Pendragon shrugs off new car shortages to upgrade profit outlook
Car dealership Pendragon increased its full-year profit outlook for the second time in less than two months as it said new car supply issues have not been as bad as feared.
The group said that, while there is still a shortfall of new cars, it was lower than expected in October and November.
It added that price rises and strong sales of used vehicles also boosted profits and offset the new car supply problems.
Pendragon has Evans Halshaw dealerships in Shrewsbury, Stourbridge, Walsall, Worfield and Wolverhampton, and also a Stratstone site in Wolverhampton.
The firm said the robust fourth quarter so far means it now expects full-year profits of around £80 million.
It had already increased its underlying profit guidance to £70 million in October from a previous range of £55 million to £60 million.
The profits haul for 2021 will mark a sharp improvement on the £8.2 million seen in 2020.
It comes despite car showrooms being hit by lengthy delays to new motors amid a global shortage of microchips used in vehicle electronics.
Manufacturers pulled back on supplies and orders for microchips after sales fell in the early stages of the pandemic.
Car production has since ramped up again as demand began to grow, but chip manufacturers have been unable to keep up, causing a global shortage.
This has had a knock-on effect on used car demand and cost, with the most recent official inflation data showing prices have soared by 27.4 per cent between April and October.
Pendragon said: "Whilst the shortfall in the supply of new vehicles persists, customer demand and order levels have continued at a higher level than last year.
"Despite demand outpacing deliveries, the shortfall in October and November was lower than we had previously anticipated and performance has been supported by a strong gross profit per unit.
"We remain cautious about potential further disruption from Covid-19 to both our local markets and global supply chains; however, our strong financial performance, with only one month of the financial year remaining, means we now expect group underlying profit before tax for full-year 2020-21 to be approximately £80 million."
