Car dealer Benfield’s profits up despite downturn

Sep 18 2009 by Peter McCusker, The Journal

THE region’s largest independent car dealer has kept hold of its profits during the “worst year in living memory” for the motor trade and it now says it is poised for growth.

With new and used car volumes recovering, Newcastle-based Benfield Motors is aiming to add new showrooms to its portfolio and make significant sales and margin gains.

Benfield saw pre-tax profits hold up at £3m despite seeing sales fall from £316m in 2007 to £287m in 2008. This year it is reporting a sales rise of 2% and is keen to add increase its 26-strong dealership chain to 30 sites over the next two years.

And as the market recovers, chief executive Mark Squires is aiming for a turnover of £350m by 2011. He said: “Last year was a watershed year, with the last six months of it being the worst any of us can remember in the car trade. So achieving the levels of profitability we did was a very creditable performance.

“We were able to make savings through a number of efficiency measures including more effective stock management and a refocusing of our marketing efforts. This year we are 2% up on our sales performance with used car sales being particularly buoyant.

“The scrappage scheme has boosted new car sales with these being 40% up since its launch, although our business model is not reliant on it.”

In February, Benfield bought the Teesside Honda franchise in Stockton after deVries Group went into administration.

Mr Squires said: “We have continued to invest during the downturn having spent £700,000 on developing the Skoda and Alfa Romeo brands and adding the Hyundai marque to our Newcastle offering.

“We are aiming to make further acquisitions and will see what opportunities present themselves.

“We are in a strong position. We have healthy reserves, good relationships with our bank and the capital we need to grow.”

Any acquisitions are unlikely to extend much beyond its existing reach of the North East, Yorkshire and Cumbria, with the company preferring to set a two-and-a-half hour drive time limit on the reach of its dealerships from its Newcastle base.

The company employs 1,100 people after shedding 100 jobs in the last two years mainly through natural wastage and voluntary redundancy.

It has been a difficult period for the industry with new vehicle sales falling by 50% in the latter part of 2008. This affected margins and many dealers reported losses last year.

The Government’s scrappage scheme has been a shot in the arm for the industry.