9:03 am, May 13, 2020
Zeus Capital head of research Mike Allen was able to share some insight into what has been almost an ongoing series of issues for some of the biggest dealer groups in the UK.
‘Pendragon clearly has had a difficult past,’ he explained on Car Dealer Live. ‘Large scale acquisitions have not been a recipe to deliver shareholder value, and it hasn’t, it’s destroyed value as time has told.’
That said, he was optimistic that there are still opportunities in the business and wouldn’t write them off yet.
‘There’s pockets of value in the business for sure, they’ve got a good leasing business, IT software platform in Pinewood, they do represent some good brands, with some good facilities,’ he said. ‘I guess the real question is what is the right size? What size should Pendragon be?’
He added that ‘there’s definitely some jewels in the crown’ and ‘I can see it emerging as a smaller business’.
Pendragon haven’t been the only group plagued with problems but Allen was equally positive that changes taking place at Lookers could see them through as a stronger, healthier business in the future.
‘The first thing I’d say about Lookers is obviously with Mark Raban running the company, he’s keen to push the fraud investigation further. They’ve done that at the board’s request,’ he said. ‘He wants to ensure that once they get a clean bill of health for that, major lessons have been learnt and that they’ve looked at the entire group. That has to be good for the long term health of the business.’
Allen gave his thoughts on the market and reviewed the current state of listed car dealer groups as he saw it, giving some insight into what has made them successful and struggles they will have in the coming months.
Host of Car Dealer Live James Baggott quizzed Allen about what businesses needed going into the pandemic to survive on the other side. He explained: ‘I think dealer groups that were well-run before Covid-19, that had strong balance sheets, leaders at the top and processes in place, that builds a strong culture and those businesses will do well.
‘Particularly with systems; good systems allow good compliance. The likes of Vertu, Marshalls, Cambria, they’ve all been well-run businesses before. Don’t get me wrong, they’ve got their challenges as the whole industry does, but having problems on top of that which are company specific must be very difficult at the moment.’
To watch the interview in full you can click play on the video at the top of this page or you can head over to our YouTube channel.
Coming up this week on Car Dealer Live we also have:
- Thursday: Sherwoods Motor Group MD Simon MacConachie
- Friday: The team from GForces to guide us on all things online sales.
If you have any questions you’d like to ask any of the above you can submit them live during the broadcasts or you can send them to us via this website, or our social media channels including Twitter and LinkedIn.
You can watch all of our Car Dealer Live interviews by clicking here.
