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AM100 analysis: Records continue to be broken


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Total turnover

2014: £45.5 billion
2013: £40.6bn
2012: £38bn

For the second year running we can report that total turnover for the UK’s major franchised dealer groups has increased to new heights.

The AM100 began in 1993 and last year we saw the total break the then all time high of £38.6billion, achieved in 2008, at £40.6bn.

Now, AM’s exclusive research can reveal that the total turnover is at 45.5bn – a 12% increase on 2013.

We are now seeing a growth rate in turnover that mirrors the period of record breaking new car registrations from 2001 to 2003.

Since 2000, AM100 turnover has increased 75%.

The total turnover of the top 10 groups is £21.6bn, or 48% of the AM100 total – the same as in 2013. Pendragon alone has represented 9% of the total in the last two years. Nine of the top 10 now have turnovers of at least £1bn.

Looking at individual groups’ figures there are some stand-out performers: BMW dealer Knights Group’s acquisition of a part of Blue Bell Group this year saw its turnover increase the highest, by 70%. It is also the highest placed new entry in the AM100 at number 69.

Snows Motor Group increased turnover by more than 50% (the impact of buying Japanese brand businesses from Marsh Group in 2013), and JCT600 and Halliwell Jones (both of which have acquired businesses) by more than 38%.

Halliwell Jones improved it position by 12 places to number 36, Hatfields 13 to number 75, Stoneacre seven to number 28 and Vantage Motor Group 17 places to number 79.

Seven groups saw a year-on-year reduction in turnover: Camden Ventures, Robins & Day, Hendy Group, Caffyns, Harratts Group, GK Group and Brindley Garages.

Twenty groups in the AM100 experienced turnover increases of at least 20% in 2013, only two of which – Vertu and Lookers – are in the AM top 10. Both have made significant acquisitions, a significant contributor to revenue.

Here are examples of the group acquisitions made in the last 12 months (June 2013 – June 2014) with buyer and acquired:

> Vantage Motor Group  - Batemans
> Halliwell Jones  - Blue Bell Bodyshop and Blue Bell Wilmslow
> Knights Group  - Blue Bell Crewe
> Vertu Motors  - Brookside and Hillendale Group
> Lookers   - Colborne Garages
> Sandicliffe Motor Group -  Farmers
> Greenhous  - William A Lewis
> Luscombe Motors  - Robert Bowett Motoring
> Hartwell  - Hangreen (Sky Ford)

Acquisition activity ramped up in 2012, it continued in 2013 and sees no signs of calming this year, with commentators differing on those being targeted, with opinion divided on whether the AM100 groups will begin to be targeted more now by groups looking to make big improvements in scale and representation - or smaller, owner-operated groups feeling the mounting pressure on standards and costs exerted by the manufacturers encouraging them to sell-up.

One property adviser has seen a 36% increase in dealers looking to buy retail property compared to 2013.

It’s been called a sellers’ market, particularly for those operating premium franchises, and especially Land Rover, with Jaguar with its planned new launch activity looking to take some of the spotlight.

There have also been warnings the market is ‘over-cooked’ with excessive multiples and goodwill being quoted.

AM talks to as many dealers as it can to gain the truest sense of the retail automotive market place and for every statement made about the continued health of the new car market and record levels of registrations, two other points are pushed home.

One is a negative: manufacturer pressure on dealers to invest in corporate identity standards, in showroom overhauls - and in some cases new builds - is on the increase, plus they are increasing volume targets (more than 20% year-on- year in the case of one leading volume manufacturer AM understands) while more of the margin on unit sales is being taken away from dealers.

The second a positive: dealers tell AM they are putting customer facing staff under detailed scrutiny, measuring activity and its impact on sales in unprecedented ways, revealing for the first time the true effect of processes designed to win and retain customers. One dealer AM spoke to said it is “the only way” to manage staff.

Now, whether you agree with this statement or not, it seems the pressure being brought to bear on staff and time and money spent on measuring the outcomes is playing a part in the improvement in franchised dealer group profit figures – almost against the odds if you consider the objections voiced by dealers about current manufacturer behaviour.

Look at ‘the AM by numbers’ below and you will get a taste of the profitabilty being enjoyed by many in the current market.

Despite the pressures, and not just from manufacturers but more demanding consumers, the AM100 groups are working hard to turn record revenues into record profits. The static levels of return on sale, however, add a note of caution on the ability of dealers to make dramatic improvements in margins.

In my analysis last year, I suggested recovery might be faster than other commentators had suggested, citing not just the increase in new car sales, but external factors such as share price highs, housing demand at its highest for years and faster economic recovery than had been predicted.

The postive factors are still evident, but add to them strong GDP, the PCP panacea in our sector and healthy home valuation activity -  one factor pointing to continuing consumer confidence – and there are strong signals to suggest we can look forward to at least another 12 months of rude health. Let’s not call it a boom.

