9 months ago
Non-franchised used car dealers could be pushing further up the Car Dealer Top 100 table next year as they enjoy bumper profits in 2020.
A combination of high demand for used cars during the coronavirus pandemic and prices pushed skywards has seen many independents report bumper years despite the crisis.
Discussing the Car Dealer Top 100 list of most profitable dealers, ASE Global chairman and compiler of the list Mike Jones highlighted used car operators as the ones to watch.
In a Car Dealer Live, Jones and Tim Smith, commercial director of headline sponsors GForces, chat about this year’s winners and who could be catching them up next year.
Jones said: ‘I think the performance of the used car operators is clearly a really interesting one and if we’re looking at the gross profit margin that the used car operators en masse generate it’s about 10 per cent.’
Arnold Clark, the Scottish-based dealer group led by CEO Eddie Hawthorne, topped the list after it generated a £194.3m EBITDA profit from revenues of £4.46bn in 2019.
The top five were dominated by the biggest dealer groups. However, pushing into the top 10 in seventh place was used car supermarket operators Trade Centre Group.
Full Car Dealer Top 100 list, click here
The group turned over £256m and managed to eke out a staggering 8.3 per cent return on those sales, making £25.1m EBITDA profit.
The list covers accounts for 2019 – the most recent available – and excludes any impact from Covid-19. Next year’s list will take into account how retailers dealt with the crisis.
Jones said he has been watching car dealers’ performances in 2020 and it had been ‘very interesting’.
He added: ‘For me, it really shows the resilience of the sector and the resilience of the business model and the strength that we’ve come through the crisis.
‘The financial results that I’ve been reporting for the franchise retailers are on par with last year, which consider the fact they were closed for a couple of months and the disruption we’ve had even since, is frankly amazing.
‘But the profitability around used cars particularly, as we went through the summer and into Q3, was on a level I’ve not seen, so I’d expect to see some really strong numbers there.’
Full Car Dealer Top 100 list, click here
Smith said that at the same time many car dealers have been able to slash costs and take advantage of government grants, such as the furlough scheme.
He said: ‘The costs have been out of the business, but the sales have come back. Obviously, they’re not at the same level they were last year, but when you take the costs of the number of people organisations have been furloughing – that’s where the saving point has been.
‘And if you can layer over the top of it the move towards click-and-collect – that’s been successful for a lot of businesses. We’re starting to see the change and we’re starting to see more in terms of optimisations and efficiencies within operations.’
During the video chat, the pair also talk about:
- The notable missing dealers from the Car Dealer Top 100 list
- How an agency model may impact profitability
- Why troubled dealers Lookers and Pendragon make the top five
- In detail about why the winners are so good
In total, the car dealers in our Top 100 list made a combined profit of £1,166,359,116 in 2019 – the latest figures available – and turned over a whopping £55,830,325,500.
Jones said pulling the list together had been ‘a challenge’ and explained EBITDA had been used to rank the list as it was ‘the fairest way’.
Accounts up to the end of March this year were considered, but many dealer groups have used the extension until the end of the year to submit their numbers. Omissions will be included in a round-up in the new year.
Full Car Dealer Top 100 list, click here
- Register as a Car Dealer member and get more out of the website here
- Car Dealer Mag issue 154 is out now – Read it here
- Join our breaking news WhatsApp group – Click here to join now
