Inchcape continues mission to consolidate in highly fragmented market

Global car distributor Inchcape is maintaining its previous full-year guidance, expecting results to be at the top end of market expectations.

Reporting third-quarter revenues of £2.8 billion, Inchcape posted a significant 35% rise in turnover, with organic revenue growth of 10%.

Its distribution division led performance with 13% organic revenue growth, with the Asia-Pacific region continuing to drive expansion while in Europe, the business saw another similarly robust performance, despite new consumer demand remaining lacklustre.

Inchcape said it had experienced growth in most markets in the Americas, gaining market share and improving cost synergies, which offset weaker markets in Chile and Colombia. The company inked five new distribution contracts with Changan in the Philippines and East Africa and completed acquisitions in Indonesia, the Philippines, and New Zealand.

CEO Duncan Tait (pictured), emphasizing the company's market leadership, diversified business, and digital capabilities to support OEM partners as key factors in its confidence regarding the medium to long-term outlook.

He added that Inchcape’s integration of Latin America’s largest automotive distributor Derco remained on track, with accelerated cost synergies expected to rise from £20 million this year to at least £40 million by the end of 2024. Operating margins for 2023 were anticipated to be towards the top end of the 5% to 7% range, pre-synergies.

Tait expressed confidence in the company's medium to long-term outlook, saying: “Inchcape produced another strong performance in the third quarter. We delivered continued momentum across APAC, supported by acquisitions, while our business in Europe and Africa performed well. In the Americas, we are gaining share in key markets and the integration of Derco remains on track.”

"Driven by the highly cash generative and capital-light characteristics of our business, Inchcape will continue to be a key consolidator in a highly fragmented market.”

Inchcape maintained its previous full-year guidance, expecting results to be at the top end of market expectations with adjusted pretax profit being between £470 million and £506 million when it reports its annual figures on March 5, 2024.