Profit decline, brand challenges, and dropping used car prices impact Citygate Automotive

author: FutureCar Staff    

Car dealer group Citygate Automotive experienced a drop in profits of £2m 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 in 2022, compared to £9.4m in the previous year. Although turnover increased to £362.4m from £336.3m, the percentage of gross profit slightly declined.

In its annual results 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 improved, it was offset by a decline in profit from used cars. Both new and used car units sold decreased, with 6,243 new cars sold, down 541 from the previous year, and 6,506 used cars sold, down 382.

The board of Citygate Automotive stated that the Volkswagen, Seat, and Skoda brands were severely impacted 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%. The light commercial vehicle segment declined by 20.6% 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, service hours and bodyshop hours at Citygate Automotive increased, and parts turnover saw a rise of £1.9m. The company's turnover grew by £26.1m (7.7%) to £362.4m in 2022. In the vehicle sales department, a favorable mix with higher average prices offset the volume declines in new and used car sales. In aftersales, there was a solid performance across all departments, with service hours up 2.1%, bodyshop hours up 21.7%, and parts revenue up 15.5%.

The supply constraints on new vehicles and the favorable mix of new products contributed to improved gross profit on new vehicle sales. However, this was offset by a significant decline in used car profitability as the market returned to a more normal level from the post-pandemic highs of 2021. Aftersales profitability improved by 13% year-on-year, but the combined gross margin declined to 14.7%.

Citygate Automotive also reported an increase in distribution expenses, which rose by £1.8m to £26.9m, driven by higher staff and vehicle costs. Administration costs also increased by £2.6m to £20.5m, mainly due to ongoing investments in IT projects aimed at digitizing processes and increasing operational efficiency.

Pictured top: Citygate Volkswagen West London

FutureCar Staff