Industry veteran sees more motor sector consolidation

FURTHER consolidation is likely in the motor trade as smaller independent dealerships find it increasingly harder to compete with the major national players such as Lookers and Sytner.

This is according to industry veteran David Holmes, who sold his Stockport-based BMW dealership two years ago and now works for Diligencia, a niche Warrington consultancy.

Mr Holmes said the sector was generally highly resilient and well supported by manufacturers, but had been transformed by the Internet and the rise of new online businesses such as ‘WeBuyAnyCar’.

Speaking at an event organised by advisory firm Duff & Phelps – with whom Diligencia is working to support automotive dealers – he said the trade is encountering “mixed fortunes”.

“At the top end of the market, Audi, BMW, Mercedes-Benz are performing well. LandRover is going from strength to strength as a result of the Evoque where there is a waiting list.

“The emerging brands such as Kia and Hyundai are doing very well too, but in the mid-market life is more challenging, with many having high cost bases and large dealer networks.”

Mr Holmes, 56, said the Internet had empowered consumers, by allowing them to research products and of course prices before visiting showrooms.

“It has changed the dynamic of the market without question, ” he said.
 
Having worked with national chain Sytner, where he was a divisional managing director for Mercedes-Benz, and then run his own business, he said the big groups have major advantages over independents.

“There’s obviously financial strength to invest in showrooms and better buying power, but from a people perspective as an independent, it is harder to retain good people in terms of pay, bonuses and career progression.

“For these factors I think further consolidation is likely, but it is possible for an independent to do well if they micro-manage every single area and watch costs really closely – I recently worked with one dealership spending £5,000 a month on Internet services, including £500 on social media, which it just didn’t need to do.”