Used car dealer the Trade Centre Group saw profits more than halve last year as the cost-of-living crisis began to bite.
Figures for 2022 show the used car supermarket group saw profit before tax plummet 62.9 per cent from £18.6m in 2021 to £6.9m in 2022.
The group – which has dealerships in Neath, Cardiff, Coventry, Rochdale, Rotherham, Wednesbury and Birmingham – said a variety of factors impacted its performance.
Despite selling more used cars – up from around 35k in 2021 to more than 41k – and increasing turnover to £345.7m (2021: £258m), the firm said it felt the impact of inflationary pressures and the cost-of-living crisis.
In 2022 it said it brought in £312m from car sales and £32.6m from commissions.
During the year the firm also paid a dividend of £6.4m, down from the £13.9m paid the year before. The highest-paid director received just over £1m in remuneration.
However, the severe drop in profit has led the group to take action.
Founder Mark Bailey (pictured) is now back in his previous role of chairman and Andy Coulthurst has assumed the role of chief executive again following a board reshuffle in September.
In its annual report, filed at Companies House this weekend, the firm added: ‘The economic challenges outlined had a direct impact on our profitability.
‘The drop in consumer confidence during 2022 impacted customer demand resulting in a slow-down in sales at our established stores combined with additional costs in developing our newer stores.
‘In response to these conditions, the company has taken decisive steps to improve profitability.
‘We have implemented various changes and improvements to develop our core offering and streamline our operations.
‘By focusing on our strengths and strong consumer proposition, we are well positioned with an enhanced geographical presence for when the used car market recovers.’
Last year, the Trade Centre Group was the 28th most profitable dealer in our Car Dealer Top 100 list.
In May 2022, the company opened a new site in Birmingham and picked up additional costs that came with that launch.
It also launched a ‘Lifetime Warranty’ product that covers used car buyers for breakdown, warranty and annual services.
The firm said: ‘This product not only provides additional benefit to our customers but will also generate long-term subscription income.’
The dealer group said it also concentrated on cutting costs for the business and its customers.
The firm said: ‘UK consumers faced inflationary pressure for much of the financial year, with a cost-of-living crisis impacting the retail sector.
‘The used car wholesale market was impacted by a shortage of used car stock due to limited production of new cars and the consequent increase in wholesale prices.
‘We took action to ease inflationary pressure on our customers, adding value through a number of new customer initiatives including Free Fuel for a Year, Freesure vehicle insurance contribution and cashback offers.
‘Meanwhile, our focus was firmly on finding efficiencies throughout our business model and implementing cost-saving measures.’
The used car dealer also looked at the cars it was stocking and made changes there. It said it ‘reprofiled’ its range of cars and decreased the value on stock it held from £50.8m in 2021 to £41.4m last year.
Looking ahead, the Trade Centre Group added it was confident the leadership team can help the company thrive.
‘Mark’s invaluable experience from building the company positions him perfectly to drive the strategic vision forward, whilst Andy’s background and extensive knowledge of the sector has provided a smooth transition in leadership for the company,’ said the annual report.
‘The board is confident that under the leadership of Andy and Mark, with the experience and expertise of the rest of the board, the company is well positioned for the future.’