U.S. Markets closed

Luxury car seller Pendragon dives after slower sales cause shock loss

Mark Shapland

Cars dealer Pendragon plunged today after revealing an unexpected loss, piling pressure on new management just weeks after they took over.

The cars dealer’s shares fell up to 13% in London after it posted a £2.8 million loss for the first quarter this year, well below the £6 million profit analysts had pencilled in.

Cars sales have been hit badly with potential buyers keeping their hands in their pockets as Brexit remains unresolved.

Last month cars body SMMT said new car registrations had fallen by around 3% in march as uncertainty over new diesel regulations also dented consumer confidence.

As a result chief executive Mark Herbert and chief financial officer Mark Willis, who both joined this month, have launched a strategic review, although the company refused to say if this could result in parts of the business being sold off.

A spokesman for the company said: “The results of the review will be communicated to the market in June. It has been a tough 18 months for car dealers. Buying a new car is an expensive purchase and consumers are being affected by the uncertainty.”

Retail analyst Nick Bubb added: “The profit warning is buried in what looks like a routine trading update, which begins with good-looking revenue growth. However, gross margins have been weak across the board.”

It is not the first time Pendragon has been in trouble, having served up a profit warning last October.

It said at the time it would combat its problems by focusing on selling more used cars, although this session’s figures show that profits at its used-cars division were also down.

Its online business Car Store also performed poorly despite heavy investment.

Pendragon operates at every level of the cars market, with its Stratstone division selling luxury cars like Aston Martins and Ferraris, while Evans Halshaw sells Vauxhalls and Fords.