Profit decline for Citygate Automotive in 2022 due to brand challenges and decreasing used car prices

author: FutureCar Staff    

Car dealer group Citygate Automotive experienced a decline 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, compared to £9.4m in the previous year. Despite this decrease, turnover increased from £336.3m to £362.4m, and gross profit also saw a rise of £2m, reaching £53.2m.

In its annual results submitted to Companies House, Citygate Automotive noted that several of its brands had lost market share in the new car market. Although profit on new vehicles had improved, this increase was offset by a decline in profit from used cars. The number of new and used car units sold also 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 highlighted the impact of the semiconductor crisis on the Volkswagen, Seat, and Skoda brands, which led to a loss of market share. However, the Kia brand experienced growth, with registrations reaching a record 100,200 vehicles and market share increasing to 6.2%. In the light commercial vehicle segment, there was a decline of 20.6% to 282,000 units. VW Commercial Vehicles, however, outperformed the market and grew its market share to 10.0%, becoming the second largest brand in the market.

Despite the challenges faced, Citygate Automotive saw positive developments in service hours, bodyshop hours, and parts turnover. Service hours increased by 2.1%, bodyshop hours increased by 21.7%, and parts revenue grew by 15.5%. The company attributed the growth in turnover to higher average prices offsetting the decline in new and used car volumes. The supply constraints on new vehicles and the favorable mix of new products also contributed to improved gross profit. However, this improvement was offset by a significant decline in used car profitability as the market returned to a more normal level after the post-pandemic surge in prices in 2021.

Citygate Automotive reported an increase in distribution expenses, which rose by £1.8m to £26.9m, driven mainly by higher staff and vehicle costs. Administration costs also increased by £2.6m to £20.5m, a rise of 14.8%, due to ongoing investments in IT projects aimed at digitizing processes and increasing operational efficiency.

Overall, Citygate Automotive faced challenges in the new car market, but saw growth in certain areas such as service hours and parts turnover. The decline in used car profitability was offset by improvements in other areas of the business, resulting in a profit before tax of £7.4m for the year.

Pictured top: Citygate Volkswagen West London

FutureCar Staff