Arnold Clark has a better than expected 2010 despite a 31.7% fall in pre-tax profits by £23.4 million to £50.5m in comparison to £73.9m in 2009.
Sir Arnold Clark, Arnold Clark chairman and chief executive, said the fall in profits was not unexpected as 2009 was "an exceptionally strong trading year”.
Despite a fall in profits, turnover was up by 6.1% to £2.271 billion, net assets were up 8% to £447m and new car unit sales were up 3% to 77,626 units.
Used car units were down by 2.1% in 2010 to 116,338 units.
Sir Arnold said the growth in turnover and new car sales was particularly pleasing after the group lost two months of trading due to unusually heavy snowfalls and arctic conditions at its branches in northern and eastern Scotland.
He said: “The fall in pre-tax profits to £50.5m was not unexpected as 2009 was an exceptionally strong trading year due to a number of factors which mitigated the effects of the downturn on the motor industry.
“2010 saw VAT return to 17.5% and the scrappage scheme, which had accounted for almost 15% of the new car market, came to an end in March.
“As anticipated, used car values returned to a more typical pattern during 2010 and, although residual values remained relatively strong, vehicle margins declined from the highs of 2009.”
The third largest dealer group in the UK took continued to invest in staff in 2010, taking on 130 modern apprentices.
As for what would happen in the automotive retail market this year, Clark believes it’s difficult to predict with any great certainty.
He said: “The Government announced the results of its spending review in October 2010 but the planned spending cuts have yet to be effected in many cases and, consequently, there is still a good deal of uncertainty as to what these cuts will mean in terms of redundancies in the public sector.
“Additionally, the VAT rate rise to 20% will inevitably have an impact on large value purchases such as motor cars.
“Despite these factors, the group remains exceptionally well-funded, allowing us to source the best available stock opportunities and ensure that we offer our customers the best possible value in these difficult times. We will also be able to take advantage of any suitable expansion opportunities that may arise in the coming year.”
Arnold Clark’s corporate progress by bullet point
- Group franchise representation was brought to 20 with the addition of Skoda in Inverness. The Skoda franchise came with the purchase of the entire share capital of Delmore Cars Limited in November 2010 and the number of Skoda sites was then doubled after opening the new Skoda showroom in the Seafield area of Edinburgh in December.
- March saw the completion of the redevelopment work of the dealership in Ashton-in-Makerfield, adding a new Fiat sales and service operation to the existing Motorstore.
- In May the group acquired a Citroen and Hyundai dealership in Stirling, taking the number of franchises represented in the city to eight. In the same month, work was completed on a purpose-built commercial vehicle centre in Newcastle upon Tyne.
- April saw Accrington Motorstore close as a retail sales outlet. The facility was converted to a transport hub and vehicle storage compound.
- August saw the opening of a new Renault showroom in Edinburgh which is adjacent to the existing Peugeot and Seat Arnold Clark dealerships.
- At the end of October, the loss-making Manchester and Stockport Honda leasehold dealerships were relinquished and resulted in the conversion of the Altrincham Honda dealership to represent the Kia franchise.
- December proved to be a busy month for dealership improvements and saw the opening of a new Hyundai showroom in Dundee and the relocation of Dundee Nissan into a new purpose-built facility in the city. In the same month, an existing site in Sefton Street, Liverpool was converted to accommodate the Kia franchise and a Fiat outlet was added to the dealership in Salford, Manchester.
- Other significant investments include the major redevelopment of existing showrooms including the Motorstores in Liverpool and Sighthill, Edinburgh.
- Additionally, the facilities at Inverness Peugeot, Elgin Fiat, Workington Ford and the Peugeot, Citroen and Ford site in Dumfries all underwent major refurbishments.