Pendragon to sell US retail group and reduce premium UK presence

Pendragon will dispose of its US-based retail group and begin the reduction of its premium franchises in the UK as part of a revised business strategy. The business announced a revised plan to shareholders, which chief executive Trevor Finn said “will provide more reliable and sustainable returns”, today. The group’s new strategy will see the disposal of its five franchised outlets – with Jaguar Land Rover, Aston Martin and Chevrolet – with its California-based Hornburg group and a reduction in the representation of premium franchises which fall within its Stratstone business on UK soil. In statement issued via The London Stock Exchange Pendragon chief executive Trevor Finn said: “Following our strategic review, we have focussed on reshaping the business to accelerate transformation and ensure capital allocation is optimised across the group. “The actions I am announcing today are a further step towards achieving our strategic objectives. “I believe this strategy will provide more reliable and sustainable returns.” Full reading...

Dividends: Part Finance, Part Psychology

If a company values the ability to distribute dividends, it should consider several factors that go beyond the financial aspect. Psychological behavior also plays a role, which tends to take on greater importance when establishing a proper dividend policy. If a company is profitable, has cash and does not know how to invest it for a return, that money should be given back to shareholders. This is a basic principle from a financial point of view. But these rules generally don’t apply, since other aspects related to human behavior come into play. Thus, the question arises whether it is a financial or psychological matter… and the latter, as it turns out, has a considerable influence. Dividends must be maintained Shareholders get used to dividends once they start rolling in, so they must continue to be paid out over the course of time. Indeed, determining a proper dividend policy requires more than looking at profitability or the amount of cash the company is generating. The company must also consider its ability to sustain the dividends in the future. It may seem like the most obvious practice would be to explain to shareholders every year whether the company was profitable enough and determine the dividend based on performance. However, that is not the case, since the information available to shareholders is inconsistent. Those who have received dividends expect to get at least the same amount in the future unless it is well justified that the company needs cash. All we have to do is look at the behavior of large companies, which predominantly define their dividend policy as a fixed amount per share,...

Mercedes-Benz chief Gary Savage: ‘Prepare for direct sales’

Mercedes-Benz franchisees have been challenged to think hard about their business opportunities when manufacturer direct sales take off. UK chief executive Gary Savage believes it is “an inevitability” that carmakers’ national sales companies will take on direct sales of new cars to consumers in the future, but he is convinced it is not a threat to dealers. “In reality, to genuinely be able to realise online selling, you have to do it direct. Because of all the components of competition law, you have to be in a position where you can set the selling price, in order to offer the customer the best price consistently,” he said. As such, direct sales couldn’t happen overnight, but he was unwilling to suggest a timeframe for the development. Full...

Amazon ‘recruiting car sales executives’ ahead of UK pilot scheme

Amazon could be set to pilot online car sales in the UK after its UK sector boss admitted car sales executives were already being recruited in preparation for the scheme. E-commerce delivery expert ParcelHero issued a warning to UK car retailers after producing a report into the strategy of the burgeoning online retailer which highlighted its future role in the business of selling cars. ParcelHero’s head of consumer research, David Jinks, said: “From books to consumer electronics, Amazon has completely transformed the market wherever and whatever it has launched. “Now the likes of Evans Halshaw and Bristol Street Motors will be taking a deep breath as it accelerates into the world of car sales.” Full...

Online car sales could spark 27,000 dealership jobs losses within a decade

Car dealers are being urged to move with the time in a bid to avoid a predicted trend which could see online car sales lead to the loss of 27,000 automotive sales jobs by 2027. Research from online review community Trustpilot and the Centre for Economics and Business (Cebr) reveals motorists looking for a new car will become increasingly likely to buy online, rather than from a dealership, with around 20% set to be sold online within a decade. Trustpilot warned that traditional salespeople could take a back seat as tech-savvy consumers become more comfortable making purchases of new and used cars online. The new research uses consumer survey data to predict that car dealers could see more than £41 billion revenue and 27,000 jobs disappear if they fail to adapt to the new sales environment, with nearly £1.5bn worth of sales moving online by 2020. Trustpilot’s UK managing director, James Westlake said “Competition will be stiffer than ever, as dealers will be forced to compete across both traditional and digital sales channels. “The key to winning this race is not just on price, but by generating consumer trust and confidence to buy a car through their platform.” Dealerships are being encouraged to adapt their current business model to meet changing consumer behaviours.   Full...