AP Eagers sells NSW car dealer to appease ACCC
The Australian Competition and Consumer Commission (ACCC) on June 24 said it had “preliminary concerns” about AP Eagers’ proposed $2.3 billion buyout of Automotive Holdings Group because of the impact on car retailing in the Newcastle and Hunter Valley region.
ACCC acting chairwoman Delia Rickards said at the time that a combined AP Eagers and AHG would operate 46 per cent of new car dealership sites in the Newcastle and Hunter Valley region, including those for the 10 most popular brands. The enlarged entity would run 54 per cent of the dealership sites selling those brands.
She said the ACCC’s preliminary view was that locals weren’t likely to travel outside the region to find a better deal.
AP Eagers chief executive Martin Ward said on Friday that while it still didn’t believe the merger with AHG would substantially lessen competition in any market, it would offer the divestment of dealerships in Newcastle and the Hunter Valley to address the regulator’s concerns. This would allow the merger to proceed in a timely manner.
Klosters has nine main vehicle brands that are sold at the three dealerships. They are BMW, Ford, Honda, Hyundai, MINI, Mitsubishi, Nissan, Suzuki and Volkswagen.
The $70 billion South Korean motoring giant Hyundai was among the outside players who expressed concerns about the overall merger in an earlier submission to the ACCC.
Hyundai warned in its submission that the AP Eagers and Automotive Holdings Group merger would erode competition in Australia and could force smaller dealers out of the market.
Hyundai was also worried the merger could drive up the costs to consumers of having their vehicles serviced and result in the enlarged entity eventually “cherry-picking” the brands it wants to sell, excluding some car brands from key markets.
The strong views from the No. 4 player in the Australian new vehicle market, which sold 94,817 vehicles last year through a network of 170 outlets, prompted a meeting between the AP Eagers chief executive Martin Ward and Hyundai Australia chief executive Jungwook Lee.