Volkswagen Group UK has resumed advertising for sponsored retailers as it bids to "improve and ring fence quality operators" for its dealer network.

Dale Wyatt, VW's UK development ventures manager, said further opportunities had arisen within the Volkswagen Group - also including the Audi, Skoda and Seat marques - as a result of dealer group mergers and the closure of some loss-making businesses.

"We set up the sponsored programme to fill these open points and ensure Volkswagen has the best representation possible," he said.

"We find the best people and loan them up to £1m to set up a business. They repay the loan in alignment with the business's ability to repay cash - typically up to seven years."

Vauxhall has appointed several operators this year via its Motor Holdings scheme.

Manager Sarah Kenworthy said the programme has 42 investments which were helping to "balance the dealer network between independents and groups".

She added: "Motor Holdings gives individual operators a chance to own and run their own business." Operators supply 15% of the working capital; Vauxhall provides the other 85%. Buy-out periods are typically between 7-10 years.

Ms Kenworthy said Motor Holdings was originally designed to attract new entrepreneurs to the network. Vauxhall had now become "more adventurous" and would consider other offers. VW's programme can involve buy-outs or buy-ins of existing retailers and greenfield site developments.

The group previously advertised for "ambitious entrepreneurs" after Pendragon acquired Lex earlier this year.

Last year VW orchestrated the sale of Pendragon dealers to Bates Group and HR Owen, two groups seen as strong and expanding retailers.

Volkswagen takes no profit from the new dealer. "Our return is in the quality of the representation we find", added Mr Wyatt.

He dismissed suggestions that VW was pre-empting Block Exemption revision in September 2002.

"We are not trying to control the network through ownership in anticipation of changes to Block Exemption. We want a good mix of plcs, entrepreneurs, owner businesses and sponsored retailers in our network."

Volkswagen Group UK has a network of 60 sponsored retailers, through 29 partners. It appoints five or six a year to the programme, which has been going since 1991. However, existing franchised dealers are not permitted to take advantage of the scheme.

"If they have a strong business they should be able to get loans from their bank to expand," said Mr Wyatt.