Inchcape Retail chief executive James Brearley has denied suggestions that the AM100 franchised car dealership group plans to close 20% of its UK sites.
Suggestions that the 6th ranked AM100 group’s imminent sale of four Volkswagen and three Audi sites in Kent and the Greater London area was the start of a slimming down of the its new car retail presence in the UK were rebuffed as being “really not the case” by Brearley.
He also branded reports that the group was also preparing to close at least three BMW Mini business and one Toyota Lexus operation as it embarks on the closure of around a fifth of its 113 dealership sites as “speculation”, adding that the disposal of the VW Group businesses had resulted from a review of the group’s market areas.
“We carried out a review of our business towards the end of 2018, in light of general market trends and specifically WLTP, and it is clear that where we had a density of representation and we are able to bring certain services together we make in improved profit as a result,” Brearley told AM.
“In the London area, with high land prices and lack of availability, the creation of PDI centres and additional used car footprint is much more of a challenge for us as a business and it was clear that there were business owners in those areas that were better placed to make those operations a success.”
Inchcape will continue to review its franchised representation across the UK, according to Brearley, and he cited the 2018 opening of standalone used car retail centres in Burton-on-Trent and York, and the acquisition of the Leicester Lexus franchise from Sytner Group, as signs that the group is also expanding in certain areas.
He said: “I have an absolute belief in the strategy of working in market areas and it’s also clear that we need to increase our footprint in used cars. There’s certainly more opportunity to be had in that area of the market. We remain a long standing, high performing partner for VW and Audi and continue to value our close relationship.”
Inchcape's annual financial results fail to deliver an in-depth insight into the group’s performance in the UK, instead being grouped together with Europe.
Its revenues for the UK and Europe - which are not separated out in the annual results - showed a 3.7% decline in annual revenues, to £3.06bn (2017: £3.17bn) as the trading profit margin in the region declined by 1.1ppt to 0.5%.
Mike Allen, market analyst at Zeus Capital, said: “The strength in (Inchcape’s) distribution business was offset by weakness in retail where market driven factors in key markets such as the UK and Australia have caused significant margin pressure and a 59.2% decline in retail trading profit.”
Figures handed to AM for the creation of the AM100 showed that the group’s UK operation’s turnover declined 5.4% from £2.99 billion to £2.83 billion in 2018.