Pendragon continues to strengthen profits in 2023

A trading update by Pendragon has reported a "robust performance" in the first half of 2023, despite the headwinds of rising interest rates and inflation.

The AM100 car dealer group expects around a.9% increase in underlying profit before tax to c.£36.5 million, outperforming H1 2022 by £3m.

Pendragon, which operates car dealerships under the Evans Halshaw and Stratstone brands, said its UK Motor division performed well, with strong volume growth and improved margins.

Pinewood, its dealer software company, and Pendragon Vehicle Management also recorded strong performances.

While there are concerns about inflation and interest rates impacting consumer sentiment, Pendragon remains resilient and expects to meet its profit targets. The interim results and Capital Markets Event are scheduled for 27th September 2023.

"Pendragon has continued to perform well, demonstrating the continued success of our strategy," said Bill Berman, chief executive.

"Increased sales across all divisions and higher profitability more than offset cost pressures, resulting in a strong cash position. While we expect high inflation and interest rates to persist in the second half of the year, our resilient model means we are well-placed to perform in line with board's expectations."

Berman recently received long-term incentives to improve Pendragon's profitability, add at least two new vehicle brands to its portfolio, and to reduce its carbon footprint.

Pendragon  had already welcomed China's largest carmaker, BYD, to its business, with plans to operate six BYD showrooms.

The group's long-serving executive Martin Casha will leave this autumn to take the chief executive role at AM100 rival car dealer Marshall Motor Group, and Pendragon is also seeking a replacement chairman.

In the trading update, Pendragon reported 18.3% like-for-like new vehicle sales volume growth, aligning with the total market (18.4%).

This growth was supported by strong margins, with new gross profit per unit (GPU) rising by approximately £200 year-on-year. Additionally, the Group saw a robust 7.2% increase in used volume growth on a like-for-like basis, with used GPU remaining well above historic levels at around £1,400 per unit.

The aftersales segment also performed well, reporting a like-for-like gross profit growth of about 14% during the first half. The Group's strategy to enhance performance and unlock significant value from the UK Motor division continues to yield positive results across the board.