AM Online

Pendragon’s used car strategy is ‘paying off’

Analyst Mike Allen, of Panmure Gordon, has given a cautious welcome to Pendragon’s statements during its AGM when the UK’s biggest car retailer told shareholders that its used car sales strategy was starting to pay dividends.

“It’s clear Pendragon is making good progress with Stratstone, but Evans Halshaw is reacting much slower to the changes in used car strategy,” said Allen.

First quarter used car volumes increased 2% year-on-year.

Allen said that he was concerned about over- supply in the used car market, but was confident Pendragon wouldn’t fail.

The update hints at a more stable Pendragon, after its profits halved in 2007.

The City is looking for it to deliver £42 million profit this year, a further slide on the £46.5 million banked last year.

There was no news from Pendragon on the non-renewal of contracts for its 11 BMW dealerships, some of which are expected to be closed or sold on.

Lookers is believed to be in talks for some sites.

Industry rumours also suggest the group is trying to cut costs by shedding some support staff at Evans Halshaw.

Pendragon declined to comment.

Pendragon has kept debt in line with its 2007 year-end figure of £37.7 million and the group is focused on reducing its gearing ratio from 97.8% in February to 70% by this year-end.

Pendragon is owed £5 million of overpaid VAT this financial year, taking its total repayments to £15 million.

If you are not a registered user your comment will go to AM for approval before publishing. To avoid this requirement please register or login.

Login to comment

Comments

No comments have been made yet.