June 17, 2021

Gp Delivers

The excellent automotive artisans

UK dealer group Pendragon warns over supply turmoil

UK car dealer Pendragon said pandemic challenges and a global chip shortage would lead to vehicle supply issues in the near term, even as a tighter control on costs and a digital push helped it to cut its losses at the start the year.

Automakers and dealers have been dealt a blow as a global shortage of semiconductors has led to production stops for vehicles.

“There is going to be some turmoil in the business over the next 6-18 months when it comes to the supply of new and used vehicles,” CEO Bill Berman told Reuters on Wednesday, although he indicated that the resultant increase in demand could lead to better margins for the company.

“We are actively working with OEMs to make sure we have the proper supply of vehicles, but often times we are kind of at their mercy when it comes to that,” said Berman, who has been running the company for just over a year.

Berman’s focus on cutting costs and building digital strategy helped the company report a narrower loss for the first two months of the current year following a return to annual profit for 2020, despite a slump in sales.

In January and February, Pendragon delivered 20,000 vehicles without customers having to visit a dealership during lockdown, Berman said.

Pendragon said it was also targeting underlying pretax profit of 85-90 million pounds ($116-$123 million) by financial year 2025, against a figure of 8.2 million pounds last year.

Through January and February, the company, which is based in Nottingham, central England, posted an underlying pretax loss of 4.8 million pounds ($6.6 million), compared with a loss of 8.2 million pounds in the same period last year.

Pendragon is Europe’s fourth-largest dealership group by revenue, according to Automotive News Europe’s 2019 Guide to Europe’s Biggest Dealers. It has 177 new-vehicle franchise points in the UK.