Pendragon profits imperilled by falling new car sales
The group behind the Evans Halshaw brand expects full year profit to come in at £60 million, down from last year’s £75.4 million.
Car dealership owner Pendragon has warned that profits will take a hit from falling demand for new cars amid a decline in consumer confidence.
The group, which is behind the Evans Halshaw brand, said that it expects full year profit to come in at £60 million, down from last year’s £75.4 million.
“The decline in demand for new cars and the consequent used car price correction has impacted this year’s profit outturn and we anticipate that our full year underlying profit before tax will now be approximately £60 million,” Pendragon said.
Consumer confidence “waned” and the firm experienced “significant market pressures” in the quarter, it added.
Pendragon is now conducting a strategic review of its premium brands, in order to evaluate by manufacturer the “investment appeal” of their proposition.
The announcement comes after the Society of Motor Manufacturers and Traders (SMMT) painted another dismal picture of the new car market in the face of slowing economy as Brexit weighs on growth and pummels consumer spending power.
Figures from the SMMT showed that the new car market declined for a sixth consecutive month in September.
Just over 426,000 new cars were registered in the month, down 9.3% on the same month last year.
Nevertheless, Pendragon said that it expects to return to profitable growth in 2018.
“We expect the new car market to continue to decline this year and the first half of next year as car manufacturers continue to adjust to the reduced level of demand for new cars.
“However, we anticipate resumption of growth in profits in 2018.”
Part of the reason for its optimism is Pendragon’s plan to double its used car revenue over the five years to 2021.