Lookers has exited from the Peugeot, Citroen, Jeep and Alfa Romeo brands in Great Britain in the final phase of a portfolio review designed to boost efficiency and profits.
It closed its Cardiff site holding Peugeot, Jeep and Alfa Romeo franchises recently and last month sold its Newport Citroen outlet to Peugeot Citroen Retail Group, which trades as Robins & Day.
Chief operating officer Nigel McMinn said the businesses had been loss-making, but not significantly, however Lookers portfolio review was focused on filtering out the brands which offered no scale relationship, to concentrate resources on larger scale representation, with a core of four volume and four prestige brands.
The strategy is to have “a meaningful representation of major automotive brands in the larger areas of population in the UK to generate profits”, added chairman Phil White. That strategy included the addition of BMW/Mini and Mercedes-Benz franchises through Lookers’ takeovers of Knights and Drayton Group last year.
McMinn added: "There has been a steady decline in the number of franchised dealers in the last 20 years, and that trend is likely to continue. As more people do more or their research and ultimately car shopping online, it's hard to see that those numbers won't fall and some of the smaller towns will not need a dealership."
"Our model works best where we throw volume at a relatively high but stable fixed cost base. That's why it suits us to go to bigger towns and cities."
As an early indication of its success, the group’s financial statement for the six months to June 30 shows total profit before tax dropped 4.5% to £44.6 million.
However, on stripping out the closed or sold businesses which included its aftermarket division, profit before tax from continuing operations increased by 14%.
Those continuing operations also recorded an operating profit up by 13% to £58.1m.
Group revenues grew by 5% to £2.46 billion in the first half of the year. Chief executive Andy Bruce said the September order book is building in line with expectations, and he believes the company is well positioned to continue its strong performance and it targets increases in new car volumes.
Nevertheless, Lookers has adjusted its view of the 2017 market. At the start of the year it predicted a total industry volume in line with 2016’s record level of 2.69m registrations.
Now, following the poor market performance in Q2, it believes the current industry forecasts of a 2.6% decline are “a reasonable estimate”.
McMinn added: “It’s hard to ignore the SMMT forecast of a decline of almost 3% for the full year, and therefore the market will decline probably by a little more than that in the second half, but as we’ve performed in the first half, our expectations are that we’ll do better than that.”
The interim results shows Lookers’ new car turnover increased by 10% (7% like-for-like) and gross profit rose by 16% (7% like-for-like). The group has put more focus on growth in quality fleet sector, including commercial vehicles.
With used cars, turnover rose 10% (7% like-for-like) and gross profit increased by 23% (13% like-for-like). A new web platform will launch in Q4, which is expected to help increase leads and sales further.
In aftersales, turnover rose 14% (4% like-for-like) while gross profit increased by 16% (7% like-for-like).
- In Northern Ireland, the group’s Charles Hurst multibrand complex in Belfast continues to hold Citroen, Peugeot and Jeep franchises among the 14 brands represented at the 30-acre site.