Arnold Clark Automobiles Ltd.

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Arnold Clark Automobiles Ltd.

134 Nithsdale Drive
Pollokshaws
Glasgow
Lanarkshire G41 2PP
Scotland
Telephone: (+ 44) 1414-222-700
Fax: (+ 44) 1414-222-790
Web site: http://www.arnoldclark.co.uk

Private Company
Incorporated: 1954
Employees: 6,000
Sales: £1.4 billion ($2.24 billion)(2003)
NAIC: 532111 Passenger Cars Rental; 441110 New Car Dealers

Arnold Clark Automobiles Ltd. is the leading automobile dealer in Scotland, and the fourth largest in the entire United Kingdom. With more than £1.4 billion in sales in 2003, the company is also Scotland's largest private company. Led by founder Arnold Clark, the company has established a network of nearly 120 new and used car dealerships. Most of the company's showrooms are in Scotland, although England, with nearly 20 showrooms, represents the group's fastest growing territory. Arnold Clark holds franchises from some 20 different car manufacturers; yet the company's large size enables it to offer its own insurance and financing services, in addition to those often imposed by auto makers. The company also owns the property to all of its showrooms. In addition to insurance and financing, the Arnold Clark empire extends to one of Scotland's largest suppliers of automobile parts and accessories; motorcycle and scooter sales; accident and automotive repair services; and car and van rentals. In the latter category, Arnold Clark has been recognized as one of the United Kingdom's leading hire services. Founder Clark, at 76 years of age, shows no signs of letting up (much of the group's growth has come since the late 1990s) nor any intention of stepping down as head of the company. Nonetheless, Clark is supported by a large family, with five of his children taking active roles in the company.

An Honest Car Dealer in the 1950s

Glasgow, Scotland-born Arnold Clark left school at the age of 14 and started his working career as a shoe designer—he designed the tops of shoes—for a retail group known simply as Co-Op. That job enabled the thrifty Clark to save up some £160 before he was called up for military service at the age of 17, joining the Royal Air Force in the late 1940s. During his four years with the RAF, Clark, who later claimed that he did not know how to drive, was trained as a motor mechanic, earning the rank as an NCO Motor Mechanic Instructor.

Upon leaving the army at the age of 21, Clark sought employment in the automobile industry. Clark quickly discovered that he was overqualified for a simple mechanic's position, yet lacked the experience and finances to set up his own business, despite the £160 in savings he had kept throughout his military service. As Clark told the Sunday Times: "I had no job and I was petrified. I was technically skilled and determined to get into the car business, but needed to get work to earn some money."

Clark turned to family friend and pub owner Robert Sunderland, who agreed to allow Clark to use Sunderland's drinks license in order to organize dances and other catering functions in the region's Masonic halls and other establishments. For this, Clark put together a traveling bar, and soon had enough business to begin hiring temporary staff. Sunderland, as Clark explained it, remained a major figure in the young Clark's early career, acting as "more my mentor than a boss, teaching me the basics of business, and I taught myself management skills through the employment of casual labor."

Yet Clark remained committed to an entry into the automotive market, and continued building up his savings. By 1953, he had enough money saved to begin buying used cars, then repairing and reselling them from an abandoned shed. Clark's first purchase was a Morris Ten Four, for which he paid £70. After repairing the car himself, Clark turned around and sold it for more than double his purchase price.

Clark not only had to face competition among other car dealers, he also had to confront the decidedly poor public perception of used car dealers at the time. As Clark admitted: "It was about building a good name, a sound business, and being polite and honest." Clark quickly displayed a knack for personal service, winning customer confidence. As part of that effort, Clark adopted the slogan "Promises Kept."

The Suez Canal crisis and the resulting gasoline shortages provided Clark's springboard to national success. As Clark explained: "One of my biggest breaks came with the Suez crisis, which should have been my downfall. Petrol was rationed and I saw this as an opportunity. I traveled up to Wick in northern Scotland and bought cars on the cheap because demand was low due to petrol shortages, and I sold them for full value in Glasgow where petrol was not so short. I made enough money to open my first showroom."

That showroom opened on Park Road, in Glasgow, in 1956, the first to boast the Arnold Clark signage that shortly was to capture the leading share of the Scottish automotive market. The original Clark showroom remained opened into the next century, despite becoming a money-loser for the company, for sentimental reasons, a rare example of indulgence on the part of Clark and his company. Indeed, throughout the next four decades, Clark maintained a policy of plowing group profits back into the company, enabling it to grow strongly and weather the ups and downs of the U.K. automotive industry.

Joining the Ranks of U.K. Leaders

Clark's growing car sales enabled him to branch out at the end of the 1950s and into the 1960s. In 1959, the company gained its first new car concession, starting sales of Morris automobiles. Two years later, as sales started to climb, the company opened its second showroom. As Clark told Scotland on Sunday, "It was very hard to make the first £1000. After that it gets easier."

