By James Sillars, Business Reporter
The company behind the Evans Halshaw and Stratstone car dealerships has announced plans to exit the US market and limit its exposure to the slowing new car business in the UK.
Pendragon announced the moves in a strategy update to investors six weeks after issuing a profit warning that sparked an 18% fall in its share price.
The franchise operator which, then, had cautioned of "significant market pressure" in the UK, said in its update that it was hopeful of raising £100 before tax from the sale of its "strong" US motor group.
Pendragon said it had decided it was "economically right to sell the business at this time to realise its value".
In addition, the company said it was aiming to release a further £100m in capital from its UK new cars business.
This would be through dealership disposal proceeds and "investment not deployed over the next three years", the statement said.
It gave no further details and did not say whether the planned closure of some "premium" brand dealerships would result in any job losses.
It has been a rocky year for the new car market – with sales declining UK-wide for seven consecutive months amid a squeeze on household budgets from the rate of inflation outpacing wage rises.
Industry body, the SMMT, has also pointed to confusion among motorists about the future of diesel models – with sales sharply lower.
Pendragon indicated in October a new focus on its used car operation, confirming then that the strategic review would lead to greater investment in its software and online technologies to fulfil vehicle servicing.
Pendragon said it also planned to re-start its share buy-back programme.
Shares – down 17% in the year to date – closed 3% higher on Monday.
Chief executive Trevor Finn said: "Following our strategic review, we have focused on reshaping the business to accelerate transformation and ensure capital allocation is optimised across the group.
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"The actions I am announcing today are a further step towards achieving our strategic objectives.
"I believe this strategy will provide more reliable and sustainable returns."
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