Car dealership profits increase more than sevenfold as sector emerges from Covid slump

Publications featured in include: Car Dealer Magazine and City AM. 

The profits of the UK’s Top 20 car dealership groups have risen more than sevenfold in the past year, from £105m in 2019/20 to £764m in 2020/21, shows our new research.

Car dealership groups have had very strong 12 months, bouncing back from an extremely difficult period in the early part of the pandemic. Lockdown forced car dealerships to close completely for several months, reducing sales dramatically to a record low of just 4,321 new vehicles in April 2020*.

Since the end of lockdown, sales of new cars have recovered strongly as demand bounced back from Covid. 141,583 new cars were sold in April 2021, more than 32 times as many as in the previous April. 

Dealerships' revenues have also been driven up by the rising values of used cars, as supply chain issues lowered the availability of new cars. In 2021 some dealerships voluntarily stored some of their used stock, rather than selling immediately in order to benefit from rising used car prices. This had not previously been seen in an industry that is heavily focused on turning stock around quickly. 

Consumers are increasingly buying more expensive electric vehicles to replace their petrol or diesel vehicles, presenting an opportunity for car dealerships to increase their profits.

Looking forward, the cost of living crisis and interest rate rises are once again putting new car sales under pressure, with only 119,167 new cars sold in April 2022, down 16% on April 2021.

Ian McMahon, Automotive Partner at our London office, says: “The past year has been a fantastic one for car dealership groups. The rise in profits has been much needed after the damage the pandemic did to the industry.”

“Some dealership groups wouldn’t have survived without government assistance in 2020 but in 2021 they had a boom year of sales and rising used stock values. The contrast couldn’t be more stark.”

“After such a successful year, dealerships will likely be looking at the coming months with a wary eye. With consumer spending under a great deal of pressure due to the cost of living crisis, this year is likely to be more challenging than the last.”

A sevenfold increase in car dealership profits since 2020/21

Car dealerships pr thumbnail

*Source: SMMT Vehicle Registrations

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