These proposed closures are being effected with the full support and approval of the Group’s brand partners.
Three of the franchised dealerships impacted are in relatively small markets and within close proximity of other existing Group dealerships of the same franchise. Where possible, this will enable the Group to retain its existing customer base. These are Honda Mountsorrel, Nissan Boston and Vauxhall Welwyn Garden City.
Two of the impacted businesses share a subscale site in Oxford with a high fixed cost base which is not sustainable in the longer term. These are the Maserati franchise and one of the Group’s used car centres
The final closure is the Citroen Cambridge new car sales franchise which is the last remaining representation point with this particular brand partner. The Group will be retaining Citroen authorised repairer status in Cambridge.
In the year ending 31 December 2017 these dealerships are expected to make a combined revenue contribution of approximately £40m and a pre-tax loss of approximately £1.3m (before central overhead charges). Closure costs are expected to be approximately £6m which includes £2m of non-cash items including asset and goodwill impairments. The cash closure costs will in due course be partly offset by the disposal of a surplus freehold property (Nissan Boston) and the realisation of working capital / disposal of stock held in the dealerships.
In the Group’s 2017 financial statements these closure costs will be treated as a non-underlying item.
Daksh Gupta, Marshall Motor Holdings plc Chief Executive Officer commented: “These proposed closures are in line with the Group’s stated strategy of driving class leading returns and will support our 2018 financial aspirations. This decisive action reflects the Board’s focus on tight financial discipline whilst investing in and supporting our businesses.
Over coming weeks we will be engaging with colleagues in these businesses and will be seeking to mitigate the impact where possible.”