Marshall Motor – The Businesses

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By the time Marshal Motor (LSE:MMH) floated on AIM in 2015 it had been led by Daksh Gupta for seven years. He was hired by the controlling family to accelerate its growth using its base of dealerships spreading out from Cambridgeshire into the East of England and the east Midlands.

When he joined in 2008 the Group had 41 franchises covering 16 brands, concentrated in seven counties: mostly Cambridgeshire, Norfolk and Suffolk, with a couple each in Oxfordshire, Herts, Leicestershire and Lincolnshire.

Gupta was previously MD of Ridgeway, a car dealer of a similar size but with a different geography, with most of its branches in the Home Counties.  Ridgeway comes back into the story later.

The 2008 strategic review conducted by Gupta concluded that:

  • MMH had an unbalanced portfolio comprising two-thirds volume brands, with the remaining third split between prestige and alternate premium brands;
  • The growing use of the internet had resulted in customers beginning the car buying process remotely by searching online, and;
  • Its strong presence in East Anglia meant its dealerships were effectively competing with each other for customers and talent, resulting in a lower turnover per site than those of its peer group with wider geographical presence.

Thus, a five-year plan was introduced:

  • To add depth and scale of representation of its core car manufacturers. There are discounts to be had from car manufacturers if the retailer takes large volume. In addition, if there are many outlets selling the same brand, vehicle stock management is more efficient, e.g. cars can be transferred from say Grantham to Ipswich to balance out the offering at each site.  Thus, MMH broadened its geographical reach through the acquisition of new dealerships.
  • It exited other parts of its portfolio that were no longer considered core.
  • Greater diversification was gradually achieved for a balanced mixture of prestige, alternate premium and volume brands.

By the end of 2014, Marshall Motors had exited 21 non-core or loss-making franchises and some other businesses no longer key to its strategy.

During this time, it made 13 acquisitions as well as building six start-ups, together adding some 51 franchises and strategically entering into brands such as Audi, Mercedes-Benz, Volkswagen, BMW and BMW MINI.

Marshall Motor then had 71 franchises and 24 brands across 63 sit………………To read more subscribe to my premium newsletter Deep Value Shares – click here

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