F&I Management & Training

Share prices fell sharply at all the major listed dealer groups in September as the economic turmoil engulfed motor retailing.

Inchcape's stocks suffered the heaviest fall, down 27.5 per cent during the course of the month to 187.5 pence, giving the global group a market capitalisation of £863m.

Philip Wylie, head of automotive at corporate finance firm Houlihan Lokey, said the group lost value after it sold five of its six Volvo franchises in the UK to Mill Garages for £3m but was unable to dispose of the properties as part of the deal.

Houlihan Lokey said this highlighted that the buyer's funding banks were not willing to lend on this element of the deal, not that Inchcape wished to retain ownership of the premises.

"Inchcape would have preferred to sell the whole shebang," said Wylie.

"The banks are being very cautious, they won't lend money if they can possibly help it."

Lookers' shares got a shot in the arm in early September from investment research company Edison, which drew attention to the advantage of the group's strong aftermarket focus in the current climate.

Aftersales contribute about 60 per cent of Lookers's operating profit despite accounting for only around 20 per cent of turnover.

However, having risen to 62 pence by 10 September from August's closing price of 56 pence, the group's share price closed September down 17 per cent at 46.5 pence.

Pendragon saw a marginal decline of 6 per cent in September to 8.9 pence - managing to stay clear of its 12-month low of 7.5 pence.

Houlihan Lokey said the group benefited in early September from speculation of stakebuilding activity.

Luxury marque group HR Owen suffered a 31 per cent downturn in its share price last month to close at 70.5 pence.

Wylie speculated that crashes in the Russian stock market could have led to investor concerns that "its rich Russian customers might suddenly desert them".

Vertu, which operates in the volume brand sector as Bristol Street Motors, saw 10 per cent knocked off its share price in September to finish at 24 pence and Caffyns was down 8 per cent to 487 pence.

DATED: 16.10.08

FEED: MT