PENDRAGON PLC has seen a large drop in new vehicle revenue during the first quarter of 2018.
The dealer group’s interim management statement, which was issued today, reveals a massive 13.3 per cent decrease, which the company says is ‘broadly in line with the market decline given our mix of brands’.
National new vehicle registrations fell by 12.4 per cent, while retail was down 13.8 per cent. In addition, new vehicle gross profit decreased 17.6 per cent year-on-year.
Meanwhile, used vehicle revenue was down 1.5 per cent in Q1, but this has been blamed on a lack of nearly new vehicles. If pre-reg models are excluded from the result, the used vehicle revenue actually grew by 3.1 per cent. That said, year-on-year, used vehicle gross profit dropped 16.5 per cent.
This came as the period saw Pendragon’s used inventory reduce by 3.3 per cent, while nearly new stock fell by a staggering 24 per cent. The group put this lack of fresh stock down as the reason for its reduced margin.
In March, the company said it was unable to retain enough used stock to meet demand, so its sales suffered even more as a result. To counter this, the firm is aiming to increase its offering in Q2, with a view to capturing an increased volume of activity at an improved margin.
Aftersales revenue for Q1 was up 3.1 per cent, thanks to a strong UK retail labour sales performance, while gross profit was down 3.7 per cent as the group continued to invest in capacity to try and drive future growth.
The quarter also saw the group save £3.9m of like-for-like costs, as underlying profit before tax fell from £32.4m to £15m year-on-year.
Trevor Finn, chief executive of Pendragon, pictured, commented: ‘Our profitability in the first quarter of the year is in line with our expectations against a backdrop of an exceptionally strong comparative in the prior year and our expectations of the market conditions in the first quarter being realised.
‘In the first quarter of 2017, the industry experienced the effect of the vehicle licence tax changes, which brought forward vehicle revenue into quarter one of 2017.
‘We also achieved in quarter one 2017 record used vehicle revenue, as the group tested the sales capacity of its retail stores. In the first quarter of 2018, national new vehicle registrations fell by 12.4 per cent, which is in line with our expectations of the calendarisation of new vehicle registrations this year.
‘Our used vehicle revenue, excluding nearly new used car sales, increased by 3.1 per cent against a strong comparative. We are making progress on the delivery of our target of doubling used revenue by 2021, with three retail store openings this quarter and further retail stores planned in the year. The group performance remains in line with expectations for the full year.’
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