Pendragon sales hit by shortage of parts

SALES of new vehicles at one of the UK’S largest car dealers plunged by 12pc as a shortage of key parts hamstrings automotive makers.

Pendragon said soaring demand combined with a shortage of new vehicles was pushing up prices as customers fought over the cars that were available.

As a result it expects to make about £33m in profit for the first half of the year, down from last year’s record of £35.1m. Pendragon’s shares jumped by more than 5pc following the update.

However, it said it remained “mindful” of the challenges to vehicle supply and warned demand could take a hit in the second half as households tighten their belts in the face of rising inflation. Pendragon has wiped out its £49.7m debt and is sitting on £2.8m of cash.

Manufacturers from Japan to the US are battling slow production as they struggle to buy computer chips. Carmakers were forced to temporarily close plants and slash production during Covid lockdowns, which wreaked havoc on global supply chains.

With fewer orders from carmakers, chip plants switched to making products for personal computers and smartphones. Supply has been tight ever since and has been exacerbated by China’s zero-covid policy.

The threat of gas shortages in Germany could slash production even further if Vladimir Putin, the Russian president, cuts off supplies. Berlin is likely to prioritise heating homes and hospitals over making cars if gas demand outstrips supply this winter.