Pendragon’s average used car price rises by nearly a third, but inflation hits profits
Car dealership Pendragon revealed an increase of almost a third in the sale price of a used vehicle as supply shortages and inflation provided the ‘backdrop’ for trading in the first half of the year.
Operator of the Evans Halshaw and Stratstone brands said the average price of a used car was £18,965, up 32%. Its underlying profit fell almost 5% to £33.5m after underlying costs increased by almost £21m.
He called macroeconomic conditions “difficult” and said they were likely to continue into the second half of the year, but stuck to his existing forecast for the full year.
Pendragon revealed failed takeover talks in August, with an unnamed suitor he called a “big international company”. The bid, estimated at £460million, fell through after one of Pendragon’s five existing major shareholders refused to join the talks.
Chief Executive Bill Berman said the offer demonstrated “great interest in the strength of our strategy and the prospects for the group”, adding: “While this proposal was unsuccessful, the board felt that it deserved to be discussed with our shareholders”.
Julie Palmer, partner at Begbies Traynor, said: “A shortage of the microchips needed to build modern cars means dealers like Pendragon are struggling to get their hands on vehicles for sale, driving up prices.
“The cost of living crisis and soaring inflation mean that cash-strapped consumers may have no choice but to keep their cars for longer, just as production normalizes and that new vehicles come to market.”
Pendragon shares fell 1% to 23p on Wednesday. According to August offer reports, the potential offer was then priced at 29p per share.