Profit decline Citygate Automotive 2022

author: FutureCar Staff    

Car dealer group Citygate Automotive experienced a £2 million 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 £7.4 million, compared to £9.4 million in the previous year. While turnover increased from £336.3 million to £362.4 million, gross profit only increased by £2 million, reaching £53.2 million.

In its annual report submitted to Companies House, Citygate Automotive mentioned that many of its brands had lost market share in the new car market. Although profits on new vehicles improved, this was offset by a decline in profits 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 commented on the challenging new car market, stating that the Volkswagen, Seat, and Skoda brands were particularly affected by the semiconductor crisis, which disrupted the supply of new vehicles. On the other hand, the Kia brand gained market share, with registrations reaching a record 100,200 vehicles and market share increasing to 6.2 percent. In the light commercial vehicle segment, there was a decline of 20.6 percent to 282,000 units, but VW Commercial Vehicles outperformed the market and grew its market share to 10.0 percent, becoming the second-largest brand in the market.

Despite the challenges in the new car market, Citygate Automotive saw positive developments in its service and bodyshop hours, which increased. Parts turnover also experienced a £1.9 million increase. The company's turnover grew by £26.1 million (7.7 percent) to £362.4 million in 2022. In the vehicle sales department, the favorable mix of higher average prices offset the decline in both new and used car volumes. Aftersales also performed well, with service hours up 2.1 percent, bodyshop hours up 21.7 percent, and parts revenue up 15.5 percent.

However, the decline in used car profitability, as the market returned to a more normalized level from the high prices seen in the post-pandemic market of 2021, offset the improvements in new car sales. Aftersales profitability improved by 13 percent year-on-year, but the combined gross margin declined by 50 basis points to 14.7 percent. Despite these challenges, the additional revenue, along with lower gross margin, resulted in a gross profit of £53.2 million in 2022, a four percent increase compared to the previous year.

The company also reported increases in distribution expenses and administration costs. Distribution expenses rose by £1.8 million to £26.9 million, mainly due to increased staff and vehicle costs. Administration costs increased by £2.6 million to £20.5 million, driven by ongoing investments in IT projects to digitize processes and increase operational efficiency.

Image: Citygate Volkswagen West London

FutureCar Staff