Halfords to become the UK’s largest commercial tyre seller after agreeing new £37.2m deal

Halfords will become the UK’s largest commercial tire supplier after agreeing to acquire another car service company.

The retailer of bicycle and car products has said it will pay £33.2 million in cash for Lodge Tyre, followed by a further £4 million in fiscal year 2025, subject to specific profit levels being reached.

Headquartered in Stafford, Lodge operates 50 garages and hundreds of mobile vans in Northern England, West Midlands and East Anglia, serving primarily B2B customers with commercial vehicles.

It is the fifth car assistance company in the past three years to be acquired by Halfords, after Tires on the Drive and McConechy’s in 2019, Universal early last year and Iverson and Axle Group in the past 12 months.

Halfords told investors the latest acquisition “further consolidates” its position as the UK’s largest car maintenance and repair company.

In addition, the Redditch-based group said it would help expand its presence in parts of the UK where its presence is smaller and increase its chances of winning major national contracts.

When the deal closes, Halfords expects motoring to account for more than three-quarters of its annual revenue, while services will account for just under half of all sales, compared to just 26 percent in 2020.

Lately, the company has gradually shifted its focus from cycling to car services, which it believes will be more financially sustainable and lucrative.

Graham Stapleton, Halfords chief executive, said: “The current trading environment reinforces the rationale for building increasingly resilient needs-based revenue streams, which is exactly what the automotive category offers.

“Within that, the nature of the commercial tire market means it is non-discretionary and therefore extremely well insulated against macroeconomic uncertainty.”

In a trading update published last month, the company revealed that total sales rose 9.2 percent in the last quarter, thanks to extremely strong growth in Autocenters’ auto service and repair business.

This offset the declining trade in bicycle revenues as consumers cut spending amid inflationary pressures.

Halfords benefited greatly from a surge in bike sales during the early stages of the Covid-19 pandemic, as Britons tried to avoid public transport and reduced cars on the road.

Growing concerns about global warming fueled a further rise, as did the boom in domestic holidays and the rising popularity of electric bicycles and scooters.

Easing pandemic restrictions eventually led to a slowdown in orders, but the group was also hit by supply chain pressures such as rising freight and raw material costs, as well as staff absences and recruitment difficulties.

Derren Nathan, Hargreaves Lansdown’s head of equity research, said: ‘The B2B automotive services industry has an added level of resilience as fleet managers have no choice but to replace worn or damaged tyres. They don’t let their employees stand by the road.’

Halfords Group Shares were up 3.2 per cent to £1.48 mid-morning Wednesday, although their value has fallen by more than half so far this year.