Aftersales keeping car dealer Pendragon profitable
MIDLAND-based car dealership group Pendragon has seen new and used sales lift during the third quarter with operating profit up £1.5m compared with last year.
Despite the vehicle sales uplift, the group said its most lucrative operation remained aftersales; an area it said it was looking to capitalise on.
In a Q3 trading update the group said its trading performance remained in line with expectations for the full year.
“In the third quarter, like for like used car volumes were up by 2.8%. In the three year period to September 30, 2012 used car volumes have grown by 40%. The most recent data from Experian showed a 2.0% reduction in national volume during the second quarter of 2012,” it said.
“Used car margin has grown as expected with margin up 0.7% in the quarter compared to the prior year. We expect to see the normal seasonal patterns in used car margin in the fourth quarter. Overall like for like used gross profit in the quarter was 11.7% ahead of the prior period. This includes gross profit in Quicks which was 27% ahead of the prior period in the third quarter.”
“Aftersales remains the core area of profitability,” it added. “The national vehicle parc (number of cars on the road) of cars up to three years old is now increasing. The group is committed to enhancing profitability in this area through the Vehicle Health Check programme together with a number of other initiatives.”
In the third quarter, aftersales turnover was in line with the prior three months. Gross profit margin of 60% was also in line with the past quarter, however, overall gross profit was marginally down.
In the new car sector, for the nine months ended the September 30, 2012, sales at its premium Stratstone dealerships increased by 13%, whereas all new retail sales – excluding Motability – increased by 21.4%.
In the volume sector, represented by the Evans Halshaw network, national registrations increased by 10.3% for the nine months ended September 30. However, Pendragon’s increases came in at 8.8%.
Its California business, which sells Aston Martin, Jaguar and Land Rover, is in line with the 2011 performance and overall it said it expected the US operation to be slightly behind last year due to product supply constraints impacting the last quarter.
In outlook, it said underlying trading performance remained in line with expectations for the full year.
“Used performance continues to be a differentiator for the group and we believe this will continue in the final quarter with further recovery in used margin. The new retail car market has performed ahead of the comparator period throughout the year and we expect that to continue in the fourth quarter,” it said.
