Car dealer Arnold Clark drives up profits after used vehicle sales surge
PROFITS at Arnold Clark have topped £110 million as the car dealer posted record turnover last year, powered by “exceptional growth” in used vehicle sales.
Glasgow-based Arnold Clark saw revenue soar to £3.35 billion as car sales surged by 10.8 per cent to 175,526 units in 2015, accounts newly available at Companies House show.
According to the accounts the business, established by industry veteran Sir Arnold Clark in 1954, made a pre-tax profit of £110.4m last year, up from £108m the year in 2014.
Sir Arnold notes in the accounts that the growth was partly driven by a spate of showroom openings, which included the acquisition of Ness Motors, comprising more than 100 staff across operations in Inverness, Perth and Elgin.
The firm also acquired Vauxhall dealerships in West Calder and East Kilbride, while adding numerous sites to its estate through acquisitions south of the Border. These included companies in Preston, the West Midlands, Newcastle, and Burton on Trent.
It also launched what is understood to be the UK’s largest ever Renault showroom at an 11-acre site in Hillington, near Glasgow Airport. Housing more than 400 new and used cars, it became home to the firm’s head office, where around 500 staff are based, in April.
However, site acquisitions only accounted for part of the sales growth, with Sir Arnold noting in his chairman’s statement that like for like sales jumped by 7.9 per cent in the year ended December 31.
In spite of surging used car sales, though, the company saw new car sales slide by 8.4 per cent to 83,813 units. This was down largely to a major fleet contract not being renewed.
Sir Arnold notes in the accounts: “Used car sales increased by 10.8 per cent due to the opening of new branches and like for like sales increasing by 7.9 per cent. This increase in used units, combined with strong residual values and continued low interest rates, were the main drivers of the increase in operating profits. New car sales fell by 8.4 per cent due to a large fleet contract that was not renewed in the year due to significant levels of working capital required to operate the arrangement.
“New retail units increased by a modest 0.4 per cent in what was a relatively static UK market, and it is expected that 2016 will experience similar levels of growth.”
Arnold Clark Finance, the company’s vehicle management and daily rentals business, made a “significant contribution to group profits” during the year, although pre-tax profits dropped by 3.8 per cent at the division to £15.5m. This was attributed to the exceptional year experienced by its daily rental business the year before, boosted in part by major sporting events taking place in Scotland, which included the Commonwealth Games.
Mulling the outlook for the current year, Sir Arnold said: “In 2016 we expect the new car market will remain relatively static, with used cars experiencing similar growth to 2015.
“Funding remains in place to take advantage of any opportunities that may arise and to overcome any market volatility. Early trading results have been very promising.”