Pendragon chief urges Ford to keep Jaguar

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The Independent Online

The head of Britain's biggest car dealer called yesterday on Ford to retain Jaguar after the company's appointment last week of a senior investment banker to consider a disposal of the prestige brand.

Trevor Finn, the chief executive of Pendragon, said the American car giant should keep Jaguar, having invested billions of pounds in the business since its acquisition in 1989.

"Personally I think Ford can make Jaguar work. They have done the hard work, they have cut the business down to size, they have taken the right action but these things take time," he said.

Mr Finn was speaking as Pendragon reported a 15 per cent increase in underlying pre-tax profits for the first six months of the year after the £500m purchase of the rival car dealer Reg Vardy in February.

Traders chose to concentrate, however, on the fall in operating profit margins and Pendragon shares closed nearly 6 per cent down, making it one of the biggest fallers in the FTSE 250.

Operating profit rose from £56.7m to £73.3m in the period on revenues up by a half to £2.64bn. But the operating margin fell from 3.2 per cent to 2.8 per cent. Pendragon said this was largely due to the Vardy acquisition and a property-sale-and-leaseback deal, which had resulted in the group paying more rent.

The successful takeover of Vardy and the failed bid for Lookers, another UK car dealer chain, led to a £3.4m charge in the six months and Pendragon said the charge for the full year would be about £5m.

Although Pendragon is now the country's biggest car dealer by some margin with annual sales of £5bn, it still has only 5 per cent of the new car market, giving it huge scope to steer further consolidation of the industry. Mr Finn said, however, that the group would concentrate on reducing its borrowings before looking at any other big deals. Debt as a proportion of equity is now down to 200 per cent from a peak of 280 per cent immediately after the Vardy deal and the target is to reduce it to between 70 and 100 per cent by the end of next year.

Pendragon is in the process of rebranding all of its 384 UK dealerships under Stratstone for premium marques, such as Jaguar, Land-Rover, Aston Martin, BMW and Ferrari, and Evans Halshaw for volume makes, such as Ford and Vauxhall.

Mr Finn said the group was considering launching a third brand in the next 12 to 19 months to deal in "value" cars from China and India. The company is also planning the launch of a national television advertising campaign next spring to promote the two existing brands.