The boss of car dealership group Pendragon has said working with Chinese electric vehicle group BYD is the first step to rebuilding its reputation among carmakers after years of declining relationships.
As the company reported a better than expected 30 per cent drop in profits because of higher costs, chief executive Bill Berman said it was trying to win back automakers that stopped working with the business under his predecessor, longtime boss Trevor Finn.
Pendragon was built up into the largest car dealership group in the UK over two decades through acquisitions. However, during its expansion, several of the UK’s largest or most profitable brands, such as Volkswagen and Audi, cut ties.
“We had officially pissed everybody off,” said Berman, who joined the business in 2019. While relationship breakdowns often have blame on two sides, “this was all on us”, he told the Financial Times.
This year, the company will open eight dealerships for Chinese manufacturer BYD, the first new carmaker with which it has worked in decades.
Pendragon was in talks with several other new electric Chinese brands looking to break into the UK and Europe, Berman said. It also wanted to win back several of the carmakers driven away under the previous leadership.
In the latter years of Finn’s tenure, Pendragon had increasingly prioritised used cars, although it kept some links with large carmakers such as Jaguar Land Rover through its Stratstone brand.
Relationships between dealership owners and car manufacturers are crucial when selling new vehicles but matter far less with used car businesses. Berman now wants to grow its new car business, winning back marques that had previously left.
“We have pivoted our strategy, to talking about growing our new-vehicle representation. And BYD is part of that. We’re going to look at every opportunity there is,” he said.
Pendragon on Wednesday said inflation and higher costs in its used-vehicle business pushed pre-tax profits to £57.6mn last year, down from £83mn in 2021, but a smaller drop than had been expected.
Revenues were up 5 per cent at £3.6bn, while the company said orders in the first three months of 2023 were very strong.
The availability of used cars was “anticipated to remain tight, following the prior three years of registration shortfalls of new vehicles”, which was likely to keep second-hand prices high, it said.
The group has faced investor disruptions, from a withdrawn takeover offer from its largest shareholder to a rebellion over boardroom pay.
Last year Hedin, which counts former Pendragon boss Finn as a director, proposed a takeover offer for the dealer and said it would block any takeover by another potential buyer. It withdrew the offer in December, which caused Pendragon shares to fall by a fifth.
More recently, new activist investor Palliser had built a 4 per cent stake and called for board seats and a shake-up of the company.
The business has faced pressure to break itself up, particularly to realise value from its Pinewood technology business, which Berman insisted was the “crown jewel” of the group.
He said the company was “better the way it is”.
“Pinewood gives the company a unique competitive advantage and is a major driver of our strategy,” he added.
