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Carmakers ‘starting to slim city retail outlets'

Nick Lancaster, the HR Owen chief executive, says carmakers have begun to address the problem of crippling overheads in metropolitan areas by making decisions to slim down dealer networks.

Last year, Lancaster was a high-profile advocate of the need for change in London particularly, but also in other major cities.

His own group is going through a radical transformation, with the aim of focusing on a small number of high-profit brands, such as Bentley, Mercedes-Benz, BMW and Lamborghini.

“Other manufacturers are beginning to see the need to bring the number of dealerships in their retail networks into line with realistic expectations on profit,” says Lancaster, who expects announcements soon.

“The problem of operating in big cities with small profit margins is not confined to the UK, and I expect manufacturers to take action in other European countries.”

He says he is in the final stages of preparing the new retail concept he talked about last year. HR Owen has five BMW outlets in west London, but will probably be left with “two or three, and the others will not be sold”.

Lancaster says he will not talk in more detail until he has completed the plan to transform HR Owen. He says HR Owen’s Audi and ChryslerJeep outlets have never been up for sale and there was never a firm intention to sell any of the group’s Mercedes sites.

“We did look at our sites close to the Mercedes brand centre at Brooklands,” says Lancaster. “We are now satisfied that they can continue to be profitable, and so we are keeping them.”

Lancaster’s shake-up of HR Owen was prompted by a swing from profit (£2.3m in first-half 2004) to loss (£7.3m in the first six months of last year). The group is predicting a loss for the second half of 2005.

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