INCHCAPE has agreed to sell its three retail sites in mainland China for £54m, it announced today.
The multi-brand automotive distributor and retailer is offloading them to China Yongda Automobiles Services Holdings Ltd, and follows the recent disposal of showrooms in Australia and the UK as it looks to optimise its retail-only portfolios.
Those UK and Australia sales mean it will receive some £150m in all, with it shedding a combined 16 sites.
China has been Inchcape’s only exposure to retail-only operations in Asia, meaning the latest transaction will see the group exiting the country, which yesterday celebrated the 70th anniversary of the republic’s founding.
The sites comprise Lexus in Shaoxing, Porsche in Nanchang and Mercedes-Benz in Jiujiang, and Inchcape says their disposal will enable it to refocus its regional resources on the more attractive distribution markets across Asia, whose prospects it says remain highly attractive, with the region a key contributor to the group.
The transaction is expected to complete by the first quarter of 2020 and is conditional upon final OEM partner and regulatory approvals. Inchcape said it expected a minimal impact on 2019’s trading profit, with the business expected to contribute some £9m to group trading profit. The exact net cash proceeds of the sale are subject to completion adjustments.
Stefan Bomhard, pictured, group chief executive of Inchcape, said: ‘The disposal of our three remaining sites in mainland China marks a further shift towards focusing on our core distribution business model, thereby allocating our resources towards more attractive profit pools in the Asia region.
‘Our focus is on growing both organically and inorganically in distribution as evidenced through the 10 businesses we have won and acquired since 2016.
‘The global opportunities for Inchcape are exciting. While we exit three retail sites in China today, through our acquisitions to date we have become a top five distributor of Chinese OEMs across the markets we operate in Latin America. We remain focused on ensuring we are driving value for shareholders today and for the future.’