The AM100 by numbers

3 The number of new entrants

A fall of two year-on-year. Blue Bell had been an AM100 back marker for several years with a turnover a little over £100m. But it was divided up and sold to two groups this year. The boost in turnover of £50m for Knights Group when it bought Blue Bell Crewe in April sees it become the highest new entry at number 69, reflecting a turnover growth of 73% on the previous year, the biggest increase in the AM100.

The remaining new entries are Essex Auto Group and Wessex Garages each with turnover of £121m and at number 94 in the AM100.

Last year’s entry point for the AM100 was £104m. This year it is £113m, reflecting the across-the-board boost in turnover in our countdown.

Previous years:
2013: 5
2012: 10
2011: 4

2.22% The average return on sale (RoS) for the 20 best groups

CEM Day’s figure of 3.6% sees it repeat its success of last year, being the only group in the AM100 to exceed the 3% mark and topping our return on sale ranking. It is also the third year running this Ford, Peugeot and Fiat retailer has hit 3% or more.

Below CEM Day are Arnold Clark with 2.9% RoS (2013: 2.4%), Westover Group and Helston Garages with 2.8% (2.9% and 2.5%). At number 20 in our ranking is Beadles Group with 1.7%.

Previous years’ RoS top 20 averages
2013: 2.26%
2012: 2.1%
2011: 2.7%

£32.4m The average profit before tax of the 10 biggest profit earners

Compared to £25.2m last year, the latest average profit before tax figure for the top 10 groups has risen a massive 29% - and over two years when it was £23.1m, a little over 40%.

Year-after-year the plcs Sytner, Lookers and Pendragon lead the AM100 for profitability alongside Arnold Clark Automobiles.
This year the Scots are at number one with a PBT figure of £85.2m, a long way off Sytner’s table leading total of £67m last year and a 41% increase in its year-on-year profitability from £60.5m.

Sytner is at number two with £71m (6% up year-on-year), Lookers follows with £46.6m (28% up YoY) and then Pendragon with a more modest PBT increase of 3% to £37.6m.

Interestingly, Vertu Motor’s strategy of buying and turning around underperforming businesses is beginning to bear fruit. It makes its first appearance in this table for four years at number five with PBT of £16.8m. Marshall Motor Holdings is at number 10 (its first appearance since 2011) with £8.9m. 

Previous years’ PBT AM top 10 average

2013: £25.2m (up 9%)
2012: £23.1m (up 1.3%)
2011: £22.8m

£12,496 The top 20 group’s average profit per employee

The concentration of effort into measuring in microscopic detail the efficiency of dealership staff and insistence they operate to rigid processes by many groups could be said to be paying off if measured by the profit individuals’ efforts are contributing too.

The number of people employed by the AM100 is up from 2013, but they are working harder helped by the boost to the new car sales market.

The average profit per employee in our top 20 is £12,496, 31% higher than last year.

For four years Spire Automotive had the highest return per staff member, but it has dropped to number eight with £12,459.

For the first time a group has broken the £20,000 barrier.

RoS champion CEM Day achieves £21,660 profit per staff member, making it the top performer by this measure. Toomeys makes its first appearance in the top 20 at number two, with £15,144. These two groups, plus Helston Garages exceed the £15,000 figure. The last company to match this was Spire Automotive in 2012, with £15,319.

Only Sytner, Inchcape Retail and Arnold Clark are in the AM10 and in the top 20 for profit per staff member group (£13,065, £11,157 and £10,651 respectively).

Previous years’ results

2013: £9,548 (17% increase)
2012: £8,144 (down 27% from 2011)
2011: £11,113

£545,918 Average profit per outlet

The numbers of outlets operated by the AM100 has increased slightly and yet this has far from diluted earnings with 2014’s research seeing a 44% year-on-year increase in performance per franchised outlet.

CEM Day, with 11 outlets, has the highest at £984,545, a leap in its own leading position in 2013 of 72%. Close as it may be to the £1m mark, it is not as impressive as Spire Audi in 2011 when it achieved £1.02m. 

CEM Day, Harwoods, Dick Lovett, Sytner, Currie Motors, TC Harrison, Peter Vardy and Thompson Motor Company exceed the average figure.

Ridgeway Group is at number 20, a new entrant in this table, with a profit per outlet figure of £391,103.

Previous year’s performance:

2013: £380,035 (up 19%)
2012: £318,470 (down 33% year-on-year)
2011: £477,587

2,757 Total number of outlets…

..or franchised dealerships – representing an increase of 57 or 2% from the 2013 total of 2,700. According to figures from AM’s franchised dealer data site AMi (www.am-online.com/ami) the AM100 operates more than 60% of the UK’s total franchised outlets.

From 2013, the number of groups with in excess of 100 sites is up one at six and in order of size Pendragon with 219 (2013: 238), Arnold Clark 193 (197), Sytner 129 (141) and Lookers and Inchape Retail both with 111 (118 and 113).

Previous year’s outlet totals

2013: 2,700 (up 7%)
2012: 2,521 (up 26 or 1%)
2011: 2,495
2010: 2,487
2009: 2,362

 


 



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