Cambria chief executive sees opportunity amid economic uncertainty

The boss of AM100 dealer group Cambria Automobiles has warned of a period of economic uncertainty following June’s Brexit vote, with “softening” of margins.

But, despite the prospect of a £20m investment in a pair of recently-purchased Jaguar Land Rover franchises, Cambria chief executive Mark Lavery said the business is in a good position to maximise opportunities presented by market uncertainties, adding: “Do I see opportunity in the current uncertainty? Absolutely”.

Cambria released its preliminary results for the year to August 31 today showing a growth in revenue year-on-year £523.8 million to £614.2m (17.3%) with profit before tax up 37.7% from £7.7m to £10.6m.

Mark Lavery (pictured), chief executive, said that improvements in the group’s lead management – through streamlining of its digital processes – and improved profit per unit on used cars were key sources of optimism.

And, reflecting on the year ahead, he said: “I think we are in a strong position and a good place to take advantage of opportunities which might present themselves.

“I think in the current climate many smaller operators will find it increasingly difficult to increase aftersales capacity and meet manufacturer CI demands and that could present opportunity for us.

“We have little outstanding debt, away from the mortgages on some of our properties, and are in a good position to acquire new locations.”

Cambria’s results showed new vehicle sales up 9.9%, with a 13.2% increase in profit per unit, and used vehicle sales up 5.2% with an 8.1% improvement in profit per unit and continued evolution of the group’s focus on ‘Velocity’ to drive return on investment

Aftersales revenue increased 8.1% with an increase of 3.7% in service and bodyshop hours sold.

Acquisition and disposal activity in 2016 saw the acquisition of Welwyn Garden City Land Rover for £10.8m, of Woodford Jaguar and Land Rover dealership for £2.1m and the opening of third Aston Martin business in Birmingham and closure of Exeter Aston Martin in line with the Aston Martin global second century network restructure.

The group also disposed of its Exeter Jaguar and Croydon Jaguar facilities.

"Over the 10 year period we have acquired a freehold and long leasehold property portfolio in excess of £41m," said Lavery.

“Next year will see some expenditure. The new Jaguar Land Rover facilities require in the region of £10m each to bring them up to the brand’s current standards, but we are very optimistic about the returns we will see as a result of that investment.

“Not only are we impressed with the Jaguar and Land Rover product plans, but we’ll also be increasing our aftersales and used car sales facilities dramatically.

“At Barnet, for example, we currently have a 13-bay workshop and room for 35 used cars. We’ll have 25 bays, 23 technicians and room for 85 used cars when we are finished. With our 15.5-times used car turn that combination represents considerable opportunity for growth.”

Commenting on the implications of Brexit, Lavery said that it was “too early to assess the full implications”, but he said: “We appreciate the UK economy is in a period of uncertainty post the EU referendum vote in June. The sterling exchange rate has been very volatile and in recent weeks reached its low point equivalent to summer 2011.

“Luckily Jaguar Land Rover are one of our key partners and they are less effected, perhaps, than many when it comes to exchange rate fluctuations.

“Do I see interest rates rising dramatically? No I don’t. Do I see opportunity in the current uncertainty? Absolutely.”

Financial highlights

Operational highlights

• New vehicle sales up 9.9% with a 13.2% increase in profit per unit
• Used vehicle sales up 5.2% with an 8.1% improvement in profit per unit and continued evolution of the group’s focus on ‘Velocity’ to drive return on investment
• Aftersales revenue increased 8.1% with an increase of 3.7% in service and bodyshop hours sold
• In line with the strategy of the group and of Jaguar Land Rover:

- Acquisition of Welwyn Garden City Land Rover for £10.8m
- Disposal of Exeter Jaguar and Croydon Jaguar
- Acquisition of Woodford Jaguar and Land Rover dealership for £2.1m. 

• Opening of third Aston Martin business in Birmingham and closure of Exeter Aston Martin in line with the Aston Martin global second century network restructure
• Continuing investment in the freehold portfolio; to meet the franchising standards of the brand partners and maximise operational potential and increase used car and aftersales capacity
• Barnet Jaguar Land Rover development progressing well, other brand led corporate identity developments initiated.

Operational results