4:21 pm, January 31, 2024
Group 1 Automotive is looking to axe about a tenth of its UK workforce during this year’s first quarter.
The bombshell announcement was made this afternoon when the Houston-headquartered company released its financial results for 2023 as well as for its last quarter.
Daryl Kenningham, Group 1’s president and chief executive, said: ‘We experienced challenges in our UK operations during the current quarter with used vehicles and recognise we have some work ahead of us to bring our costs back in-line with recent trends.
‘We are focused on reducing costs in the UK in the first quarter of 2024, with an expectation of reducing our UK headcount by approximately 10%.’
Group 1 has 199 dealerships in the US and UK, and Kenningham said the US team had another strong quarter and full year, adding: ‘We continue to execute well in this evolving US market.’
It owns more than 70 car dealerships in the UK, and the headcount reduction would have an impact on around 300 people, the company confirmed to the PA news agency.
Selling, general and administrative expenses (SG&A) as a percentage of gross profit rose by 7.5% in the UK, which Group 1 said was driven by higher SG&A expenses and lower margins on new and used vehicles.
‘During the current quarter, our UK operations began a rebalancing of our used vehicle inventory in response to market changes, which generated losses on used vehicle wholesale sales in the current quarter, which are expected to continue into the quarterly period ended March 31, 2024,’ the report said.
But it added: ‘Despite the current quarter challenges, our UK team, delivered record current year revenues, driven by all lines of service and record gross profit, driven by new vehicles and parts and service.’
Group 1’s total revenue for the year was a record $17.874bn (circa £14.028bn) versus 2022’s $16.222bn (£12.732bn) – up by 10.2%.
However, its net income (profit) was $602m (£472.5m) – a 20.2% decrease on the $754.2m (£591.9m) it made for the prior year – which it blamed on lower new and used vehicle margins, increased SG&A expenses, and higher interest costs.
It sold 32,757 new vehicles and 42,039 used in the UK via retail last year – up 10% and 7.6% on 2022’s figures of 29,780 and 39,068 respectively on 2022’s figures.
Meanwhile, 12,307 used vehicles were sold wholesale last year versus 11,996 the year – up by 2.6%.
Total revenue for the UK arm last year was $3.059.5bn (£2.404.9bn) – up 9.5% on 2022’s $2,795.1bn (£2.197.5bn). It made a total gross profit of $410.1m (£322.2m), which was up by 7.1% on 2022’s $382.9m (£300.9m).
The gross profit per unit (GPU) in the UK for retail sales of new cars in 2023 was $3,689 (£2,899) – a drop of 1.9% on 2022’s figure of $3,762 (£2,957).
The GPU for used vehicle retail sales last year was $1,432 (£1,126) – 11.9% down on the GPU figure of $1,277 the year before.
However, the UK division made a loss per unit of $514 (£404) for used vehicle wholesale sales in 2023, deepening the $217 (£171) loss it made per vehicle in 2022 by a whopping 136.4%.
Gross margin on new vehicle retail sales was down by a fifth of a percentage point from 9.2% to 9.0 %, while the gross margin for used vehicle retail sales was down 0.7 of a percentage point from 5.6% to 4.9%.
Used vehicle wholesale sales gross margin slipped further from -2.1% to -5.0%.
Parts and service sales revenue for the UK last year went up by 16.4% from $248.2m in 2022 to $289.0m. Gross profit rose by 15.9% from $144.7m to $167.8m, but gross margin was down by 0.2 of a percentage point from 58.3% to 58.1%.
Pictured at top via Google Street View is Group 1 Automotive’s UK HQ in Allington, Kent
