Top 20 car dealer groups see sevenfold increase in profit for 20/21

Top 20 car dealer groups see sevenfold increase in profit for 20/21

Profits of the UK’s 20 largest car dealer groups have increased more than sevenfold in the past year, from £105 million in 2019/20 to £764 million in 2020/21.

This is according to new research by the national accounting group UHY Hacker Young.

Car dealer groups have had a very strong 12 months and have come back from a difficult period at the start of the pandemic. Lockdown forced car dealerships to close completely for several months, drastically dropping sales to a record low of just 4,321 new vehicles in April 2020.

Since the end of the lockdown, new car sales have recovered strongly as demand bounced back from Covid. In April 2021, 141,583 new cars were sold, more than 32 times as many as in April.

Dealers’ revenues have also risen due to the rising value of used cars, as supply chain problems have reduced the availability of new cars. In 2021, some dealers will voluntarily stockpile some of their used inventory rather than sell immediately to take advantage of rising used car prices. This had not been seen before in an industry that is heavily focused on rapidly turning inventories.

Consumers are buying more and more expensive electric vehicles to replace their petrol or diesel vehicles, giving car dealers an opportunity to increase their profits.

Ian McMahon, Automotive Partner at UHY Manchester, said: “Last year has been a fantastic year for car dealership groups. The increase in profits has been much needed after the damage the pandemic has wrought on the industry.

“Some dealer groups would not have survived in 2020 without government support, but in 2021 they had a high year of sales and rising used inventory values. The contrast could not be greater.

“After such a successful year, dealers are likely to view the coming months with caution. With consumer spending under severe pressure from the cost of living crisis, this year is likely to be more challenging than the last. ”

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