Marshall buys eight Jardine VW Group sites
18 December 2019
Marshall Motor Group has bought eight Jardine Motors Volkswagen Group businesses for £9.3m.
In Marshall’s seventh deal of the year, the group has acquired six Volkswagen car operations, one VW commercial vehicle and one Skoda franchise. The sites are all north of London, and located at Milton Keynes, St Albans, Loughton, Harlow, Aylesbury and Letchworth.
The purchase marks yet another significant change for the VW network this year, following new franchise agreements being agreed last year.
The purchase makes Marshall the largest retail partner with VW Group, holding 53 franchises. The deal also makes Marshall the second largest group VW car franchise holder with 15 sites, behind Inchcape with 16 VW car sites.
The Jardine sites purchase will see 400 staff move over to Marshall Motor Group.
The VW dealerships aren’t expected to be profitable until 2022, according to Marshall chief executive Daksh Gupta.
“While the acquired Businesses are currently loss making, we are confident in their future potential. The businesses are in excellent locations that are contiguous to our existing Volkswagen and Skoda franchises and each site is fully compliant with the latest brand requirements.”
A spokesman for Marshall added: “The Volkswagen franchise in Aylesbury shares a site with an Audi Approved Used business which is being retained by Jardine. Completion of Aylesbury Volkswagen will be deferred pending completion of the legal process to sub-divide the site. It is expected that this process and the transfer of the Aylesbury Volkswagen business will be completed in 2020.
“Aggregate revenue for these businesses was £196.1m in 2017 and £212.8m in 2018 with a loss before tax in these years of £3.3m and £2.8m respectively. As a result, the Acquisition is expected to be earnings dilutive in 2020 and 2021 while the group improves the operational performance of the businesses. We expect the deal to be earnings enhancing in 2022 onward.
“The total consideration agreed for the fixed assets and goodwill of the businesses was £[9.3m], including deferred consideration in respect of the Aylesbury business, funded from the group’s existing resources. The fixed assets include £4.25m in respect of freehold/long leasehold properties in Letchworth and St Albans and the goodwill is £3.6m. In addition, excluding Aylesbury, the businesses held [£13m – exc Aylesbury] of inventory of motor vehicles, parts and other stock at completion which will be primarily funded via the company’s existing stock funding facilities.”
Marshall is also expected to complete the purchase of Derby Volvo from Vertu, before Christmas.
Assuming the Derby Volvo acquisition is completed in 2019, this will mean Marshall Motors has added 20 sites (19 franchises and one bodyshop) this year including the purchase of two Honda dealerships from Jardine in September and several Skoda businesses from Progress in March.
Auto Retail Agenda understands that Marshall is not expected to slow its growth by acquisition in 2020.
Marshall also issued a trading update at the same time as revealing the VW site acquisitions.
Mr Gupta said: “As has been well documented and as previously reported, trading conditions for the UK automotive retail market have been challenging in 2019, impacted by continued weak consumer confidence as a result of political uncertainty over Brexit together with ongoing cost headwinds and vehicle supply constraints as a result of the implementation of further emissions-related regulations in September 2019. The Society of Motor Manufacturers and Traders’ (‘SMMT’) currently forecasts the UK new car market to decline 2.8% in 2019 and a decline of 4.4% in 2020 with the next forecast due to be issued in January 2020.
The Group has performed well in this challenging market and despite trading conditions weakening further in Q4 2019, the Board’s outlook for the full year remains unchanged.”