Pendragon wants to renew frayed relationships with automakers
The boss of car trading group Pendragon says a partnership with Chinese electric vehicle group BYD is the first step in rebuilding its reputation among carmakers after years of declining ties.
As the company reported a better-than-expected 30 percent drop in profit due to higher costs, CEO Bill Berman said it was trying to win back automakers that went out of business under his predecessor, longtime boss Trevor Finn.
Over two decades, Pendragon has built itself into the UK’s largest car dealership group through acquisitions.
But during the expansion, several of the UK’s biggest or most profitable brands, such as Volkswagen and Audi, cut ties.
“We officially pissed everyone off,” said Berman, who joined the business in 2019. While there are often two parties to blame for the breakdown of relationships, “it was all down to us,” he told the Financial Times.
This year, the company will open eight dealerships for Chinese manufacturer BYD, the first new carmaker it has worked with in decades.
Pendragon is in talks with a number of other new Chinese electric brands looking to break into the UK and Europe, he added. He also wants to win back several of the car manufacturers that drove away during the previous administration.
In the final years of Finn’s tenure, Pendragon increasingly favored used cars, although it maintained some links with major car manufacturers such as Jaguar Land Rover through its Stratstone brand.
Relationships between dealership owners and automakers are crucial when selling new vehicles, but are much less important for used car dealerships.
Berman is now looking to expand its new car business by reclaiming previously abandoned brands.
“We have developed our strategy in such a way as to talk about the expansion of our new vehicle representation. And BYD is part of it. We are looking at all options.”
On Wednesday, Pendragon said inflation and higher costs in its used car business lifted pre-tax profits to £57.6m last year from £83m in 2021, a smaller-than-expected fall.
Revenues rose 5 percent to £3.6 billion, while the company said orders were very strong in the first three months of 2023.
Availability of used cars is “expected to remain tight due to the previous three-year lack of new vehicle registrations,” which is likely to keep used car prices high, it said.
The group has faced investor turmoil, from a withdrawn takeover bid by its biggest shareholder to a revolt over boardroom pay.
Last year, Hedin, which counts former Pendragon boss Finn as a director, made a takeover bid for the retailer and also said it was blocking a potential takeover by another potential buyer. It withdrew the offer in December, sending Pendragon shares down by a fifth.
Recently, new activist investor Palliser took a 4 percent stake and called for board seats and a restructuring of the company.
The business has been under pressure to break up, particularly to realize value from Pinewood’s technology business, which Berman says is the group’s “crown jewel”.
He said the company is “better as it is”.