Pendragon has said it will focus on growing its used and aftersales business in the future, after 2017 results for new car sales proved disappointing.
In a reversal from the previous year, revenues from the used car segment surpassed the new car one, growing 15.3% year-on-year to £2.1bn.
New car revenues stopped at £1.7bn, a decrease of 4.9%. UK retail registrations fell by 8% over the year. Add link.
Pendragon’s slump in new cars was mostly due to a disappointing third quarter, partly offset by a recovery of revenues reported in the fourth quarter. Pendragon had put out a profit warning in October over a 20% fall in new vehicle sales for Q3. The fall in new vehicles also impacted used premium vehicle values.
The leasing business saw a major boost in 2017. Revenues grew almost 40% to £64.9m, while operating profits almost doubled to £4.8m. De-fleeting of leased vehicles also contributed to the growth in used sales.
Overall operating profits for the group totalled £91.4m in 2017, down 4% from 2016.
For the future, Pendragon said it would bolster its used car and dealer software business, while disposing of US operations and reviewing premium brand capital allocation, as announced in December.
The group will open eight used retail points across the UK in 2018, bringing total used points to 35. Additionally, work is under way to renew Pendragon’s online platform.
Trevor Finn, chief executive, said: “The group has a clear focus and direction to transform the business and double used revenue by 2021. This will be enabled by our market leading software business to provide the online and technology platform and by investment in increasing the used retail and aftersales representation points in the UK.
“We made further progress towards our goal of doubling used vehicle revenue, with growth in the period of 15%. We anticipate our performance in 2018 to be in line with expectations.”
The company had a bleaker outlook on 2018 compared to the Society of Motor Manufacturers and Traders (SMMT). Pendragon said it expect the full year market to slow down 6.6% from 2017, and the retail market 8.8%. The SMMT forecast a decrease of 5.6%, more contained than the -6.3% of 2016/17.