Citygate Automotive's 2022 profit drops by £2m due to brand challenges and declining used car prices.

author: FutureCar Staff    

Car dealer group Citygate Automotive experienced a £2m drop in profits in 2022, according to its annual results for the 12 months ending December 31, 2022. The company reported a profit before tax of £7.4m, compared to £9.4m in the previous year. Despite the decrease in profits, turnover increased from £336.3m to £362.4m, and gross profit also saw a rise of £2m, from £51.2m to £53.2m.

In its annual report submitted to Companies House, Citygate Automotive noted that many of its brands had lost market share in the new car market. While profit on new vehicles had improved, this was offset by a decline in profit from used cars. The company sold 6,243 new cars, down 541 from the previous year, and 6,506 used cars, down 382.

The board of Citygate Automotive stated that the Volkswagen, Seat, and Skoda brands were particularly affected by the semiconductor crisis, which disrupted the supply of new vehicles. However, the Kia brand gained market share and increased registrations to a record 100,200 vehicles, with a market share of 6.2%. In the light commercial vehicle segment, there was a 20.6% decline to 282,000 units, but VW Commercial Vehicles outperformed the market and became the second largest brand with a market share of 10.0%.

Despite the challenges in the car market, Citygate Automotive saw positive developments in its service and bodyshop hours, which increased. Parts turnover also experienced a £1.9m increase. The company's turnover grew by £26.1m (7.7%) to reach £362.4m, with higher average prices offsetting the decline in new and used car volumes. Aftersales performance was solid, with service hours up 2.1%, bodyshop hours up 21.7%, and parts revenue up 15.5%.

However, the decline in used car profitability and increased distribution and administration costs impacted the company's gross margin. Distribution expenses increased by £1.8m to £26.9m, driven by higher staff and vehicle costs. Administration costs also rose by £2.6m to £20.5m, due to ongoing investments in IT projects for process digitization and operational efficiency.

Overall, Citygate Automotive faced challenges in the new car market but saw improvements in certain areas of its business. Despite the decline in profits, the company remains focused on adapting to market conditions and investing in technology to drive future growth.

Pictured top: Citygate Volkswagen West London

FutureCar Staff