Inchcape amasses £200m war chest

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The Independent Online

Inchcape, the international car retailing group, yesterday said it had a £200m war chest to spend on acquisitions. One of the key growth markets for the company will be the UK, where it is keen to expand the number of dealerships it owns.

Peter Johnson, Inchcape's chief executive, said the partial dismantling from next year of the block exemption, the restrictive system under which cars are distributed and sold in Europe, would lead to "fewer, bigger, better funded dealerships".

Inchcape, which now owns 57 UK dealerships specialising in upmarket models such as Lexus, BMW, Jaguar, Maserati and Land Rover, could benefit from this by buying up smaller retail chains, Mr Johnson said.

Last year it bought Bates Motor Group, one of the UK's largest BMW/Audi dealerships, for £26m and also launched an internet car retailing venture with the AA.

Mr Johnson said that after raising £90m from the disposal of unwanted businesses, Inchcape was now in a "cash neutral" position" and had "significant capacity" to expand further. After returning £45m of cash to shareholders last year, a further return of capital was not considered appropriate.

Headline pre-tax profits before goodwill rose 32 per cent to £98m for the year ended 31 December, helped by a recovery in Inchcape's UK retail business where profits went from £700,000 in 2000 to £13.7m.

Inchcape said the outlook for the six major markets in which it operates was "very encouraging" with the UK continuing to recover, good growth prospects in Australia and the launch of the new Toyota Corolla set to boost profits in Greece and Belgium.

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