Pendragon’s loss of profit in its Ford parts business was the result of deliberate action by the carmaker, which decided to dominate UK distribution at the expense of other players – even if they were its own dealers.
And the man who initiated the policy has been promoted to the role of parts and service supremo for Europe so that he can apply similar tactics in other countries.
Pendragon’s half year operating figures show that profits on parts distribution of £3.5 million in the first half of last year had been cut to £100,000 in 2008.
Given this year’s huge reduction in profit from new and used car trading, that had become an important part of the group’s £41 million first half income.
Pendragon chief executive, Trevor Finn said that the drop was a direct result of Ford’s expansion into the UK parts supply system. His business was styled as “the leading independent genuine parts wholesale business in the UK”.
60,000 deliveries a month
Pendragon had a fleet of 180 vans making 60,000 deliveries a month on a next-day or same-day basis.
Ford’s Customer Services Division director, John Cooper, said: “Our decision would have come as no surprise. We have been looking at doing this since 2000.
“Pendragon got into the Ford parts business after its acquisition of Quickco – part of the CD Bramall dealer group which Pendragon bought three years ago. It found that parts were very profitable. It became an opportunity for us and an issue for them.”
Cooper said Ford was doing next-day delivery while Quickco had a same-day service. “But Pendragon built the business to be profitable for them rather than to create a true national network.
“As soon as we made our move, we told them that it was going to happen. There was a little bit of friction.”
Ford redesigned its own business – calling it 3D for During Day Delivery.
“It was clear that the UK demanded same-day delivery. Some of the independent factors were doing hourly parts delivery, so all UK manufacturers had the same dilemma.”
Three different approaches have been adopted by manufacturers in the UK.
Volvo, a Ford company, used independent local distributors and a third party logistics operator.
- Read this story in full in the 12 Dec 2008 issue of AM. To subscribe to AM magazine click here or call 01733 468659.