Pendragon enjoys strong Q1 driven by improving sales
CAR dealer group Pendragon has been buoyed by a strong first quarter showing, with group sales for both new and used vehicles showing increases.
The group, which trades through the Stratstone and Evans Halshaw dealerships, saw new car sales climb by 4.3%, outperforming the market as a whole, which fell by 1.5% during the period – excluding the scrappage scheme.
Used car sales in the first three months were up 14% year-on-year, with margins up 12%. The group said it was optimistic used car volumes would continue to grow during the remainder of the year.
The group said its aftersales profitability improved by 3.9% year-on-year.
It said the premium sector of its market, catered for through the Stratstone network, continued to demonstrate the ‘V’ shaped recovery profile.
Stratstone dealership focus on luxury brands such as Jaguar, Land Rover, Lotus and Aston Martin.
Armed with the Q1 figures, the group said it was “cautiously optimistic” about the prospects for 2010 and saw profitability in line with expectations.
In an interim statement to the London Stock Exchange today, the group said: “Aftersales activities continue to represent the most profitable activity for the group.
“During the first quarter of the year we are pleased to report that our UK aftersales profitability has improved by 3.9% over the prior year. Excluding the profits generated from internal work, relating to the preparation of new and used vehicles for sale, aftersales profit was 2.3% behind the prior year.
“This is aligned with our experience of the improving trend in the key aftersales segment that began in the third and fourth quarters of 2009. We are encouraged by this result achieved despite the difficult weather conditions experienced in January impacting this quarter’s performance.”
During the three months ended March 31, UK new retail car registrations grew by 37.8%, with total new car registrations – including fleet – rising by 27.3%.
Pendragon said that excluding the additional volume from the scrappage scheme, retail registrations would have fallen slightly, by 1.5% in the quarter.
“Excluding scrappage our total retail sales were up 4.3%. Sales in our Stratstone premium business continue to demonstrate the ‘V’ shaped recovery profile whilst our Evans Halshaw volume business demonstrate a more ‘U’ shaped recovery profile,” said the statement.
“Retail sales excluding scrappage were up 10.6% in Stratstone and in Evans Halshaw were up 2.1%. New car margins have also been stronger resulting in a significant improvement in new car profitability compared with Q1 2009.”
It said in outlook, it continued to focus on the aftersales market as this was a growth area for the business.
“Used cars should continue to have stable margins and early indications are that volume will improve in the coming months as the economy eases out of the recession,” said the statement.
“Within the new car sector, our Stratstone business has had a particular strong start to the year. We expect this trend to continue. Our new car performance in our Evans Halshaw business was assisted by the scrappage incentive scheme and we therefore expect new car growth to be modest in the foreseeable future.
“Across the business we continue to focus on maintaining our control on costs but without impacting our growth aspirations.”
The statement will be well received by the automotive industry, as it suggests that the recovery in the market while still fragile, continues to gain momentum.
“The first quarter of this year has seen a continuation of the improvement in profitability that started in 2009. We remain cautiously optimistic that this will continue during the year and that profitability will be in line with expectations.
“We expect our balance sheet to be in line with our plan at half year and lender covenants comfortably achieved.”
