Remodelled Pendragon CarStore division to tackle ‘restrictive’ used car sales

Pendragon will re-launch its CarStore division with a new hybrid sales model designed to remove the “restrictive” process of traditional retail and new online rivals, chief executive Bill Berman has told AM.

In an exclusive interview this morning (January 11) Berman said that the AM100 PLC would leverage its full 150-site scale and add 10 new standalone CarStore locations to offer customers access to a choice of 15,000 to 20,000 vehicles in any way they choose.

He said that the mix of physical and digital sales processes would provide “greater choice and flexibility” than market newcomers Cazoo, cinch and Carzam.

“Right now customers can largely buy a used car the traditional way or the digital way. We will give customers the choice of transacting however they like,” Berman told AM.

“The new market entrants – Cazoo, cinch and Carzam – place an emphasis on viewing the car, organising finance and buying their vehicle wholly online, without seeing it, and then deciding whether they want it once it’s been delivered. That, in itself, is restrictive.

“This is the second largest investment most people will make. We don’t want to force customers down any particular buying process, we will offer choice.”

Pendragon will offer “haggle-free” fixed used car pricing, a 14-day/250-mile money-back guarantee and a 90-day warranty on all its used cars.

Customers will also be able to provide an aftersales service from its existing network of dealerships.

Pendragon's CarStore brand will operate across the group’s 150 physical retail locations.

10 new CarStore sites

What was once a 32-site network of standalone CarStore used car retail sites now has nine sites.

But Berman said that a further 10 sites were already in the group’s re-launch plans as it looks to fill gaps in the group’s existing geographic footprint.

Warrington will be the first of the new locations, with a redevelopment of the existing Chesterfield CarStore also underway, he said.

The majority of CarStore sites will feature an on-site vehicle preparation centre, rather than through the “preparation factories” envisioned by Pendragon founder and former CEO Trevor Finn, with nearby franchised sites handling stock where that is not the case.

Berman said that the aim was to minimise unnecessary vehicle movements and get vehicles to market as quickly as possible.

He told AM that Pendragon had previously done a “disservice” to the CarStore brand – primarily through poor stock acquisition and management – but said that the new CarStore era would see data-led decisions accompany a customer-centric philosophy to drive its success.

“Once upon a time a car would be sent whichever way the transporter was pointed when it emerged from the preparation centre,” he said.

“Now we have the data to tell use where a vehicle is most in demand, where it will sell quickest. Data will shape our decisions.”

Re-brand re-think

Pendragon initially revealed plans to restructure its CarStore operations into a digitally-led retail offering back in 2020.

The move is part of a growth strategy which it hopes will deliver an underlying profit before tax of £85m to £90m by 2025.

Berman conceded that he had initially made the rebranding of the restructured CarStore business a priority, but added that the reputation and trust of consumers meant the name would stay.

“We’ve invested heavily and the team have worked hard to re-build the brand and its reputation,” Berman said.

“Sometimes we can be a little hasty, but the truth is that we considered a number of new names and the one that came up repeatedly was CarStore. There’s a lot of equity in the name and, ultimately, it’s customer perception that really matters.”

In setting out a strategy for the relaunch of its used car division, Pendragon completed a survey of 1,463 UK car buyers.

It found just 12% of consumers want a solely digital experience, while 88% confirmed that they look for some form of personal or physical contact with their potential car purchase. 

In response to this, Pendragon has Personal Advisors which are available online, over the phone and in dealerships to guide customers through their options and the subsequent buying, selling or purchasing process.

Berman said: “As an industry we need to recognise that our customers are ever-evolving and we need to evolve with them.

"The industry heritage, expertise and experience that has already been established by our dedicated and experienced CarStore teams, coupled with this new proposition, will enable us to empower each of our customers to make their own informed decisions at a pace and in a way that best suits their needs.”