg Vardy recently bought five dealerships from the Priory Motor Group in a deal worth more than £15m.

The acquisition comprised a BMW and a Mini dealership in North Tyneside, Vauxhall dealerships in Blaydon and Gateshead, and a dual franchised Kia and Chevrolet dealership in Gateshead. In addition, a standalone bodyshop in Newcastle has been bought.

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