9:03 am, January 23, 2025
Jemca Car Group saw a £500,000 profit disintegrate into losses of over £4m last year with bosses admitting that shrinking new car margins had taken their toll.
Accounts recently published via Companies House show that the London-based Toyota and Lexus dealer made a pre-tax loss of £4.71m in the 12 months to the end of March 2024.
The figure is a whopping 991% down on the previous year’s profit before tax of £529,294, marking one of the biggest swings in what has been a brutal results season for dealers across the board.
It also came despite turnover being up almost 10% from £314.88m to £345.16m in 2024.
There was also good news when it came to used car sales, which rose 6.1% to 6,988, and new vehicle retail sales, which increased by 16.1%.
Meanwhile, fleet sales increased by 50.7% reflecting an overall increase in total new cars sales of 27.0% at 9,279 units.
However, bosses are expecting the ZEV mandate to impact sales in the coming years, with both Toyota and Lotus being slow to electrify their ranges.
‘The level of business and the year end financial position reflect a very challenging trading environment for the company, mainly due to the reduction in new car margin from the manufacturer and the UK used car value realignment in the last quarter of 2023, which lead to a significant reduction in gross profit and the requirement for an increase in used car provision,’ said director Masahiro Kuwahara.
‘The significant increase in UK interest rates on borrowings, and high inflation rates, specifically in utilities has put pressure on controlling operational and structural costs within the business.
‘Management continues to review operational and structural costs ni several areas to improve cost efficiencies focusing on managing headcount levels and increasing focus on cash flow management to keep long term borrowing within the budgeted limits set, but increasing operational and governance resources where appropriate.
‘The company continues to take actions to control ageing of used car stock and tight controls on working capital to reduce the risk of losses arising from fluctuating market values.
‘There was also increased emphasis on strong credit control to ensure that debt recovery was maximised, and debt write off was avoided during the current economic uncertainty.
‘Management will continue to take action on the business’s cost base in the forthcoming year, specifically headcount levels, used vehicle stock levels, advertising costs and reduced utility consumption.’
Speaking specifically about the ZEV mandate, he added: ‘The UK ZEV mandate, which commenced on 1st January 2024 requiring 22% of registrations having to be Full EV, increasing each year until 2035, will have an initial negative effect on new vehicle sales, as we wait for our manufacturer to produce new models and local councils to install a far better infrastructure.
‘When this is achieved we remain confident of significantly increased customer demand.’
The recently published documents show that Jemca ended the year with net cash in hand and at the bank of £6.91m.
When it came to staff, the company’s workforce decreased from an average of 449 employees to 439.
Despite this, wages and salaries increased from £21.94m to £22.04m with overall staffing costs coming in at £25.77m.
Meanwhile, the accounts also show that the vast majority of the company’s improved turnover (£306.59m) came from the sale of goods, namely new and used vehicles, with the rendering of services raising a further £38.57m.
