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Inchcape on track during Q3

Stefan Bomhard

Inchcape has revealed in its latest trading update for Q3 that its UK business showed “robust revenue growth” as the group benefited from the continued expansion of the new car market.

This is despite the pressure Inchcape’s UK business has seen on its used car sales, with margins declining year-on-year during Q3.

The group said its UK aftersales business “performed well” during the period.

Globally, group revenue was £1.739 billion, up by 9.4% at constant currency (up by 2.5% at actual currency) compared to the same period last year. Like for like revenue was up 10.1% at constant currency (up by 3.1% at actual currency).

Inchcape’s aftersales business represents 50% of the company’s gross profit and the group said it is “performing well and in line with expectations”.

Stefan Bomhard, Inchcape group chief executive, said: "Our growth continues to be supported by the group's strong portfolio of distribution and retail businesses, in attractive markets, across five continents, where we typically have strong long-standing positions.

“In line with our earlier expectations, we are set to deliver a robust underlying constant currency performance in 2015.”

Inchcape Retail Group UK recently bought the Armstrong Massey Land Rover dealership in York. The acquisition takes Inchcape's portfolio of Land Rover dealerships, which trade under the Hunter brand, to eight sites.

Analyst view

Mike Allen, Zeus Capital head of research, said: "In the UK, Inchcape has seen robust revenue growth commenting that the corporate market in particular has been strong. Used margins here have declined YOY, and this is consistent with what other dealers such as Vertu has seen too.

"Inchcape continues to trade at a healthy premium to the other UK centric dealer groups despite delivering inferior growth.

"While we continue to admire the unique Inchcape business model, we believe there are better ways to play the sector at present via the UK dealers."

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