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Inchcape UK profits down 'significantly' in half-year financial results

Stefan Bomhard

Inchcape’s UK trading profits were down “significantly” over the first half of this year as pre-registration activity put pressure on new and used car margins.

While Inchcape doesn’t separate out its UK financials from its European operations, Stefan Bomhard, Inchcape group chief executive, said positive results in Poland, Greece, the Balkans and its BMW business in Estonia helped to offset the declines seen in the UK.

Inchcape said the decline in the new car market of 6.3% in the first half of 2018 created a challenging back-drop for vehicle margins.

Bomhard said: “The first half trend for the UK business is consistent with the difficult trading in the second half of 2017, with a supply and demand imbalance and the resulting elevated level of pre-registration activity causing pressure on both new and used margins.

“The challenging conditions were exacerbated by our brand mix, with a high exposure to premium new vehicles that have a greater than market weighting to diesel powertrains and subsequently greater pressure on margins given the significant decline in diesel demand.”

Bomhard said Q2 had shown a better profit performance in the UK due to improved market momentum.

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  • Martin R - 29/07/2018 22:10

    In my opinion, I am not sure I agree with this statement regarding the difficult UK trading for Inchcape UK’s dreadful set of results. This is misleading, and It could potentially have a knock-on effect on the wider franchised dealer market. I underpin this by highlighting the following: radically changing all the pay plans, especially the Sales Executive one, that has driven the best Sales Executives into the arms of competitors may be the real reason as to why so many vehicles have had to be pre-registered. Coupled with a disastrous used car strategy and process that was implemented last year, you begin to very quickly see the net result! Moreover, the UK dispensed with a lot of existing senior Managers and bought in ex-Pendragon staff to improve performance. If this was the plan (and not just done to get back at an ex-employer) it has not worked. It would be interesting to see the staff churn statistics for this year as it is always strongly linked to the financial performance of a company. In summary, yes, it is has taken a lot of hard work to grind out a good result this year but these results, in my opinion, are self-inflicted. If Inchcape UK was a football club, they would be telling ‘Manager’ that the company were right behind him whilst a replacement was being lined up to come in and resolve the many issues that Inchcape UK has. As an interested party, I certainly hope so!