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AMi exclusive: Dealers' financial health sees new record in AM100

> The 2013 AM100 countdown (pdf)

Total turnover:
2013: £40.6 billion (7% rise on 2012)
2012: £38bn (1.3% rise on 2011)
2011: £37.4bn (11% rise on 2010)

A new record has been achieved in the turnover of the franchised dealer groups in the UK. Based on 2012 financial returns the total turnover for the AM100 has reached £40.6 billion, exceeding the all time high since our records began in 1993, of £38.6bn achieved in 2008.

What it means is that total turnover has returned to the growth path it was from 2001 until the impact of the recession was felt with the slump in total turnover the sector experienced between 2008 and 2010, before rallying dramatically in 2011 with an 11% rise.

AM100 historic turnover

 

 

 

 

 

 

 

 

 

 

 

 

 

Between 2008 and 2010 turnover fell from £38.6bn to £33.8bn.

From 2011 to 2012, turnover grew a modest 1.3% and while positive there was much to be cautious about.

There was still an air of austerity, a mood of economic uncertainty and reluctance amongst the banks to use the taxpayers money the Government had given them to resume lending activity and therefore boost confidence and kick start the market.

As a result, beyond turnover, there was little to smile about.

There were slight increases in average profit before tax, but return on sale for the best 20 groups (see box out on the following page) was down, as was profit per outlet year-on-year and profit per staff.

And at a certain point in 2012 there were voices suggesting franchised dealers’ financial health would continue in the relative doldrums for some time yet: statements were made directly to AM, at events, meetings, in interviews and in polls that highlighted the growing practise of manufacturers looking to incentivise customers into showrooms with ‘too good to miss’ finance offers at the expense of dealers’ margins.

Manufacturers’ target were excessive, a one size fits all approach being applied to networks – be you a plc or a local focussed group – was beginning to show cracks and overhead absorption was continuing its downward slide. Allied to this was the lack of lender appetite already touched on here.

A dealer quoted in the AM100 introduction last year said the franchised model was “on the ropes”.

So what happened to reverse the gloom, to send dealer groups racing out of the traps in such an emphatic way?

Month-after-month of continuous growth in new car registrations – with the retail market particularly strong compared to fleet – will have played a considerable element. In the middle of last year there was much talk around excessive pre-registration activity: 30% of all new vehicles said CAP and KPMG put the figure at 5%.

There are no accurate figures to end the debate, but now feedback from dealers and manufacturers AM has spoken to, and latest opinion from KPMG, suggests the extent of pre-registrations has been overstated. It is not having a demonstrable impact on registrations they say.

New AM100 research shows a strong contributing factor to the turnover growth.

The biggest groups have been growing.

In financial terms, six top 10 groups lead the growth in turnover, Sytner by £501m, Vertu £371.7m, Arnold Clark £351m, Lookers £264.6m, Marshall £172m and Pendragon £169.3m. All have increased their franchised outlets.

Acquisitions played a significant part in this growth. Groups were on a spending spree. Looking at the events of 2012 and 2013 to the end of May there appears to be only one month without an acquisition or group expansion by an AM100 group.

The examples include:
Sytner buying Isaac Agnew (in January 2012, but accounts in part for its significant turnover growth in the new AM100)
Marshall acquiring F Cross and Silver Street Automotive
Group 1 four Inchcape Ford sites
Lookers buys Lomond Motors
Arnold Clark buys John R Weir, Vauxhall dealerships from Verve and others sites from Moorland Motors
Jemca takes over Octagon Motor Group
Peter Vardy three sites from Town and County and Pendragon
Cambria acquires County Motor Works
JCT600 buys £200m turnover Gilder Group.

And Vertu deserves an special acknowledgement: it bought Dobies and sites from Walter C Brigg, Holiways Ford Group, Pendragon, Co-op and Springfield Cars.

It also sold its Iveco heavy truck business. Acquisition activity helped it to a 33% rise in turnover – the highest in the AM10 - and a move of three places up the AM100 to number six.

Collectively the top 10 has seen a 10% growth in turnover. It fell 12% last year.

For the group AM11 – 20 (Listers to Renault Retail Group), traditionally seen as a hotbed of activity, the situation is reversed.

After last year’s growth in turnover of 12%, this year it has fallen from £5.57m to £5.47m – down 1.8%.  Standout performers were Listers, JCT600, Group 1, Benfield, Ridgeway and Perrys.

All experienced turnover growth. Greenhous, Camden, Robins & Day and Renault Retail Group experienced falls. Note the two manufacturer owned groups. AM10 Mercedes-Benz Retail Group suffered the same.

Other financial performance indicators are looked at later in this supplement, but profit before tax and return on sale,  profit per staff member figures are positive.

What of the future?

Since 2010, when the sector began to recover, commentators said there would be a slow climb out of the recession.

But it may come at a faster pace than originally presumed.

