Lookers in top gear for expansion

AMERICAN INVESTMENT giant GE Capital is set to bankroll Northern Ireland's biggest motor retailer Lookers, making it one of the half dozen or so mega-dealers left standing in Britain after the latest consolidation in the industry.

The Manchester-based firm, with turnover of £700m last year, aims to double in size by acquisition in a bid to stand shoulder-to-shoulder with listed rivals Pendragon and Reg Vardy and the Jardine Matheson-owned Lancaster Group.

Lookers has been one of the stocks driving a boom in the sector, having nearly doubled in 12 months, with profits leaping as low interest rates have fuelled soaring car sales.

Many believe new 'block exemption' rules from the European Union will see a whole host of smaller motor dealers falling to bigger operations. The rules will see manufacturers giving retailers exclusive rights to large geographical areas and will likely spark increased competition from the entry of non-traditional operators such as supermarkets

In the past two months, fast expanding CD Bramall has snapped up Quicks for £45m, Dixon Motors has sold out to jamjar.com partner Royal Bank of Scotland for £110m and United Auto Group of the US bought Sytner for £100m.

Lookers is insulated from takeover by the 29% shareholding held by GE Capital through its acquisition five years ago of Irish motor finance group Woodchester. Chairman Fred Maguire, who has been briefing the City on Lookers' strategy, said of GE Capital: 'They are backing our plans for growth.'

Lookers, with 84 dealerships in the UK, has its eyes on expansion in the Midlands where Listers of Coventry, with 19 dealerships, and Camden Motors with 30 showrooms are reckoned to be among the UK's best privately-run operators. It may also grow in the South, where it is to be found only in Essex.

Outside of international dealer Inchcape, there are only five quoted independent operators on the stock market ranging from nationwide operators European Motor Holdings and Ryland to smaller dealers HR Owen, Wm Jacks and Caffyns.

After the consolidation of 1997, whch saw big players such as Henlys and Lex Service quit the market, last year saw DC Cook go bust - with much of the group later snapped up by Co-op Motor Group - while HMG, a Legal & General Ventures buyout from Henlys, also went to the wall.