Dealer group results from 2020 are expected to be overwhelmingly positive with 97 per cent of those who work with UHY Hacker Young making a profit in 2020.
This is according to partner at the firm Paul Daly, who wrote yesterday (March 12) about the exceptional results it has seen as the UHY completes 2020 year end motor retail audits.
He said: ‘Over 97 per cent of the groups we work with had a profitable result in 2020 – an exceptional result and the best I have seen since the unusual year that was 2009 (another year when used vehicle prices were rising strongly).
‘For the five months to May 2020 I would estimate the reverse was true with the vast majority in a loss making position due to a weak March and losses in the total lockdown months of April and May – a truly remarkable turnaround with some incredible performances particularly in the bounce back months over the summer.’
He added: ‘[The] 2020 results have done much to strengthen the position as well as prove yet again to the stakeholders the inherent resilience of this sector.’
This is down to reduced manufacturer pressure, impressive cost saving measures, strong customer demand and, of course, government support.
The cash position of these businesses is also ‘overwhelmingly positive’, says Daly, and in some cases the groups he works with are planning to spend this on ‘significant investments’.
He said: ‘Of course, the profits have turned into cash helping the position, but more importantly much improved working capital levels and a freeze on most capital investment projects have turbo charged the cash positions to record levels.
‘This is great news, but a note of caution is required in my view.’
He warned that a return to normality will be a positive thing but also likely bring more costs back to businesses so to ensure sufficient cash reserves are available.
He said: ‘Increases in volumes, manufacturer pressure, slower turning stock, VAT repayments to HMRC are all likely to come with this return to normality and any deployment of cash must make allowance for them.’
While Daly said that so far 2021 had been ‘challenging’ he added that from the results he’s seeing nobody is ‘bleeding heavily’ so far.