Beyond the incredible surge in performance, car sales forecasts have been reforecast upwards for the year-end (fuelled by PPI refunds?), shares are at a five-year high, housing demand is at its highest for about three years, and faster recovery in the jobs market than all European countries except Germany.

The AM100 by numbers

5 The number of new entrants

Half as many as last year. Highest placed is predominantly premium brand focused Hatfields (eight Jaguar and Land Rover franchises out of a total of 11) at number 88 with turnover of £118.9m on total car sales in 2012 of 3,867 units.

Other new entrants are Bowker BMW (£114.6m), Renrod Holdings (£110m), Meridian Motor Group (Vantage) with £108.9m and Hughes Group ((£107.9m). The entry point for the AM100 is a little over £100m. Blue Bell BMW has been a back marker in previous years and is once more with a slight year-on-year increase in turnover from £101m to £104m.

Previous years:
2012: 10
2011: 4

2.26% The average return on sale (RoS) for the 20 best groups
Last year’s second highest performer CEM Day is the best this year with a return on sale of 3.4%. In the previous year it achieved 3.0%, beaten by Stoneacre which recorded an RoS of 3.8%. This time Stoneacre is at 16 with 1.9%.

Just below CEM Day are Westover with 2.9% (2012: 2.7%), Yeomans with 2.9% (2.5%) and Spire with 2.6% (2.6%).

At number 20 is Lloyd Motors with 1.7%, the same as last year.

Previous years RoS top 20 average
2012: 2.1%
2011: 2.7%

£25.2m The average profit before tax of the 10 biggest profit earners
Compared to £23.1m last year, the latest average profit before tax figure for the top 10 groups sees an impressive 9% rise.

Sytner Group (number two in the AM100) has seen the highest returns (£67m), gaining the top spot for three successive years. It has improved profits by 16% year-on-year and this year exceeded its 2011 achievement of £63m.

Pendragon’s year-on-year improvement in PBT has been remarkable: a rise of 460% to £36.4m from £6.5m. It is just behind Lookers with £36.5m, but still some way behind Arnold Clark with £60.5m and Sytner. Five of the top 10 best performers are in the AM10, eight in the AM20. CEM Day has the lowest turnover at number 54 in the AM100, but has the ninth highest PBT and the highest RoS (see above).

Previous years’ PBT AM top 20 average
2012: £23.1m (up 1.3%)
2011: £22.8m

£9,548 Average profit per employee
For the fourth year running Spire Automotive has the highest return per staff member at £14,629, down on the previous two years (2012: £15,319 and 2011: £16,660), suggesting the downward impact of its outlet expansion in March with the purchase of sites from Jardine Motor Group. Halliwell Jones, with an average of £13,226 and CEM Day at £12,516 follow Spire in the chart.

Only Sytner and Arnold Clark are in the AM10 and in the top 20 for profit per staff member group (£11,167 and £7,277 respectively).

The average profit per staff figure of £9,548 compares to £8,144 last year, a 17% increase. The latest figure is 14% down, however, on the 2011 average.

Previous years’ results
2012: £8,144 (down 27% from 2011)
2011: £11,113

£380,035 Average profit per outlet

A rise of 19% year-on-year, reversing a fall last year on 2011 of 33% for the top 20 leaders by this measure.

Return on sale champions CEM Day leads the top 20 for profit per outlet at £573,455, with 20 franchised centres with a mix of volume brands, predominantly Ford. It is a long way from Spire Audi’s achievement of £1,016,250 per outlet in 2011. But CEM Day is ahead this year of Peter Vardy, Halliwell Jones and Thompson Motor Company. Sytner and Lookers are the only top 10 AM100 groups to feature in this top 20.

At number 20 is AM100 new entrant Hatfields with a figure of £253,636.

Previous year’s performance:
2012: £318,470 (down 33% year-on-year)
2011: £477,587

2,700 Total number of outlets…
or franchised dealerships – representing an increase of 179 or 7% from the 2012 total of 2,521. From 2011, the number of groups with in excess of 100 sites remains at five. With 238, Pendragon has the greatest number. Arnold Clark has grown the most with 43 additional sites since last year’s AM100, a 28% growth.

Previous year’s outlet totals
2012: 2,521 (up 26 or 1%)
2011: 2,495
2010: 2,487
2009: 2,362


Notes to the AM100

Information in the AM100 is derived from responses to our questionnaire or from statutory accounts.

Where no questionnaire has been returned and statutory accounts are not sufficiently current, an estimate is made.

Profits are adjusted, where information is available, to eliminate exceptional items. Profit percentages are calculated on the unadjusted turnover numbers. Turnover is net of VAT.

In order for the table to be as current as possible, information in the public domain, principally relating to acquisitions and disposals, is used to update questionnaire responses or statutory accounts.

AMi: data in AMi on dealer group financial performance is based solely on published year-end financial accounts
 

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