Global sales totalled £6.1bn in 2007, fuelled by Inchcape's acquisitions and joint ventures in emerging markets such as Russia, Lithuania and Latvia. Inchcape has motor retail and distribution operations in 17 mature and nine emerging markets, and has global relationships with more than 20 brands. On a like-for-like basis, sales grew by 2.5%.
In the UK, although its trading margins declined 0.3% to 2.5%, Inchcape delivered like-for-like sales growth of 5.2%, an achievement in a challenging market. Thanks largely to the EMH acquisition, turnover rose to £2.7bn from £1.7bn, and operating profit rose from £45.9m in 2006 to £62.5m, accounting for a quarter of all group profits.
"The strategy in the UK will be to continue to focus on the premium car segment with a smaller number of key brand partners. We will improve customer service through Inchcape Advantage and will drive growth in aftersales and finance penetration," said group chief executive Andre Lacroix
"We saw some recovery in the UK market which grew by 2.5% in 2007. The new car premium segment grew much faster, with Inchcape's premium brands increasing 5.5% year on year. There has also been significant growth in diesel engines as fuel prices and car tax increase. Market pricing was more competitive and, in particular, used car margins declined overall."
He added that while the overall market is expected to drop 2.5% in 2008, he expects the premium sector to outperform this decline based on strong new products. Nevertheless, pressure on margins will continue as decreasing consumer confidence will require more promotions to stimulate sales.
Disposal of non-core EMH dealerships representing Bentley, Ferrari, Maserati and Vauxhall, plus its sale of the EMH auctions, Wilcomatic and Inchcape Automotive vehicle refurbishment businesses, for a total of £38m, meant an exceptional loss of £7.1m.