Clark continued adding new showrooms and franchises at the beginning of the 1960s, and by 1963 the company boasted five showrooms and two new makes, Daimler and the period's hottest car maker, fast-growing Jaguar. Clark was aided by the reluctance of new car dealers to offer used cars at their own showrooms, providing a steady source of new vehicles for Clark's growing automobile empire.

Working six days a week, 12 to 14 hours per day, Clark continued to plow profits back into the business, enabling the group to expand without taking on any significant long-term debt. This allowed the company to expand its network, in part by taking advantage of down cycles in the U.K. economy to buy up struggling car dealerships. By the beginning of the 1990s, Clark's network numbered some 40 dealerships, including most of the major automotive brands.

A strong part of the group's success was its willingness to branch out into a range of extended automotive services. During the 1970s and 1980s, the group began adding new components, including accident towing and body repair services, as well as full-scale automotive repair and maintenance operations. The company also began a parts and accessories service, becoming the largest dealer in that segment in Scotland. Later, Clark developed its own automotive rental service as well. In a related market, the company launched its own motorbike and scooter showrooms. Meanwhile, in the late 1980s, the company decided to take over its advertising and marketing operations, launching its own advertising department to prepare its ads, which generally featured Arnold Clark himself.

Another integral part of the group's success was its willingness to help in customer financing, with Clark himself often putting up funds to back purchases. This led the company into developing its own financing component. From financing, the group entered the insurance market, offering not just automobile insurance, but home and fire insurance policies as well. These latter services, coupled with the group's policy of owning its showroom properties, did not always sit well with a number of automotive manufacturers. The group's growing portfolio of car brands topped 20 makes by the end of the 1990s. Nonetheless, several major names, including upscale brands such as Mercedes and BMW, remained absent from the group's showrooms. Another notable gap was the group's lack of a Ford dealership, despite the brand's strong position in the U.K. market.

By the middle of the 1990s, Clark's empire had topped 45 showrooms throughout Scotland, generating sales of nearly £350 million. Yet the company, which for a time had held a spot among the top ten U.K. car dealers, had slipped down in the national ranks. From about 1996, however, Clark, by then 70 years old, put his business into overdrive. The company started a new, more aggressive dealership campaign, culminating in September of that year with the £7 million purchase of Ewarts of Iverness, which operated four dealerships in Scotland. The deal brought the group's dealership total to 55, as sales soared past £460 million for the year, firmly establishing the company once again among the U.K. top ten.

Clark had set his ambitions higher; by mid-1998, the group's network topped 70 showrooms and included the £6 million purchase of ten dealerships from two Aberdeen-based groups, Corners and Harpers. These acquisitions also helped the group plug a gap in its franchise portfolio, adding Clark's first Ford dealerships.

By 2000, Arnold Clark had cracked the U.K. top five, boasting 90 dealerships, and a growing number of showrooms in England as well. The company's sales had risen accordingly, nearly doubling over the previous three years as the group gunned its engines for the £1 billion sales mark, which would enable it to claim the number one position among privately held Scottish firms.

Company Perspectives:

We at Arnold Clark are a committed team of caring professionals. The simple philosophy on which the company was founded in the 1950s remains the aim of the company today—to offer unrivalled value for money and create the highest possible levels of customer satisfaction.

Clark nearly met its billion-pound goal at the end of 2001. Instead, the company had to wait for the following year, when its sales raced past that mark to top £1.2 billion. Already Scotland's largest dealer, with more than a 15 percent market share, the company stepped up its expansion, building its network to more than 120 shops by 2003, including nearly 20 in England. With sales of more than £1.4 million, the company had also moved up a notch, taking the number four spot in the entire United Kingdom.

In the meantime, Arnold Clark remained solidly at the helm of the company he'd founded nearly 50 years before. In excellent health, Clark had no plans for retiring soon. With nine children—including five taking part in the company's operations—Clark appeared committed to maintaining the company's privately owned status, and to his own place as sole decision-maker. Nonetheless, as Clark admitted to the Evening Times: "It's a good position to be in, but there are times you feel a little bit lonely and you'd like to ask someone else's advice."

Key Dates:

1954:: Arnold Clark buys his .rst car, repairs it, and makes his first sale.
1956:: Clark establishes his .rst showroom in Glasgow.
1959:: Company receives its .rst new car franchise, for Morris automobiles.
1963:: Company opens a .fth showroom.
1996:: Ewarts of Iverness is acquired, boosting dealership network to 55 showrooms.
2003:: Annual sales at Clark top £1 billion with 120 showrooms in Scotland and England.