Restructuring at Alan Day Motor Group has led the business to dispose of all its Volkswagen outlets in London and refocus on its more profitable Honda franchise.

The family-owned dealer group had three VW dealerships in the boroughs of City, Hampstead and New Southgate. These have been sold in a management buyout to its VW brand dealer principal, Paul Tanner, who had been with the group for 20 years. It has also sold its accident repair centre in Neasden to Veetec.

The disposals leave Alan Day Motor Group with five Honda outlets in Enfield, Hendon, Portsmouth, Southampton and Winchester.

Managing director Christian Day says the reason for restructuring is the cost pressures of running dealerships within the M25.

The Volkswagen outlets were “only seeing a small profit” and the group had put them under review six months ago, when Tanner made his offer.

Day says: “Now we’ve decided to stick with Honda we’d like to expand with them in the long-term if the opportunity arises. There are great benefits from representing just one brand, and we’re totally committed to Honda and motor retailing.”

Day dispels rumours that his father Alan ‘Bobby’ Day, the group’s founder and chairman, will retire. He will continue in his role, although “wants to do less”, says Day.

Paul Tanner’s new business, Tanner Automotive, is turning over around £60m and has been given permission by the Day family to trade under the brand Alan Day Volkswagen.

“He’s been a long-serving employee with us and the transfer of the business was smooth. He paid us what the business was worth, and as long as he doesn’t damage the name we’re happy for him to continue with it,” says Day.

Tanner says the support of VW has been fantastic. The MBO was funded through VW and NatWest Bank, and Tanner is now on VW’s sponsored retailer programme.

“The business is probably one of the only family-owned dealerships in London that returns a profit. Not a huge profit, but for me it’s an opportunity to build on,” says Tanner.

The AM view

Alan Day’s decision to drop its longstanding relationship with Volkswagen in order to concentrate on its Honda business is a further example of the difficulties facing retailers making businesses viable within the M25.