Inchcape, the world’s biggest car dealer, has said it was outperforming the UK market with a three per cent rise in sales so far this year.
But it went on to warn that domestic demand was now weakening.
The group, which sells marques including Audi, BMW and Mercedes-Benz, said the like-for-like sales increase came despite a 3.5 per cent fall overall in UK new car registrations last month as the market declined after a “buoyant” April. It added that June was also set to be weak.
nchcape’s global reach helped the group notch up a nine per cent increase in pre-tax profits for the five months to May 31.
However, the company said profits on a constant currency basis remained flat on last year. And group-wide comparative sales growth slowed to 1.4 per cent from the 3.3 per cent seen in the first three months of the year.
Inchcape made its comments in a pre-close trading statement to the London Stock Exchange. Its interim results for the six months to June 30 will be published on July 29.
Inchcape said sales in emerging markets such as the Baltics, China, Poland and Russia – were more than 50 per cent up on a constant currency basis compared to the prior year, boosted by market growth and recent acquisitions. The statement went on to say: “Despite challenging conditions in several of our markets, we continue to expect to report progress in sterling terms in 2008.”
Inchcape has fared better than rival dealerships as it is less exposed to the UK market, where margins on used cars have been tighter. Its UK business comprises just over 40 per cent of turnover. Broker Panmure Gordon said the results were “solid” and in-line with expectation, but warned that the UK market could get tougher later this year. Analyst Mike Allen said: “The market has clearly got tougher in June with the potential for trading to deteriorate further in the second half.”
But he expected Inchcape’s businesses in Hong Kong and Singapore to offset any further weakness in the UK and Europe. Shares gained 8.5p, or three per cent, to close at 327p yesterday.
Inchcape’s comments yesterday about the cooling off of the UK new car market reflected figures from industry body the Society of Motor Manufacturers and Traders which showed that production levels at UK plants are falling.
Output of cars fell by 10.6 per cent over the first five months of the year as manufacturers take a “cautious approach” to demand across western Europe, the SMMT said.
In a separate development, Toyota responded to a rare fall in sales in Europe by appointing Akio Toyoda, a great-grandson of the company’s founder and widely tipped as a future global president of the world’s second biggest carmaker, head of its operations in the region.