12:59 pm, October 7, 2026
Franchised dealer group Parkway saw profits rebound strongly last year as improved margins, lower finance costs and tighter cost control helped offset a £14.5m fall in turnover.
The Volkswagen dealer group Parkway Derby Limited made a pre-tax profit of £657,056 in the year to December 31, 2025, up from just £81,322 in the previous year.
Revenue fell 6.6% from £218.2m to £203.7m, but gross profit increased from £13.9m to £15.1m, lifting gross margin from around 6.4% to 7.4%.
Operating profit also increased from £2.28m to £2.50m.
In its strategic report, Parkway said: ‘Despite the reduction in revenue, gross profit increased to £15.1 million from £13.9 million, representing an improvement in gross profit margin from 6.4% to 7.4%.’
The group said used vehicle trading had started the year positively as values stabilised following what it described as the ‘significant market realignment experienced during 2024’.
It added that the more stable market had ‘provided a more predictable trading environment and reduced the impact of stock valuation movements compared with the previous year’.
Lower finance costs also played a significant role in the recovery.
Interest and similar expenses fell from £2.25m to £1.87m, meaning more of Parkway’s operating profit was able to flow through to the bottom line than in the previous year.
The company said: ‘Whilst interest rates reduced during 2025, borrowing costs remained relatively high and continue to represent a significant cost to the group.’
Parkway also pointed to operational changes made during the year as helping improve profitability.
The dealer group said it had carried out a review of its cost base, organisational structure and operating processes, resulting in ‘the restructuring of certain departments and functions, with the objective of creating a more efficient and sustainable operating model’.
It said changes implemented during 2025 had already generated savings, with further benefits expected during the current financial year.
Directors said: ‘Despite the challenging market conditions, the improvement in gross margin, together with the actions taken to improve operational efficiency and control costs, contributed to the improvement in profitability during the year.’
Parkway added that its commercial vehicle division had ‘experienced a particularly difficult year’, with the switch to the new Volkswagen Transporter restricting product availability during the model changeover.
The company said the disruption ‘significantly reduced sales opportunities and adversely affected the performance of the commercial vehicle operations’.
The wider business also continued to face pressure from subdued consumer confidence, cost-of-living pressures and relatively high borrowing costs.
However, Parkway said new passenger vehicle sales had remained resilient despite the difficult consumer environment, while aftersales continued to provide an important source of revenue and margin.
The dealer group ended the year carrying significantly more stock, with total inventories rising from £34.5m to £41.6m.
Vehicle inventories increased from £28.75m to £32.31m, while used vehicle funding stood at just over £15m, and demonstrator funding also rose sharply from £6.91m to £12.47m.
Parkway said it would continue focusing on ‘disciplined stock acquisition, stock turn and pricing strategies to protect margins and respond quickly to changes in customer demand’.
Looking ahead, the group said it expected economic conditions and consumer confidence to continue influencing demand, but believed the changes made during 2025 had put it in a stronger position.
Directors wrote: ‘The directors believe that the actions taken during the year have strengthened the operational efficiency of the business and leave the company well positioned to respond to future market conditions.’