Pendragon shares crashed 23% on Wednesday as the car dealer said a jam of unsold vehicles and other problems in the business would see it fall to a small loss for the year.
Until April it was forecasting profit of between £30 million and £40 million, which makes today’s news a hasty reversal.
New chief executive Mark Herbert, who replaced 30-year veteran Trevor Finn in April, undertook a “financial and operational review” which today showed that each element of the company has problems. In particular, slowing sales of new and used cars have led to an “excess of stock”.
Herbert said: “Notwithstanding the challenging market and uncertain macro outlook, the expected loss for the year is still disappointing,” adding that he saw “opportunities to improve the business” and return to profit.
Pendragon, which operates the Evans Halshaw and Stratstone brands, saw its shares fall 5.3p to 17.7p, which leaves the company valued at £239 million.
An “accelerated” programme to get rid of old cars will reduce the level of “aged, pre-reg and ex-demonstrator stock” it said.
Pendragon also has problems at its online arm carstore.com, where losses for the year are likely to more than double to £25 million.
The whole UK car industry is in turmoil. Sales fell by 4.6% in May, figures last week from the Society of Motor Manufacturers and Traders revealed.
The trade body partly blamed government policy for the strife, with an anti-diesel drive and a cut to incentives for plug-in cars causing confusion. Analysts say potential buyers of cars are struggling to work out how much the vehicles would be worth in future.