We lead with another story of a dealer acquisition today. You may have already read that Sharmans have agreed in principal to the purchase of Louth Tractors.
This follows on from last week's most read story on our Weekly Update which saw the news of Russels buying RES.
And if you go back a few weeks further you might remember that RW Crawford announced they were taking over Agwood Ltd. A short while before that we were reporting on C&O Tractors taking over the site and Massey Ferguson trading area from MST.
All of these takeovers and buyouts have come in just the first few months of this year. Feel free to scroll through the archived news section on our website and you'll find plenty more examples along these lines taking place over the past couple of years.
It's clearly a dominant, continuing trend and one that shows little sign of abating. A question that it prompts of course, asks if smaller, independent dealers should be concerned about the practice?
A change in the network
As mentioned briefly last week, it's something that our recent discussion with a panel of representatives of manufacturers and suppliers touched upon. And whilst respecting their anonymity, when they were speaking frankly they told us they saw the move to the U.S model of fewer, larger dealer groups as an inevitability.
One posed the question will single-depot dealers, who just do consumer and don't sell larger machinery, are they going to disappear? Will those businesses naturally migrate to online-only sales, will they sell out to a bigger group, or unfortunately will they simply go out of business?
One of our panelists talked of some research they had undertaken themselves, that had apparently led them to discover that since 2018 forty-five dealerships that they knew of, no longer existed. Either they didn’t have a succession plan and had closed their doors permanently or they were merged into another, larger company.
They felt this was only going to continue, where dealers of the future are going to be bigger, stronger and more corporately branded. Consequently they believed, the network will include fewer smaller, less branded, single depot companies. Those they felt, will be disappearing.
We heard that moves such as this reflect the nature of major manufacturers' ambitions. A figure was mooted of just how low a number of dealers that John Deere for example, allegedly desire to have representing them for the whole of the UK. Whether this was entirely accurate, I'm not sure. But what is clear, is that there's certainly fewer individual dealers representing that brand than there used to be!
Mergers are a continuing trend we were told. Similar to our news pages, these suppliers are receiving notification of dealership takeovers almost every single month now. They are looking at perhaps between ten and twelve a year.
We heard that there is some resistance. The network is seeing dealerships pick up new brands and new territories. But if those dealers who have perhaps lost a major franchise and have now acquired a less well-known range, if they don’t then receive a reliable supply of quality goods, they won’t be in the game for the long-term either.
It was said that whilst this rationalisation of dealerships was mostly being seen in the agricultural machinery sector, there are groundcare companies being absorbed into these mergers as well. Companies that are traditionally ag, often now have a groundcare division too because they see a profitability in that. There’s a definite appetite for these big groups to have that whole offering – maybe even including construction.
What our panel did seem to agree on, was that single-depot, non-franchised dealers are at risk moving forward – from their point of view, that was definite.
In the most brutal assessment we heard, the opinion was voiced that if they personally were a small garden machinery dealer, they would definitely be looking for either something unique that keeps them alive – or to be doing something different!
Your thoughts?
But what do you, our dealer readers think about this trend? Do you feel your offering is unique enough to maintain your independence or are you planning on making changes to ensure this? Equally, is selling to a larger dealer group not something you would be adverse to anyway?
It is clearly a lot to think about, with some major decisions to be made for businesses around the country I'm sure.
To hopefully offer some assistance, at the Service Dealer Conference this November our expert speakers, in combination with the smaller seminar sessions, will be considering ideas as to how dealerships might sustain and evolve themselves for this uncertain future. Also discussions will be held around the whole issue of succession for the dealership too.
But what are your thoughts regarding the ongoing rationalisation of the independent dealer network? Please let us know in the comments below.
