Pendragon will ditch its used car dealership brand Car Store as it plans to tackle new online upstarts head-on.
The dealer group will be launching a direct rival to the likes of Cazoo and soon-to-be-launching Carzam as it plans to ‘disrupt standalone used car’ sales.
In a bold statement to the Stock Market this morning, the dealer group laid out how it will combine online sales with physical locations to gain a ‘meaningful share of the market’.
A new name for the used car proposition will also be launched as the group rebrands the used car proposition.
Pendragon also revealed that it believes the transition it has seen to digital sales across its business during the pandemic will be permanent.
And it will be focussing on growing its Pinewood DMS arm that sells its services to other dealers.
The statement said the new strategy will help the group achieve profit before tax of between £80-90m by 2025.
Bill Berman, chief executive officer, said: ‘We firmly believe the three strategic priorities set out today will provide a platform to transform the group’s performance, leading to sustainable profit growth and delivering attractive returns for our shareholders.
‘Critically, our strategy is designed to equip the business to react to changing consumer patterns in the years ahead and ensuring, in particular, that we are well positioned to take advantage of digital innovation.
‘Pendragon has grown to become a leading motor retail group with a strong network of dealerships.
‘Throughout my years in the automotive industry I have seen, and responded to, major shifts in consumer habits and market dynamics.
‘I am confident we can unlock the full potential of Pendragon by delivering targeted improvements to our people, our systems and our operations.’
As part of the used car strategy Pendragon said it will look to expand the footprint of certain sites.
It said it will create eight larger, purpose-built facilities in targeted locations which will become stocking points, collection locations for customers and hubs for home deliveries.
Each site will cost £7.5m to redevelop and will be rolled out over the next five years.
‘We believe this an ambitious plan, but is achievable through the delivery of the initiatives we have set out,’ said the statement.
Pendragon says this used car arm will sit outside of its franchised used car business and will be designed to appeal to a wider customer base both ‘physically and digitally’.
The group believes that it has better access to stock than its rivals and can leverage its franchised dealerships to keep new used car inventory flowing.
Pendragon said the pandemic has allowed it to ‘right size’ its business and cuts already made will deliver £37m worth of savings.
The statement added: ‘We believe there is a strong case for change and a significant opportunity for upside in profitability and the group is well positioned to deliver transformational performance.’