Profits halve at Pendragon as competition hits margins

Profits at Britain’s largest car dealership group, Pendragon, halved for the 12 months to December 31, 2007 as the market became ever-more competitive putting pressure on margins. The company reported pre-tax profits before exceptionals of £34.8 million (2006: £69.4m) on static revenue of £5.1 billion. Chief executive Trevor Finn said: “As interest rates rose last year the car market became progressively more competitive putting pressure on used car margins. We acted early, closing poorly performing sites and, as a result, are better placed to face the challenges in what remains an uncertain market in 2008. “Overall we have made good progress to improve the quality of the business. The changes we have made to our physical footprint and the changes to our customer proposition, focusing on lower priced used cars, leaves us better placed for the type of market we expect in 2008.” Pendragon is the largest independent operator of franchised car dealerships in the UK, operating 343 franchises. The company also operates 11 car franchises in California, but has pulled out of the loss-making German market. The company also has a substantial presence in the UK vehicle leasing, wholesale parts and dealership management software markets. The existing vehicle fleet reduced slightly to 17,600 units with an average lease period of 30 months. (Pendragon: February 20).

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