Group 1 boss predicts release of several years’ pent-up car retail demand

Group 1 Automotive president and chief executive Earl J. Hesterberg has predicted the release of “several years” pent-up demand in the UK car retail sector.

Speaking at the US-based AM100 group’s first-half results call, Hesterburg revealed that the business had delivered a 73.6% year-on-year rise in revenues, to $3.7 billion (£2.65bn), and a total gross profit increased 84.3% at $661.3m (£473.3m) in the six-month period to the end of June.

New vehicle revenues increased 74.6%, as units sold increased 62% and gross profit per retail unit (PRU) increased 59.9%, to $3,853 (£2,758), the group revealed.

Its used car operation delivered revenues up 86.5%, as units increased 47.4% and gross profit PRU increased 59.9%, to $2,425 (£1,736).

And Hesterberg believes that the market’s momentum is here to stay.

He said: “In the UK market, which was finally allowed to reopen in mid-April, we saw aftersales revenues increased sequentially throughout the quarter with the month of June seeing an 11% same-store increase over June 2019.

“As with the US, we expect to see continued sequential growth throughout the second half of 2021.”

Hesterberg added: “Consumer demand for vehicles in the UK is extremely strong. We retailed nearly 18,000 new and used units in the second quarter, a 31% sequential increase from the first quarter.

“We believe pent-up demand built over the past several years due to both Brexit and the pandemic will help drive strong UK vehicle demand into the foreseeable future.”

Group 1’s buoyant first half display follows record financial results in 2020 and a “solidly profitable” Q1.

Its H1 result reflects that reported by AM100 PLCs Inchcape, Lookers and Vertu Motors yesterday (July 29) and a Pendragon trading update delivered via the London Stock Exchange this morning.

All these business reported a degree on uncertainty about the remainder of 2021, however, as semiconductor supply shortages choked new car production, some anticipated a realignment of used car values and the potential for further COVID-19 disruption persists.

Earlier this month Group 1 completed the acquisition of nine-site Robinsons Motor Group, taking its total UK operation to 55 locations with 75 franchises representing 14 total brands.

The group added to its existing Volkswagen Group franchises with the addition of Audi, Seat, Skoda and Volkswagen businesses – largely located in East Anglia – and a Citroen dealership in Peterborough through the transaction.