British car dealers are better at getting in a huddle than dealers in any other part of the world.

As of today (5 December), the biggest UK huddle is even bigger. Pendragon, Britain's biggest car retail group has made an accepted bid for Reg Vardy, Britain's number two by annual sales revenue.

That makes Pendragon's chief executive, Trevor Fynn, the undisputed leader of the pack. Having absorbed CD Bramall into his network just over a year ago, he is now three times the size of his nearest rival in the UK. That assumes of course, that he will not be outbid.

And yet, Pendragon will still have less than 6% of the UK new car market. In terms of plate glass showrooms, that means 300-odd compared with a British population of over 5,000.

For a long time, no-one has been particularly sure what the advantage is in having big huddles of dealers. The maximum size of UK dealer groups has been growing slowly over the past 20 years. But acquisition-driven growth has not really been that much more impressive than that of groups which have increased size by organic growth.

Growth has had a series of varying explanations. First it was people like Appleyard recognising that they were over-exposed to British Leyland and balancing their risk by acquiring dealerships franchised to other brands.

Then it was regional groups growing nationally. Then it was managements who fancied their financial management testing their skills over a larger group.

Then it all went into reverse as dealers deliberately increased their exposure to certain brands. The strategy became a brand partnership rather than an over-exposure. Same thing with regional policy; instead of national spread, groups looked for regional dominance. And if they could get brand dominance in a region dominance (like Pendragon's failed Fiat/M25 strategy) so much the better.

There were also plentiful pretences of economies of scale. A group of 50 dealers would get huge discounts if all purchase of oil or tyres or paint were centralised and given to a single supplier. Well yes, to a degree. But we never saw big groups outperforming the owner-driver retail garage on that basis. In fact it has routinely been the case that the likeable local man who lived over his garage and played golf at the local club between visits to the Rotary meetings made more profit than a peripatetic general manager from one of the big groups ever could. Manufacturers who compared the performances of their franchisees regularly prove that to their own satisfaction.

The value of having the scale to advertise a retail brand nationally is not the answer either. Retail car dealer groups are still hideously schizophrenic. Some can still be running three brands of equal weight: the brand of car, the historic name of the garage - retained because of its reputation in the local community for trustworthiness, and the acquiring group brand. Which flag goes to the top of the pole: BMW? Victoria Garage? Or Reg Vardy?

All the major groups are beginning to consolidate brands. Pendragon itself has recently, discreetly, appended "a Pendragon company" at the bottom of the local newspaper ads of all its dealers. And the acquired companies that were continuing to trade under their own names are gradually adopting one of three trading names. The same thing has been happening within Reg Vardy.

The other thing that has been a genuine scale benefit has been group accounting - using a single server-based electronic financial package for financial reporting rather than independent systems site by site.

But the real game now may be reaching sufficient size to tweak the tail of the manufacturers. A company the size of Pendragon may well reach a position where it can dictate terms of business to the smaller manufacturers, in the way that electricals retailer Comet can get an audience with Sony.

Now that Lookers has joined the chase to buy Reg Vardy, along with one other as-yet-unnamed suitor, the task for we onlookers is to discover what game is being played. If there is no rationale expressed, it is probably safe to speculate that the dealers want to play hardball with car suppliers. It will be some years yet before they summon the strength and confidence to actually say so.

And the eyes of the world will be upon them. From Japan to South Africa, small groups of dealers want to see what can happen when there are big groups large enough to get uppity.

Rob Golding

Auto market intelligence
from just-auto

• Auto component fitment forecasts
• OEM & tier 1 profiles & factory finder
• Analysis of 30+ auto technologies & more