Saturday 19 January 2019

Shares tumble at Pendragon as profits imperilled by falling new car sales

Figures from the SMMT showed that the new car market declined for a sixth consecutive month in September.

New car stock
New car stock

By Ravender Sembhy, Press Association City Editor

Shares Pendragon tumbled after the car dealership owner 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 third quarter, it added.

Shares collapsed 17% to 24p in morning trading.


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.

The figures echoed Pendragon’s three month trading update, in which it said new car gross profit reduced by 20.7% on a like-for-like basis.

For the year to date, gross profit in the new car category has fallen 10.2% on a comparable basis.

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.

Press Association

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