AM Online

Inchcape disposal avoids further OFT action

Industry observers suggest Inchcape may have come under pressure from the Office of Fair Trading to quickly sell its Wrexham Volkswagen dealership last month.

The group announced the disposal on October 16, more than seven months after it gave the OFT a binding undertaking to dispose of either Wrexham or Oswestry Volkswagen to avoid a Competition Commission probe.

The OFT would not tell AM how long it gave Inchcape to complete the disposal. But small print in the undertaking states that the OFT had the power to require Inchcape to quickly sell a business at no minimum cost to a purchaser approved by the OFT, if divestment could not be achieved normally within its specified timeframe.

AM understands the period from Inchcape’s approach to Swansway Garages to completion of the sale was just two weeks.

In March, the OFT intervened out of concerns about lack of choice for VW owners seeking franchised servicing and repair following Inchcape’s acquisition of European Motor Holdings, which left it operating the only two VW franchised dealerships in the North Welsh Marshes.

Swansway chairman Michael Smyth told AM that Wrexham Volkswagen will add around £13m to Swansway’s £116m turnover, and it will be profitable. The additional turnover pushes Swansway up 11 places from its 87th ranking in the current AM100.

“We currently have three Audi, two VW commercial vehicles and one VW car dealership so we thought another would fit nicely, and Wrexham is on the edge of our current territory,” he said.

Swansway’s other businesses are in Crewe, Preston, Stoke-On-Trent and Stafford.

“The VW brand is excellent for us,” added Smyth. “This gives us a bit more volume with VW. There are very few economies of scale in our business but there are some in terms of brand expertise.”

IT systems are being replaced, but Smyth expects no changes to the workforce. He has appointed a new sales manager following the resignation of the previous incumbent prior to the acquisition.

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