Updated April 23, 2008

   British Inchcape raises prices for small Russia’s cardealers as reported the chairman of directors’ board of the large Russian cardealer Genser Igor Ponomarev.

   According to him, all company plans about the purchase of smaller car retail players were broken by Inchcape. "They have raised the prices for smaller companies considerably. Two our transactions have collapsed within this month since the companies have seen how much Inchcape offers. We have been said to seat and wait when Inchcape comes for us", he said.

Since 2007 Inchcape has purchased several companies, including the British dealer European Motor Holding, as well as Latvian and Lithuanian companies.

   In Russia Inchcape has purchased 75,1% of Orgtekhstroy company (Audi dealer, owns Audi Center Vitebsky) and Peugeot dealer JSC Concord at its St. Petersburg partner Olympus. The total transaction sum was $43 million.

   Moreover, in 2006 Inchcape has purchased the dealer centers Toyota and Lexus (Axel Car) at Olympus also (through joint venture establishment). Inchcape also has joint ventures with the dealer holding Nezavisimost (Independence) in Moscow. Inchcape owns 51% of the joint venture, and Independence – 49%. Now the project is under construction. But according to the recent data, it is expected to open it at the end of the current year.

   "Judging by the investments amount the company has invested into two Toyota dealer centers’ construction in Moscow in the framework of Independence joint venture ($35 million at the first stage in 2006), Inchcape lays enormous potential. The invested sum exceeds considerably the current average indices’ investments at the Moscow market for the car centers of these makes", says Auto Business Review columnist Natalia Stepanova. "Generally speaking, the alliance with a western investor becomes the most perspective for funding of the Russian dealer companies, and such tried methods as borrowings attraction over loans and bond placements become less and less perspective. Loans rise in price, a competition for them at the stock market grows. The consequences of liquidity crisis tell. Russian companies do not hold public offerings often; moreover one has to possess substantial material resources and developed business. So, Inchcape cooperation is of great interest for dealer companies. It is a way for large holdings, like Independence, to get the market by the closed make for them".

   Meantime, Ponomarev declared he saw no prospects for Genser and Inchcape amalgamation. "Inchcape suits those who intends going out of business, as they put the management for the company control. We are not intended going out of business", he said.

   Genser is the official dealer of the leading world car brands: Nissan, Chevrolet, Opel, Ford, Saab, Cadillac, Hummer, and Infiniti. The company operates more than 16 years at the Russian market. It manages six centers for cars sale and maintenance in Moscow and two in the regions of the Russian Federation. The company turnover exceeded $390 million in 2006, and it realized more than 17 000 cars.

Expert comments

Konstantin Romanov from Finam Investment Company

– The British pursue a hard policy directed to their market stake increase. Such policy implies assets buying-up, as it is the most rapid method of sales increase at the current moment. The estimation is conducted by the European parameters that are much higher than the situation at this market.

Thus, one should not eliminate Inchcape prefers not to save purposively. It has made the strategic step which makes M&A transactions too expensive both for the rivals and for Genser.

When speaking about the prospects of the foreign companies in Russia, we estimate them as rather good. It is obvious that due to assets buying-up they would occupy no less than 20% of the market, and in Moscow and St. Petersburg – to 40% in the nearest five years. However, one should take into account various factors. For example, further liquidity crisis’ development will significantly limit the opportunities of the western players in terms of assets buying-up.