Car dealership Pendragon back in the fast lane after scheme

Feb 24 2010 by Iain Laing, The Journal

BRITAIN'S biggest car dealership returned to profit last year, helped by the "cash for bangers" scheme and strong recovery in used car margins.

Pendragon, the owner of the Stratstone and Evans Halshaw brands, posted underlying pre-tax profits of £10.1m in the 12 months to December 31, compared with a loss of £33.6m in 2008.

The firm, which is facing the imminent end of the Government’s car scrappage programme, predicted the market for new car sales would be well below the pre-recession average for the next 12 months before gradually improving.

Chief executive Trevor Finn said: “The group has successfully dealt with the challenging market conditions since the nineties. We acted swiftly to implement significant cost-saving and debt reduction actions.”

Pendragon, which bought Wearside dealership chain Reg Vardy for £500m in 2006, now operates 276 franchises after it closed 26 outlets last year, with the overall loss of 879 jobs across the business.

The firm said it had identified a further nine closures for 2010.

“While we anticipate our market will remain difficult in 2010, we are well positioned to focus on the profit opportunities that will drive our core business forward,” Mr Finn added.

Pendragon saw revenues retreat to £3.2bn in the year, compared with £4.2bn, as it reduced its fleet activity and was affected by a smaller new car market.

The firm saw a marked turnaround in demand for luxury cars in the period as its upmarket Stratstone dealership swung to an operating profit of £18.6m, from losses of £2.5m in the previous year.