More mergers in paper-thin times.
The trend for motor manufacturers to allow dealers to control larger geographic areas has gone some way to lift returns.
Takeovers achieve the same objective by improving economies of scale and through cost savings. Restructuring in the last 12 months has seen groups such as Henlys and Lex Service sell their dealership operations, while others including Pendragon, Reg Vardy and Sanderson Bramall have expanded at speed.
As consolidation gathers pace, it is not clear whether Bramall will emerge as a takeover target or a predator.
The company, which runs a Vauxhall forecourt in Wolverhampton and has outlets in Newcastle under-Lyme and Cheltenham, failed last year in an auction to acquire rival, Appleyard. But the company ended the year by pulling off a deal to buy Charles Sidney a smaller competitor best known for its Mercedes distributorships.
The transaction, however, is expected to leave it with gearing of about 130 per cent which may make the company think twice before embarking on significant expansion.
On the other hand, Bramall's move last week to appoint Rover commercial director Mr Peter Jones as chief executive, appears a good investment for the future.
Mr Jones, aged 41, has held a senior board position at Rover, and his appointment was welcomed by City analysts.
The news came as Bramall's founder, Mr Tony Bramall, split the job of chairman and chief executive, a role that he has performed since the formation of the company in 1990. Mr Bramall remains as executive chairman.
Meanwhile, Bramall's financial prospects are trumpeted in a new circular from Birmingham broker Albert E Sharp which believes that the acquisition of Charles Sidney is an excellent fit both in terms of the franchises acquired and geographical location.
Sharp is forecasting pre tax profits of pounds 13.75 million in calendar 1997 against pounds 12.3 million in 1996. But the numbers are forecast to improve much more dramatically by the end of this year, when the effect of the Sidney purchase is felt fully for the first time.
Sharp has pencilled in pounds 18.25 million, which represents a pre tax profits upgrade of more than pounds 3 million.
The main attractions of the Sidney buy, according to the broker, are the Mercedes, Rover and Vauxhall franchises, together with a sizeable contract hire business (3,000 vehicles) adding to Bramall's own start-up operation which has grown to 1,000 vehicles and recently moved into profit.
Sanderson is understood to be forging ahead with an attack on the combined group's overheads which involves integrating the two contract hire operations, the two used car buying departments and the commercial fleet divisions.
There is little doubt that the Sidney purchase, coupled with the disposal of a stake in its Thrifty car rental offshoot, has significantly improved the outlook for Sanderson both in 1998 and beyond.