8:35 am, May 15, 2023
Sales of VW Group car dealerships are being blocked by the car maker if they’re not to ‘preferred partners’, it has been claimed.
Car dealers wanting to sell their businesses to the highest bidders have said VW Group leaders have blocked deals if they’re not to the companies the German car maker wants.
The move has caused some dealers to be offered paltry prices for their businesses, as the ‘preferred partners’ are the only firms allowed to bid and have made derisory offers as a result.
Sources have told Car Dealer that the VW Group would like to reduce the number of business partners it currently has from ‘more than 170 to fewer than 25’, similar to the Mercedes-Benz network.
‘This is a long-term ambition of the VW Group. They’d like to cut the number of partners that run its different franchises across the brands down to around 25 across the country within the next decade,’ said a source.
‘The group already has preferred partners and has carved up the UK and assigned territories to those different businesses.
‘If sales come up of VW Group franchises in those areas, the sellers are told who the brand would approve to buy – and usually that’s just one firm.
‘That makes the sale process very one-sided and means that low-ball offers come in as the preferred partner knows they are the only firm that is allowed to buy the franchise that is for sale.’
Several sources at different businesses – including some on the preferred partners list – have confirmed the plans. Car Dealer is not naming them to protect their identities.
VW Group said it ‘did not recognise’ the numbers Car Dealer had been told.
One VW Group franchise holder said: ‘This has been a long-held ambition of VW Group to reduce the number of different businesses it works with, and in some way it makes sense.
‘For the preferred partners, there are efficiencies to be gained because if, for example, you run a VW, Audi and Skoda dealer. you will only need one warranty administration person as the process is the same across the brands. That is easier for the manufacturer and for you as a partner.’
However, there are some dealers who have been negatively affected by the plans and are frustrated the sale process is being dictated to them.
When Vertu Motors bought Helston Garages, it did not get the VW Group brands that were part of that deal. The reason why was not disclosed.
The 12 Helston Garages VW Group sites were eventually sold to Yeomans, with Vertu snapping the lion’s share of the rest of the group in a £185m deal. Sources said VW is likely to partner with Vertu in other areas of the country rather than the south-west.
Car Dealer asked David Kendrick, CEO of mergers and acquisitions specialists UHY Hacker Young, what impact this would have on the value of dealerships.
He said: ‘If an individual party is only introduced to a sale process, how is it possible for a shareholder to understand what the true value is?
‘If this is the case, it would be very challenging as an adviser to give comfort to a shareholder that they are receiving the fair value for their business without understanding, in a competitive environment, what the true value is.’
Car Dealer contacted VW Group for comment.
In a statement, it said: ‘Mergers, acquisitions and disposals are an enduring feature of the retail motor industry.
‘Volkswagen Group works closely with its retail partners to ensure future-proofed, sustainable networks focused on best-in-industry customer convenience.’
