Fleet News

Ford pulls out of Pendragon venture

FORD is withdrawing from its joint venture with Pendragon to co-own dealerships, two years after paying £20 million for a 49% stake in Pendragon's 28 Ford dealerships.

Pendragon will pay £5.5 million for the Stripestar chain of dealerships and assume the group's borrowings of £18 million. The deal is conditional on approval by Pendragon's shareholders at an extraordinary general meeting next week.

Ford and Pendragon claim single ownership will help Stripestar respond more rapidly to changes in car retailing, and provide greater focus on business and property reconfiguration that has been difficult under the joint venture because a number of Stripestar's properties are leased from Pendragon.

But Ford insists that the transaction in no way jeopardises its commitment to its other joint venture dealer initiatives.

Ian McAllister, chairman and managing director of Ford, said: 'We have seen an improvement in trading throughout the Ford dealership network in 2001 compared to 2000 which has led to improved profitability. Our agreement with Pendragon does not affect our other retailing joint ventures in the UK and Europe.'

Trevor Finn, chief executive of Pendragon, said Stripestar had achieved one of its two objectives, to improve customer service to Ford buyers by implementing the latest methods in customer handling, and investing in skilled staff, quality premises and efficient processes.

Call handling, finance and insurance sales and warranty and accounting services have been centralised at Pendragon's customer services centre.

But success in its second objective of improving financial returns, has been more elusive. Figures released by Pendragon show that in 2000 the Stripestar dealerships made pre-tax losses of £8.4 million on turnover of £409.8 million, compared to a profit of £2.5 million on a turnover of £429 million in 1998.

'Progress on delivering improved financial returns has been hampered by tough markets and a high overhead structure given both the location and geographical spread of the business. Acquiring the outstanding shares in the joint venture will help us improve these returns,' said Finn.

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