Pendragon has forewarned that shortages of new and used vehicles will persist into the following year, as the auto dealer disclosed a decline in profits due to growing prices.
The company, whose brands include Evans Halshaw and Stratstone, reported that new car sales increased during the third quarter, offsetting a decline in used vehicle sales.
Gross profit maintained at the “extraordinary level” of the previous year, but increases in operational costs and interest expenses reduced its net income by around £7 million and £3 million, respectively.
For the third quarter, the vehicle retailer located in Nottingham reported an underlying pre-tax profit of £14.7million, down 41 percent from £25.1million a year before. In 2021 as a whole, it earned a record £83 million in profit.
Despite continued semiconductor shortages, sales of new automobiles increased by 14%, compared to a 0.1% decline in the whole market.
During the quarter, the gross profit per vehicle sold amounted to £2,597, an increase of £743 compared to the same period the previous year.
The company reported a third-quarter order backlog of 20,000 new vehicles, “far beyond normal historical levels.”
Aftersales income, which includes services such as MOTs, also grew by 5%, while the gross margin rate increased from 50.3% to 51.7%.
However, used car sales were “down” as Pendragon struggled to acquire more pre-owned automobiles “as decreased new car production continued to impair the supply of used cars.”
As input costs grew, gross profit per used vehicle decreased by nearly a quarter to $1,561 from the ‘extraordinary’ $2,051 recorded last year.
Pendragon’s outlook for the year remained unchanged even though there will continue to be shortages of both used and new automobiles in the coming months and year, and the economic environment will remain “difficult.”
Bill Berman, chief executive officer, stated, “While supply chain problems and other market constraints are expected to persist, we are confident that we have the proper strategy in place to deliver for our customers and partners and fulfill our targets for the whole year.”
Tuesday morning trading saw shares of Pendragon increase 0.8% to 27.1p.
They have increased by over 45 percent over the past year, reflecting an ongoing commercial boom that began with the pandemic.
