Britain’s biggest dealer groups have capitalised on the shortage of new cars to extract greater profit than ever from each sale so far in 2022, financial figures show.
However, bumper profits recorded last year on the back of the soaring value of used cars have slipped back this year, as the cost to source those cars has also increased.
Vertu, best known for its Bristol Street Motors brand, recorded its second highest ever profits in its history with new cars “the star performer”, it said in a release detailing figures in the first half of its financial year, which started on 1 April.
Vertu said the amount of gross profit it made from each new vehicle sale rose by more than a quarter to £2124, which increased gross profit at the company by £7.7 million to a pre-tax profit figure of £28m. Vertu has 160 sales outlets in the UK.
Car dealers are experiencing the same jump in profit margins as the car makers themselves, as supply-chain bottlenecks increase competition for cars that do get built.
What’s currently a tough situation for buyers is quite the opposite for the dealers. “Someone asked me 'are you worried about supply constraints?'; I said 'no, I worry about supply coming back!'” Vertu CEO Robert Forrester told Motor Trader Radio back in May.
Reduced supply for both new and used cars would continue “well into the next financial year,” Forrester predicted in his first-half statement. “Margins are therefore expected to remain strong and used car pricing robust,” he said.
Dealer group Pendragon, owner of dealership brands such as Evans Halshaw, meanwhile said that gross profit it made per new car sold had risen almost £1000 to £2576 in the first six months of the calendar year. The company, which also has around 160 outlets, said that the average new price of new cars sold rose to £29,213, up 13% from the same period the year before.
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