New car sales rise revs up results for dealer

THE UK’s biggest car dealership Pendragon said full-year results will be “materially ahead” of expectations, sending its shares up three per cent to 39.75p.


The firm said that new car sales are rising in the UK, bucking the negative trend that has been reported across much of continental Europe.

The company, whose brands include Evans Halshaw, Stratstone and Quicks, said the volume of new car sales rose 16 per cent in the first nine months of 2013, with a nine per cent uplift in used car sales.

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The shares have more than doubled over the past year thanks to a strong recovery in the car market.

The group said website visits rose by 23.5 per cent on the previous year.

It said retail volumes in the UK were up by 19.4 per cent for the three months to the end of September.

Pendragon reported its seventeenth successive quarter of growth in used car volumes with market share continuing to increase.

The update follows recent figures from the Society for Motor Manufacturers and Traders, which said UK car sales in September hit their highest monthly total for more than five years.

There were 403,136 new cars registered in the UK, a rise of 12.1 per cent on the same month a year earlier, according to the society.

Upmarket dealership Stratstone, which sells brands such as BMW, Mini, Mercedes, Smart and Honda, has 12 sites in Yorkshire, including Harrogate, Leeds, Bradford and Hull.

This includes a Leeds BMW and Mini dealership bought from Jardine Motors.

Volume dealership Evans Halshaw has nine sites in Yorkshire, selling marques including Vauxhall, Citroen, Peugeot, Nissan and Ford.

Its Chatfields truck and van arm has sites in Leeds, Hull and Sheffield.

Pendragon said that its service, maintenance and repair business was boosted by the return to growth in the new vehicle market.

Retail labour sales grew by 2.9 per cent and overall gross profit rose by 6.4 per cent on a like-for-like basis.

The group said its California business also performed strongly, largely due to the success of Land Rover.

The Quicks brand narrowed losses in the year to date with a small increase in volumes in the third quarter although there was a slight decline in margin. Chief executive Trevor Finn said: “Profitability in 2013 is expected to be materially ahead of expectations for the full year and we are cautiously optimistic about the prospects for 2014.

“Market conditions have been favourable this year, whilst the outlook to next year remains promising.”

Before yesterday’s trading statement the company was expected to report an average full year pre-tax profit of around £41m.

In 2012, underlying pre-tax profits rose 18 per cent to £36.4m on the previous year.

Numis Securities upgraded its full-year profits estimate from £40m to £44m, having previously pencilled in a £1m decline in second half profitability year-on-year. Will Kirkness, equity analyst at Jefferies, said: “The strength of new registrations in the UK is driving strong growth in new and after sales segments, with Pendragon’s initiatives allowing outperformance versus the used market.

“The result is profitability is materially ahead of expectations.

“With two months until the end of the year and visibility over 80 per cent of new car sales, this is the confident update that we had hoped for.

“Robust trading is being experienced in most segments thanks to the strength of new car registrations.”

Analyst Mike Allen, at Panmure, said: “Pendragon has delivered a strong interim management statement consistent with other operators in the sector at present.

“Market conditions have been strong across the board in new, used and after sales prompting us to upgrade our 2013 earnings per share forecasts by 10 per cent.

“For 2014 we have been more conservative, but believe the market should get off to a strong start given the improving UK economic backdrop.”

The road to the top

Pendragon became a public limited company when the vehicle division of Williams PLC was de-merged in 1989.

At that time the operation included 19 car dealerships, representing specialist and luxury franchises, in addition to a small contract hire business.

It has expanded considerably through a series of new builds and acquisitions and now represents over 20 brands. This covers both specialist and volume brands. Its largest representation is with Ford and is closely followed by Vauxhall where it is the largest retailer in the UK.

Its specialist marques range from Maserati to Mercedes-Benz and it also sells Harley-Davidson and Triumph motorcycles.