CAR retailer Reg Vardy has bought five North-East dealerships from Priory Motor Group in a deal worth £15.5m.

It has exchanged contracts to acquire a BMW and a Mini dealership in North Tyneside, Vauxhall dealerships in Blaydon and Gateshead, and a dual franchised Kia and Chevrolet dealership in Gateshead. It has also acquired a body shop in Newcastle.

Chief executive Sir Peter Vardy said: "This is a significant acquisition for the group. The BMW and Vauxhall dealerships represent a further strengthening of our manufacturer relationships in these prime franchises.

"The franchise expansion gives us the opportunity for future growth and we hope to make further announcements with regards to additional Kia representation in the near future."

Reg Vardy now holds 98 dealerships between Reading and Aberdeen, employing more than 6,000 staff and selling about 200,000 cars a year.

The group said the estimated total cash consideration for the properties, fixed assets and stock of the new businesses was £15.5m.

Based on unaudited accounts for the year to 8 January 2005, the dealerships reported turnover of £61.6m, pre-tax profits of £1.1m and net assets of £9.4m.

Bill Oliver, managing director of Priory Motor Group, said: "There have been colossal changes within the sector over the past two years and to compete effectively size has become increasingly important.

"We estimate that we would need to treble the size of our business to achieve long-term success. It is therefore in the best interests of our staff and customers in the North-East to join one of the biggest groups in the UK motor trade."