8:11 am, September 27, 2024
Directors at Eastern Western Motor Group have taken a swipe at Mercedes’ decision to implement agency sales as the group announced reduced profits for last year.
The firm is the latest in a long line of automotive retailers to see its profits slashed in its latest accounts, following on from the likes of Listers, Vindis and Vospers.
Car Dealer has today published a special feature on just why it is that dealers are not making as much money as they once were and Eastern Western has certainly not bucked the trend.
Documents published via Companies House this week show that the West Lothian-based retailer made a profit before tax of £14.8m in the 12 months to December 31, 2023.
That figure represents a slide of more than 26% when compared to the £20m the outfit made in 2022.
Despite this, the firm managed to raise an improved turnover of £859m, compared to 2022’s £811m.
In response to falling profits, directors pointed the finger of blame at ‘general inflationary increases’ and the costs of opening new Toyota and Lexus sites.
They also hit out at Mercedes’ implementation of agency sales, which they claim cost Eastern Western more £50m in income.
A recent report by Cox Automotive described agency sales as a ‘false dawn’ and encouraged the automotive industry to ‘move on’.
In a statement included in the accounts, director and secretary Nasser Mohammed said: ‘In 2023, the motor group’s turnover increased from £811m in 2022 to £859m.
‘This increase is after the move by Mercedes-Benz in January 2023 to an agency model where we now receive a handling fee instead of invoicing the new vehicle.
‘This change to the agency model has reduced our turnover by more than £50m in the Mercedes Benz Passenger Car franchise.
‘The motor group made a profit before tax of £14.8m for the year ending 2023 (2022: £20.0m).
‘The reduction in profit between 2023 and 2022 can be attributed to numerous general inflationary increases, namely, interest payments, energy costs, salaries and substantial costs associated with the development and opening of three new Toyota dealerships and one Lexus dealership.’
Directors ‘pleased’ with performance
The accounts show that of Eastern Western’s improved turnover, the vast majority (£819.7m) came from the sale of goods, mainly new and used cars.
In the period covered by the accounts, the group increased new car sales by 21% but used car sales fell by 3.8%.
Meanwhile, a further £39.6m of revenue was generated by the rendering of services.
At the end of the year the group had franchises representing Mercedes, BMW, Mini, Lexus, Toyota, Volkswagen, Nissan, Honda, Mazda, Smart and Maxus.
It also has agreements with bike brands Kawasaki and Harley-Davidson.
When it came to staff, the firm employed 1,461 people, compared to 1,442 in 2022, with wages and salaries totalling £53,978.
The group’s directors are paid by a separate holding company so the accounts do not reveal how much they received.
Reflecting on the results, Mohammed added: ‘Overall, the directors are pleased with the motor group’s performance in 2023.
‘The motor group performed particularly well in new vehicle sales which increased by 21% mainly through corporate, fleet and motability.
‘The excellent new car performance adversely affected our nearly new vehicle sales which contributed to our total used volume reducing by 3.8%.’
