Inchcape’s ambitious plans to drive hard into new European markets and open new retail networks with new brands is paying off.
Its first half pre-tax profit figures (halved to £65 million before exceptional items) show it has survived by a comfortable margin and is confident about its abilities to go on developing its UK businesses.
The ex-Burger King Frenchman, Andre Lacroix, who runs the business as chief executive, was extremely pleased with the achievements.
And Ken Hanna, Inchcape chairman, said: “We are more proud of our results this year than last year. Our retail businesses have improved the group is still strongly profitable we are way ahead of targets on cost reduction.”
The board spotted the UK downturn early and started cost reduction in May last year.
Simultaneously, it was introducing new systems, such that its market share was up and its operating margin down from 2.4% to only 1.8%. It actually made better used car margins than it did last year and outperformed the market in terms of volume.
One way it reduced working capital was to drive down stock cover to only six weeks. Aftersales were driven so hard that their profit now matches that of car trading.
Inchcape has driven up finance sales and introduced a major programme of local test drives – having shown beyond doubt that test drives win orders. Dealers’ routes: urban for local drivers, motorway for high-mileage drivers.
Money has been saved from the advertising budget by increasing use of the internet.
Although Inchcape owns Autobytel, that website is losing its position as a major car-finder brand and searches are increasingly being driven into Inchcape’s retail centres.
Reported profit before tax:
£47 million (2008: £130.3 million)
Sales: £2.8bn (£3.3 billion)
Cost reduction: 13%
Net debt: £28 million
Cash flow: £217 million
AM100 position: 2