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Mercedes-Benz Retail sells 'core' Birmingham and Manchester market areas to Hong Kong investor

Mercedes-Benz

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.”

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Comments

  • Mark - 11/05/2016 13:15

    I assume there would have been a number of interested UK based companies looking to expand with this acquisition?! Shame on Mercedes-Benz for taking a decision that detracts from UK investment and UK job prospects. In relation to your recent EU survey, I take this as a timely reminder that being in the EU counts for nothing... expect for when it suits multinational corporations and the furtherment of their own profit driven ambitions. Can we take this as Mercedes-Benz official support for Brexit?!

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  • Stuart Hough - 27/09/2016 16:07

    Cut backs have started already. As you know, it's impossible to escape the salesmen within 2 hours ! Historically, drinks and a selection of biscuits were supplied, to keep you going. Now the only option is a slither of a malted biscuit. This probably saves the group about £3,000 per week, and achieves an ultimate LOSS. Why ? Because I am buying a new car elsewhere ! Cheapscapes. SGH.

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