7:47 am, April 24, 2024
Pendragon’s new US owner, Lithia Motors, is to cut around 250 jobs from the UK dealer group after deciding to kill off the firm’s CarStore used car supermarket brand.
The American giant completed its £397m purchase of Pendragon’s dealerships and leasing business earlier this year and is now setting about a drastic restructure.
According to the Financial Times, the firm is planning to cull the used car supermarket in response to a ‘collapse in the supply of used cars’.
Staff were told of the decision yesterday (Apr 23) with all 16 of Pendragon’s CarStore sites now set to close down. The closures will include nine CarStore sites and seven CarStore pods.
Just four CarStore sites will stay open – although they will be become franchise dealerships under Pendragon’s Stratstone and Evans Halshaw brands.
Meanwhile, the seven remaining CarStore pods will become Evans Halshaw Direct sites.
A spokesman for Lithia confirmed that consultations around redundancies are already underway.
They said: ‘Following the acquisition and ongoing merger, we have carried out an initial review across the group.
‘As a result of which, we will be going into consultation with a number of our colleagues around potential redundancies.
‘All colleagues have been notified today, to explain how they may be impacted’.
They added: ‘We will be closing nine CarStore sites and seven CarStore pods this quarter in order to focus on Evans Halshaw and Stratstone.
‘Four CarStore sites will be retained and re-franchised, expanding our retail operations with three existing carmakers, while seven remaining CarStore pods will become Evans Halshaw Direct sites.’
Move set to cause alarm bells following Lookers job losses
Pendragon is far from the first UK dealer group to announce heavy job losses shortly being taken over by North American investors.
Late last year, after being told to Canada’s Global Auto Holdings, Lookers also confirmed hundreds of redundancies.
Staff were left fuming at their treatment from the new owners, with Christmas parties cancelled at the last minute as a result of cuts.
There have also recently been questions about whether the deal could fall foul of Takeover Panel rules after the wave of redundancies.
It now remains to be seen whether any further job losses will follow at Pendragon.
Reacting to the latest announcement, David Kendrick, CEO of chartered accountants UHY Hacker Young, told Car Dealer: ‘Whilst it’s never good to read about job cuts, the reality is that when large businesses – especially PLCs – get taken private there is excess resource unlikely to be required.
‘The buyer will want to do an independent review of the full business and consider which elements are viable and which perhaps aren’t.
‘It is not nice to read but also not unexpected I’d suggest.’
Other US investors to take over UK dealer groups in recent times include Group 1 Automotive’s £346m deal to acquire Inchcape, announced last week.
The only UK car dealers still listed on the London stock market are Vertu Motors and Caffyns – with the prior said to be a ‘sitting duck’ for overseas investors.
You can read why car dealerships this side of the Atlantic are proving so attractive to American investors here.
