26 July 2018

Inchcape has described the UK auto retail market as “challenging” in its half year results. Globally, Inchcape saw profit before tax fall 15.6% to £161.2 million in the first six months of 2018 compared to the same period last year. The drop comes despite a 3.8% increase in revenues to £4.6 billion in the same period.

Stefan Bomhard, Inchcape group CEO, said: “Our Retail segment delivered a trading profit of £23.0m, down 61.8% in actual currency and 61.3% at constant currency, continuing the trend from the second half of 2017 and reflecting very challenging conditions for vehicles in our UK and Australia retail businesses.”

Commenting on the firm’s UK and European operations he added: “Our UK trading profit was down significantly, which was the key driver of the overall regional performance. Strong profit growth in our Greek and Balkan markets was only partially able to offset the UK outcome. The first half trend for the UK business is consistent with the difficult trading in the second half of 2017, with a supply and demand imbalance and the resulting elevated level of pre-registration activity causing pressure on both new and used margins. The challenging conditions were exacerbated by our brand mix, with a high exposure to premium new vehicles that have a greater than market weighting to diesel powertrains and subsequently greater pressure on margins given the significant decline in diesel demand. Encouragingly, the UK profit performance was better in the second quarter as comparatives eased somewhat and established an improved momentum going into the second half.

“We expect the UK & Europe segment performance to reflect the challenging trading for the UK in 2018.”

UK and European sales were up 1.2% to £2.21bn, however the retail trading margin was down to 0.9% in the first half of 2018 against 2.3% in H1 2017.

Tags: Inchcape