Pendragon to be sole Alfa Romeo dealer within M25

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The Independent Online

City Editor

Pendragon, the motor dealer spun off from Williams Holdings in 1989, has been granted the right to sell Fiat and Alfa Romeo cars across the Greater London region in a deal which observers believe marks a significant shift in the way cars are currently sold in Britain.

The award of a large region to one dealer - Pendragon has exclusive rights to sell the makes within the M25 - is a significant change from the current system which limits the number of franchise outlets any one dealer can operate within a given area. Potentially it offers successful groups big economies of scale and marks an important step towards the consolidation of the car retail industry.

According to Trevor Finn, chief executive of the Derby-based group, the market area approach is based on a successful trial in the US, where General Motors launched a new car, Saturn, and distributed it through big geographical territories. The idea is that dealers set up a core network of outlets, building up as the number of the make's cars increases.

The new system also allows a better allocation of resources within an area. If, for example, a region includes a high number of used cars of a certain make, but little demand for new cars, a service centre can be built without the extra unnecessary cost of a new car showroom.

Within London, Pendragon plans to build 15 Fiat locations, of which three will be service only outlets. Alfa Romeo will be represented at nine of the sites.

Mr Finn said yesterday the introduction of new models from Fiat and Alfa Romeo had enabled the brands to outperform the UK market significantly. Sales of Fiat cars increased in the UK by over 20 per cent last year, and have risen by 21 per cent so far this year, increasing market share to about 4 per cent.

The Fiat agreement is the second time Pendragon has been awarded the right to sell a make over a large area. Last year it was signed up by Volvo to develop the South London territory which includes all areas within the M25 south of the river Thames. Four dealerships are now open for business in that chain and another will open in June after refurbishment.

Pendragon's concentration on the luxury end of the car market paid off last year when pre-tax profits rose 17 per cent to pounds 11.3m, despite a difficult market for car sales.