EU move prompts Arriva to sell car dealerships

Arriva, the passenger transport group, yesterday revealed plans to exit its remaining motor retailing interests and put the business up for sale.

Arriva, the passenger transport group, yesterday revealed plans to exit its remaining motor retailing interests and put the business up for sale.

The move follows changes to the European Union "block exemption" rules, which means that car dealers are no longer tied to one manufacturer. This has led to the car makers putting their dealers on notice that the existing franchises will end.

Arriva said it had received terminal notices for its 33 dealerships that will see these franchises end in a year or two. It decided that now was a good time to sell up. Analysts estimate the business, which has 2,000 employees, is worth about £55m. NM Rothschild, the investment bank, will market the business.

Bob Davies, Arriva's chairman, said: "Our objective will be to maximise shareholder value while securing the continued employment of as many employees as possible. The decision we have reached has no impact on our vehicle rental business."

In the six months to June, the Arriva motor retailing business reported an operating profit of £6.1m on turnover of £358m. Net assets at 30 June, before financing, were approximately £73m, including nearly £40m of freehold property. The business owns all its own sites, which are often in city-centre locations, across the country. The dealers represent 13 manufacturers, including Ford, Vauxhall and BMW.

A spokesman for Arriva said: "This is not a core business. The manufacturers are reshaping their relationship with the dealers. This is not a business we seek to expand or invest in."