The car market collapse, warranty hysteria and supply issues after Japan’s tsunami were a triple whammy for RRG Group in the North West of England. Yet it made it through intact, and bounced back fast. Now its Japanese owners have given its management clear instructions: acquire, expand and spread the risk.
RRG Group has caused some frustration for AM in previous years. It has long been a very strong regional performer, quietly making money and serving its carmaker partners well. But despite a couple of approaches by AM for interviews over the years, the top 30 AM100 dealer group remained rather media shy.
But this time AM hit gold, with appointments with joint managing directors Arran Bangham and Tony Cliff. So the obvious first question was what has changed?
Bangham was candid – it’s time to raise the group’s profile in the industry. The reason? “We’ve been tasked by our team in Tokyo at Marubeni Corporation to double the size of the business, the entire business, by 2015,” he said.
That is some step change in RRG’s development, whose last acquisition was Smith Knight Fay’s Japanese brand division in 2006. UK motor retail still represents a tiny proportion of parent Marubeni’s global business interests, even after its 2008 acquisition of Norton Way Motors 200 miles further south in Hertfordshire. RRG Group and Norton Way continue to operate independently, though they share a Japanese chairman and are grouped together in the AM100, AM’s annual ranking of the UK’s largest motor retailers.
A sign that RRG Group was changing was the creation 18 months ago of the joint managing director roles for Bangham, then finance director, and Cliff, who was operations director. The duo are based at its Salford headquarters and directly lead the general managers who head each dealership.
The brief from Tokyo to expand – and the funding Marubeni can put behind it – follows a tough period for the business. First came the 2008 recession and slump in the new car market, then came recalls which shook the Toyota brand globally, and finally the product supply issues created by exchange rate pressures and the Japanese tsunami.
Bangham explained: “RRG has always been seen as a Japanese franchise business, with mainly Toyota, Lexus, Suzuki, Mazda and a couple of Peugeot, and clearly that can be an issue when Japanese manufacturers go through a difficult time.
“We want to now expand into other brands and change the portfolio, away from being 90% Japanese, to have a bit more variety. For long-term survival you need to have a balanced portfolio of manufacturers, so when some are having bad times others are having good times.”
It’s not a sign of lacking confidence in its existing partners – both Bangham and Cliff said its core brands Toyota and Lexus are gaining strength fast, and even the likes of Mazda will have its time again. But RRG is already a top quartile performer, and acquisitions would create more growth opportunities as well as rebalance the business.
Annual turnover: £306m
AM100 ranking: 27
Franchises: Toyota (9), Lexus (3), Peugeot (2), Mazda (2), Suzuki (1), Kia (1)
Annual sales volumes: 10,000 new, 8,000 used
Annual servicing: 60,000 cars annually
Properties: 16 freehold, 3 leasehold
Click on page two to read the second part of AM's Face to Face interview with RRG Group.