11:55 am, October 16, 2024
Dealer group Johnsons Cars saw its profits slide last year as it battled ‘challenging head winds, including agency sales and a push towards EVs.
The dealer group enjoyed a record-breaking year in 2022, with a pre-tax profit of £12.95m but that figure has now slumped to £7.83m in the 12 months to December 31, 2023.
The result represents a decline of almost 40%, despite turnover rising from £808.21m to £935.02m in the same period.
In accounts filed with Companies House, bosses say the company delivered a ‘strong performance’ in the face of widespread challenges.
Directors pointed to rapidly rising inflation and interest rates throughout the year, as well as difficulties with EVs and agency sales.
Despite the struggles, the firm sold 27% more new vehicles than it did in 2022, as well as 7% more used vehicles.
Richard Martin, finance director of Johnsons Cars, said: ‘Johnsons Cars Limited has delivered another strong profit for 2023 in the face of numerous challenging head winds. Turnover has increased by 16%.
‘New car supply came back to levels last seen in the years before the pandemic, this was at a time when interest rates increased rapidly to address inflation and retail consumer demand has reduced noticeably.
‘To add to this set of challenges we have the move to the agency business model and a very sizeable push to make electric vehicles a more attractive mobility solution.
‘There have never been so many changes, challenges and opportunities presented to the industry over such a short period of time.
‘In the face of these we delivered 27% more new vehicles and 7% more used vehicles year on year. But margins have returned to those seen in the pre-pandemic years due to the normalisation of vehicle supply.’
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He added: ‘On the two subjects of the agency sales model and the electrification of mobility, agency is still in its infancy and though a true conclusion cannot be drawn, our financial results tell us it will not enhance earnings.
‘The EV effect on the business is of two-fold, firstly for a business user it is a very popular way to reduce their benefit in kind and we have maximised this via our fleet channels.
‘The retail customer has not engaged to a level that will deliver significant volume for reasons that have been debated in the press.
‘The increased supply of new vehicle stock and the rapid growth in the cost of funding meant that the holding cost of the stock doubled year on year at a time when the market returned to a push model, chasing a reducing consumer appetite for new retail vehicles particularly.’
Elsewhere in the accounts, it is revealed that Johnsons ended the year with net assets of £47m and a net cash position with Barclays of £6m.
The company also paid a dividend to its shareholders for the first time, with a one-off payment of £3m (£3 per share) made on April 12, 2023.
The documents show that majority of the company’s improved turnover (£872m) came from vehicle sales, with aftersales and other related activities bringing in £63m.
When it came to staff, the group ended the year with an average of 1,337 members of staff, with wages and salaries costing £46.05m.
The highest paid director was paid £297,000, compared to £322,000 in 2022.
