Steve Le Bas, June 2019, BDO SouthamptonSteve Le Bas, June 2019, BDO Southampton

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Car dealers have emerged from pandemic in a position of strength after embracing change, say business experts

  • Sales at UK’s top 150 motor retailers took a hit in 2020 but gross margins improved slightly
  • Turnover dropped by 13.1 per cent, with the largest 75 groups hit hardest
  • Government support was critical to survival, especially through first lockdown

 

Time 2:42 pm, November 26, 2021

2020 saw a reversal of fortune for many dealerships when it came to turnover growth but they’ve managed to bounce back.

That’s according to accountancy and advisory firm BDO in its annual Motor 150 Report, which has just been published and looks at the financial health of the UK’s top 150 automotive retail businesses over the previous year, as well as considering the sector’s outlook.

It said it was no surprise that they suffered their first fall in turnover for more than a decade, because of the showroom closures in the spring and more disruption towards the end of the year.


Previously, the top 150’s largest groups have always enjoyed better turnover growth versus previous periods, but the opposite was true for 2020.

The total fall was 13.1 per cent, but the largest 75 groups saw a drop of 13.8 per cent, while for the next 75 groups it was just eight per cent.

It was felt the most by the top 15, which suffered a combined sales decrease of 17.3 per cent.

Gross profit margins improved slightly, though, from 10.81 to 10.9 per cent and the current trading picture is one of record profitability, with the listed groups issuing profit upgrades over the past two to three months.


BDO said the results were driven by the downturn in new car supply, which has fuelled used car prices and sales, together with pent-up consumer demand.

Head of motor retail Steve Le Bas, pictured, said: ‘There has been a remarkable transformation and resilience shown by the sector.

‘However, it should not be forgotten that the government has played a very important part in sustaining the industry through its rates and furlough support, particularly through the first lockdown, which undoubtedly protected jobs.

‘Without this support, along with that from manufacturers and funders, the sector would be in a significantly different place now.’

He added: ‘Motor retail is at a pivotal moment with fundamental changes under way.

‘These have been accelerated by the Covid-19 pandemic, which required quick investment in digital marketing, websites, click-and-collect services, automation and online sales capabilities.

‘Not only will the way dealers transact potentially change with the introduction of the agency model, but the cars being sold are changing as electrification gathers pace.’

John Bowman's avatar

John has been with Car Dealer since 2013 after spending 25 years in the newspaper industry as a reporter then a sub-editor/assistant chief sub-editor on regional and national titles. John is chief sub-editor in the editorial department, working on Car Dealer, as well as handling social media.

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