Inchcape Retail may be up for sale, group confirms

AM100 dealer group Inchcape Retail UK is poised for acquisition.

Parent Inchcape plc, which globally is now almost exclusively a vehicle distributor/wholesaler except for its UK dealer division, is looking for a buyer for those 72 car and van showrooms, according to reports by Sky News.

Inchcape's board has confirmed it has received interest from several potential purchasers of the dealer group, and it is considering its strategic options.

Its sale, should a deal be achieved, would be the latest in a string of takeovers involving top 10 AM100 dealer groups - US-based Lithia & Driveway bought ​​​​​​​Jardine Motors and Pendragon's dealerships and Finance and Insurance Services divison, US-owned Sytner bought Rybrook, Canada's Global Auto Holdings bought Lookers and Constellation Automotive bought Marshall.

According to Sky News, Inchcape is working with Rothschild bankers to find a buyer for its 72 dealerships, which in last year's AM100 turned over £1.329bn and employed almost 2,700 people. Analysts predict the retail division could be worth several hundred million pounds.

In a statement, Inchcape said: "Inchcape confirms that following approaches from a number of interested parties it is reviewing strategic options for the UK Retail business, which potentially could include a sale. This review is at a very early stage and there can be no certainty that it will result in a transaction."

In the past decade Inchcape PLC has sold or ended many of its dealership ventures overseas and instead expanded its licenced distributorships in Asia-Pacfic and South America, whereby it manages the importing and wholesale of new vehicles for global vehicle manufacturers. 

It sold its UK leasing division in 2019 to Toyota.

Ideal for Hedin?

Its portfolio of UK dealerships is mostly focused on premium brands, including BMW, Mercedes-Benz, Jaguar Land Rover and Porsche.

"This doesn’t surprise me at all having seen Inchcape exit a number of sites over the past few years to regional groups etc. The UK market is now a relatively small element of their worldwide business and therefore potentially moving this on would make logical sense," said David Kendrick, chief executive of UHY Hacker Young (Manchester).

"My guess would be that one of the existing UK international partners will look to acquire this or more likely a new international entrant such as AutoNation or Emil Frey who have been considering UK expansion perhaps. Lithia have a lot on their plate with the Jardine / Pendragon integration, however Hedin haven’t scaled just yet so maybe it could be one for them.

"It has some great assets within it so would imagine it could have some strong interest. How the OEMs deal with it is a completely different matter however!"

Last March Inchcape chief executive Duncan Tait highlighted the success of the automotive PLC’s “portfolio shift towards distribution” as it reported a near-50% growth in profits in its 2022 annual financial results.

The risk of losing some £200 million annual turnover due to OEMs introducing agency contracts was highlighted by Tait, who made media headlines recently in Post Office scandal coverage for admitting he had described the Post Office's Horizon system as Fort Knox when he was Fujitsu's chief executive between 2011 and 2014.