Pendragon PLC expecting £30m loss, putting 2500 jobs at risk
10 November 2008

The UK’s largest car dealer group, Pendragon PLC, has announced that it expects to make a loss of £30m this year because of falling car sales. It is planning to close 75 of its chain of dealerships, and make up to 2500 people redundant.

Pendragon has seen a 12 per cent drop in sales over the last year, with registrations falling by 21.4 per cent in the last three months alone.

Pendragon, which recently took over Reg Vardy and whose outlets include Stratstone, Evans Halshaw and Chatsfield, is already implementing cost-cutting initiatives to the tune of £60 million.

The dealer group’s share price has dropped from 60p at the start of the year to under 6p today.

"Assuming no significant further downturn in economic activity between now and the year end, we expect to report a full year loss before exceptional items for 2008 of £30m," the company said in a statement.

Will Powell

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16

10 November 2008

6p, the share price, is probably generous valuing, for what, if and when you have to break it up, is a collection of glass-walled sheds, a few service ramps and large oveheads of salaries, wages, and business rates.

10 November 2008

They need to adjust the value of their stock too, something most dealer groups have done but pendragon haven't, i reckon they'll be out of business in 6 months..... Couldn't of happened to a nicer company, LOL

10 November 2008

[quote rosstopher]They need to adjust the value of their stock too, something most dealer groups have done but pendragon haven't[/quote]

- good point.

10 November 2008

I read about so many people these days trolling the showrooms, arranging the test drives with the dealers then buying from internet based brokers, thus saving several thousand quid at prices the dealerships cannot match. Maybe this is the way to go?

Have the manufacturers set up showrooms for browsing their products and trying out then make the purchase via a registered broker online, thus cutting out the need for the independant or franchised dealers altogether. To be honest, a lot of dealerships I have visited in recent times leave a lot to be desired. The staff know less about the vehicles than I do - I always do internet / driver review research before I visit a showroom - and they are more interested in selling a finance package than anything else. It's likely most of the dealerships make the biggest profits on servicing anyway during the cars warranty period than actual sales these days, so maybe that's where they should concentrate their efforts?

Just a thought and probably a bit off the mark but I see a lot of other retail areas losing out to internet suppliers these days. Not surprising as the internet operations don't have the huge property and other overheads to pay.

10 November 2008

[quote eenymac]I read about so many people these days trolling the showrooms, arranging the test drives with the dealers then buying from internet based brokers, thus saving several thousand quid at prices the dealerships cannot match. Maybe this is the way to go?[/quote]

I don't actually think people really gets thousands off cars if bought on the Internet, it is something of a misnomer. The online companies do not have the rights to sell new cars themselves so they actually buy them from the dealers! We found we could match the online deals quite easily in many cases when I sold cars, unless the online site was buying and selling imported vehicles - in which case it wasn't like for like. In fact most Internet car sales businesses have actually not been very sucessful (e.g. 'Virgin Cars') and are often used by people as a way to work out a 'best price' before going to the dealers.

You are right about the finance side, profit on new cars is so tiny that actually dealers are really finance and accessory companies that also sell cars!

10 November 2008

Back in March I was offered a job at Evans Halshaw in new and used car sales. I turned it down because of the poor wage (£10000 pa) and the commission was which laughable. Add in the long hours on top and I'm actually releived that I never took the job.

I do feel for those whose jobs are under threat. But I have no sympathy for Pendragon and for companies like Ford and GM who will have seen the economic downturn approaching a long time ago. Shame its the workers who will mostly suffer.

10 November 2008

[quote stuart74]

I don't actually think people really gets thousands off cars if bought on the Internet, it is something of a misnomer. The online companies do not have the rights to sell new cars themselves so they actually buy them from the dealers! We found we could match the online deals quite easily in many cases when I sold cars, unless the online site was buying and selling imported vehicles - in which case it wasn't like for like. In fact most Internet car sales businesses have actually not been very sucessful (e.g. 'Virgin Cars') and are often used by people as a way to work out a 'best price' before going to the dealers.

[/quote]

My experience of buying an Audi A3 was that the local dealers couldn't get close to the online price. Of course you're absolutely right that the brokers source the cars from bricks and mortar dealers - in fact, mine came from an Audi dealer in N London that went bust about 6 months after they supplied my car! Possibly not a coincidence.

I agree with the previous poster about the business model where the manufacturers bear the cost of demoing the cars - but then we'd lose the benefit of being able to buy from different dealers with their own targets/margins to hit and I suspect that on the whole the price of each car would go up.

10 November 2008

Its ok undercutting dealer price's. But who's going to do warranty repairs, etc when the dealer's have gone. Who will train the machanic's and body repairer's. Your all very clever saving cash but I also know the moaning lot you are when things go wrong.

10 November 2008

I dont think anyone should be laughing out loud - this is a tragedy - I work in the trade for a smaller family company and I am probably in a safer position at present but these are desperate times that we all have to pull through

10 November 2008

My biggest gripe about main dealers here is the amount of money wasted on the showrooms - driven by the manufacturers in most cases I suspect to enhance their precious brand values.

Buyers want good service and fair prices - not to subsidise a "my showroom's better than your showroom" war.

The manufacturers and the dealers have created these glass n' chrome beasts that need feeding and have nobody to blame but themselves. Without all this expense, might more dealers have weathered the incoming storm - at least for a while?



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