11:44 am, August 21, 2024
Dealer group Vines saw its profits and turnover slump last year, as outside political and economic factors conspired against the firm.
Accounts published via Companies House last week show that the Surrey-based retailer endured a difficult year in 2023, compared to the previous accounting period.
Turnover for the Car Dealer Top 100 firm slid by 8% to £201.85m in 2023, compared to £218.8m in 2022.
As a result, the outfit’s pre-tax profits also took a major hit, declining by almost 50%, from £5.75m to £2.97m.
By way of explanation, boss Sean Kelly said that the cost-of-living crisis and slow wage growth had majorly impacted the business.
He also called on more government incentives to support increased private uptake of EVs.
Kelly said: ‘Battery electric vehicle registrations reached a record of 314,687 registrations in 2023.
‘Overall, battery electric vehicles now account for one in six registrations, predominantly to business and fleet buyers who benefit from significant tax incentives. However, only one in eleven BEV registrations are to private individuals.
‘The UK is now the only major European country which offers no BEV vehicle registration incentives, whilst also being the only market who has mandatory zero emission vehicle (ZEV) registration target.
‘The mismatch between the mandatory government enforced car industry targets of 22% of all registrations in 2024 increasing to 80% by 2030, while changing the target date for consumers from 2030 to 2035 is further leading to confusion and not encouraging a greater uptake of BEV vehicles.
‘Due to the increase in new vehicle supply in 2023 vs the supply chain affected 2020 to 2022 periods, new vehicle margins came under increased pressure with the increase in supply.
‘This increase coincided with an intensifying of the cost-of-living crisis for consumers with lower than inflation wage increases and interest rates at the highest level for 16 years.
‘This hampered affordability of both new and used vehicles which led to a reduction in margins, specifically in the final quarter of 2023.
‘Although inflation has significantly reduced and reached the Bank of England’s 2% target in June 2024, uncertainty over stubbornly high interest rates will continue to put pressure on both new and used margins due to weakening consumer confidence.’
The accounts also revealed that the majority of Vines’ reduced revenue (£189.82m) came from the sales of goods – chiefly new and used cars. Meanwhile, the rendering of services brought in a further £12.02m.
The year also saw the total spent on wages and salaries decrease from £14.92m to £14.24m, despite staff numbers rising from 300 to 304.
Elsewhere, debtors were down by 3.4% with the company owing a total of £7.92m compared to the year before at £8.2m.
Vines also found that its cash in hand or cash at bank up at £2.42m – representing a year-on-year rise of 63.4%.
Looking ahead, the firm is expecting to retain its long-standing relationship with BMW, although Kelly did express fears about how controversial rules of origin requirements from the EU could impact the motor trade going forward.
The regulations, which have been postponed until at least 2026, would mean 10% tariffs on car sales between the UK and the EU if at least 45% of the vehicle’s value didn’t originate in the UK or EU.
Manufacturers of electric cars would currently struggle to meet that threshold as battery production in Europe hasn’t increased as quickly as hoped.
Writing in the accounts, Kelly said: ‘The UK has now left the EU, but uncertainty remains in relation to the medium-term impact of the agreed trade deal with the EU, specifically the “rules of origin” where 45% of the value of a vehicle and 60% of the battery pack must originate in the UK or EU to avoid 10% import duties being applied.
‘Although both parties agreed to postpone the implementation of such rule, the future implementation of such rules will have a significant impact on the automotive sector in the UK.
‘Uncertainty is not helpful when it comes to making long term decisions, the company continues to plan for different outcomes, to operate as “business as usual” in so far as possible.’
Established in 1980, the Vines Motor Group is a franchised BMW and Mini dealership network that is spread out across the Surrey area, including Guildford, Gatwick and Redhill.
Boss Kelly is among the guests set to appear at our upcoming Car Dealer Podcast Live event.
The event – sponsored by Motorway – takes place on the afternoon of September 4 in Abingdon, Oxfordshire, and is a great opportunity for a social gathering with like-minded automotive industry people.
Book your tickets by following this link and selecting them at the bottom of the post.
