9:35 am, August 16, 2019
STRUGGLING car dealer Pendragon has continued the sell-off of its US showrooms by offloading its Chevrolet dealership in California to help reduce its net debt.
The sale of the Puente Hills showroom for approximately £17.2 million to Scott Biehl – the operator of a privately owned dealership – comes just three months after the group sold two Jaguar Land Rover dealerships in California for £60m. It also sold its sole US-based Aston Martin dealership to US Auto Trust last July for £3.1m.
Pendragon, which trades under the Evans Halshaw and Stratstone brands, added that the business will continue to offload the rest of its US operations and will use the cash to pay down its debt pile – at a time when the company has seen chief executive Mark Herbert quit after less than three months and sales in the UK have struggled.
The deal to sell the Chevrolet dealership will also require the approval of General Motors and the car giant can nominate a replacement if bosses are unhappy. Pendragon says it will make a further announcement once the transaction is completed or earlier if there is no completion.
It comes amid turmoil in the company boardroom. Former chief executive Trevor Finn retired from the role on March 31, with Herbert joining Pendragon as chief executive-designate on March 4 and being appointed to the board as chief executive on April 1. However, he left suddenly on June 27 and a replacement is still to be announced. It is understood he clashed with chairman Chris Chambers on how to turn round the company.
Pendragon saw its shares dive in April when it announced a review into operations after it fell to an unexpected loss of £2.8 million in the first quarter. The performance fell around £10 million short of board expectations, comprising some £7 million from the impact of falling margins, about £2 million from cost increases and £1 million from the worse-than-expected performance of Car Store, which increased from 26 to 34 sites last year.
It has predicted a major half-year loss when it releases its half-year results on September 18. However, despite the widening losses in its Car Store vehicle supermarket arm, which are expected to reach £25m, high levels of used car stocks left to shift, one-off costs to its bottom line and the impact of price cuts to boost new motor sales, it said it was set to return to profit in its second half, adding that a turnaround plan would be outlined in detail alongside the results next month.
Meanwhile, finance director Tim Holden also stepped down on March 31, with successor Mark Willis taking up the role of chief finance officer and joining the board on April 8.
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