Questions have been raised over the future of the Mercedes-Benz Retail Group after it sold off its entire Manchester and Birmingham market area to Hong Kong-based automotive retailer Lei Shing Hong.
A total of nine dealership operations were acquired by the Asian business – already the world's largest Mercedes retailer with sites in Asia and Australia – which bought 40 German Mercedes dealerships during the second half of last year.
Contracts have been exchanged and the expected transfer date is June 30.
Mercedes-Benz Retail Group’s sales concern market areas which had formed the core of the business – based on London, Manchester and Birmingham – has prompted suggestions that Mercedes may withdraw from direct retailing altogether.
A spokesman for the group insisted that was not the case. He said: “That is not the case. This is very much a one-off deal with an established and well-respected business partner and comes as part of a European project and a new strategic plan for sales and aftersales Europe.”
The spokesman would not reveal the sum involved in Lei Shing Hong’s acquisition deal or the turnover of the affected businesses – Mercedes-Benz Retail’s total 2014 turnover was £1.74bn – but sought to assure customers of the nine businesses involved that it would be “business as usual”.
It has since emerged the deal was agreed for £121.4 million.
All 596 staff are expected to be retained at the affected sites, which are comprised of: Birmingham Central, Tamworth, Solihull, Birmingham Used Cars, Manchester Central, Whitefield, Macclesfield, Stockport and Manchester Used Cars
The spokesman added: “As far as we are aware there won’t be any wholesale changes to the businesses. They were sold as highly profitable operations which made a very attractive investment proposition.”
A pre-cursor to Mercedes-Benz’s operational changes came when Mercedes Cars director, Gary Savage, stepped down as a director of the retail operation and was replaced by Vittorio Braguglia, Mercedes European aftersales and retail director earlier this year.
First conceived back in 2000, the manufacturer-owned retail business was a used car only operation, MB Direct, was expanded to include new car sales in 2002 as part of a major reorganisation of the network under then Mercedes Cars director, Dermot Kelly.
Knight Frank’s automotive team undertook pre-acquisition due diligence for Lei Shing Hong and valued the property assets of the nine Mercedes-Benz Retail dealerships.
The Hong Kong group beat more than 20 bidders to win the portfolio.
Tom Poynton, a partner in the firm’s Birmingham-based national automotive team, said: “This is the first time Mercedes has disposed of any of its UK sites and is part of a wider trend we are seeing in the sector, with manufacturers choosing to concentrate on making cars rather than selling them. We believe this is a landmark transaction in the motor retailing sector and demonstrates global corporations’ confidence in the UK automotive industry.”