Lansdowne
Venture Group (LVG), the parent firm of the Red Driving School, has entered
administration after a major investor withdrew its support.
MCR, the
administrators who were appointed on Tuesday, said the company was suffering
“due to a lack of funding and investment”. The company began life as Airport
Driving School, set up by David Little and Nick Buckingham in 1992.
RED has
had numerous TV adds, portraying driving instructors making £35,000 per year and walking straight into a job,
this has led many people with redundancy money signing up for a driving instructor
training course, unaware that they have to pass three exams before becoming
fully qualified.
The
company made a net profit of £3m in the year to October 4 2009, but in the 16
weeks to January 24 lost £2.2m. Turnover for the full year was £40.5m, and
£9.5m in the 16 weeks to the January 24.
MCR hopes
to sell the company as a “going concern” because it believes there is little
wrong with the business model.
Andrew
Stoneman, a partner at MCR, said: “We are confident a buyer will be secured as
the most recent financial reports indicate the business has been quite a
healthy and profitable operation.”
LVG
employs 400 staff across the country, with 250 in its Red Instructor Training
division. It makes most of its money from training driving instructors who pay
fees of about £3,000. They do not
mention how many driving instructors are facing losing their jobs. In a
troubled driving instructor industry, they may find employment difficult.
Trainees
who cannot afford to pay fees up-front often take out a loan to cover the cost
of the course. Red Instructor Training used to offer loans through Barclays but
the bank withdrew that facility after a review at the end of last year.
Barclays
have also withdrawn the offer of point-of-sale loans from other training
organisations.
Red is
best-known through its TV advertising campaign, focusing on drivers who are
looking for a career change and people who had been made redundant. But demand
for driving lessons has fallen during the recession.
In the
two years from March 2007 to March 2009, the number of new applications for
provisional licences fell 34 per cent, and are likely to be lower by the end of
this financial year.
LVG also
offers accountancy services to driving instructors and publishes ADI News, a
monthly driving instructor industry magazine.
The joint administrators at MCR seem to believe it will not be long before a
new owner takes the helm as several interested parties have already put bids
forward.
He added that a lack of funding is the only reason for LVG's move into
administration.
The group, which has annual revenues of over £40m, is continuing to trade as
normal while a buyer is sought.
LVG is one of the largest driving instructor training companies in Britain.
Based in Brighton, the company has 400 employees across three offices.
In addition to the Red Driving School, LVG also owns Red Instructor Training
and Red Fleet Training, which have a focus on training and testing driving
instructors, as well as trade publication adiNEWS and Practical Driver
Instructor Aids, which supplies tools for instructors.