How to acquire dealerships effectively

“With internal growth difficult in a saturated market, expansion and increasing scale via acquisition is the only real route to capitalise on the business model and sweat the asset base. It is now fundamental in enabling a prosperous motor business to leverage its size and react to manufacturer and market demands to optimise its returns,” said Samantha Pettengell, head of motor advisory at MHA MacIntyre Hudson.

Small groups with multiple sites representing one brand may want to broaden their portfolio. Focusing on one brand can bring advantages such as continuity, synergies between sites and the simplicity of dealing with one manufacturer management team, but diversification can spread the risk of a business downturn when the original brand is at a weak point in its product replacement cycle.

That risk became particularly acute during the recent economic crisis as Saab and Daihatsu disappeared completely from the UK, Japanese brands Toyota and Mitsubishi were forced into retreat by unfavourable currency exchange rates, and Peugeot, Citroën, Ford and Vauxhall suffered financial difficulties and lost UK market share to Volkswagen, BMW and Audi.