Arnold Clark drives profits up 104%

ARNOLD Clark, Scotland's biggest car dealership, saw its pre-tax profits more than double last year despite a fall in sales.

Cost controls and rising used-car values helped profits rise by 104 per cent to 73.9 million on turnover down 3.2 per cent to 2.14 billion in the 12 months to 31 December.

Chairman and chief executive Sir Arnold Clark described the results as "exceptional" but admitted that 2009 was one of the "most unusual and unpredictable years the motor industry has ever experienced".

He also hinted that the company was looking at further expansion through acquisition.

But Clark cautioned that 2010 would "tell a different tale" as several factors affected on trading including the return of the VAT rate to 17.5 per cent and the end of the scrappage scheme.

Sales of new cars during 2009 fell by 4.7 per cent to 75,390 with used cars down by 6.6 per cent to 118,817. The scrappage scheme accounted for 14.5 per cent of the new vehicle market.

Many of the vehicles part exchanged were effectively scrap and the supply of second hand cars for sale was squeezed.

"This factor coupled with vehicle manufacturers reducing and restricting vehicle supply and a lack of activity in the fleet market resulted in a shortage of used cars and a dramatic reversal of the suppressed used car values experienced at the end of 2008," said Clark.

"These market conditions prevailed for the majority of 2009, leading to the unprecedented situation of used car values appreciating for nine consecutive months through to September 2009."

He said used car values were now following "a more typical pattern".

Clark said despite the challenges the industry faces he was confident for prospects for the company in 2010.

"The board will continue to pursue a policy of ensuring that the group remains very well funded, enabling full consideration to be given to any opportunities that arise."

Arnold Clark operates more than 150 dealerships throughout the UK. In December it bought four dealerships in Cumbria and Dumfries. In Scotland it invested in the expansion of its Fiat dealership in Sighthill, Edinburgh, expansion of its Vauxhall Glasgow East and Ayr Honda dealerships and refurbishment of sites including Stirling Volvo.

During the year the group donated more than 280,000 to UK-based community projects and charities including the Prince's Trust Scotland.

Arnold Clark holds a strong position within an industry renowned for wafer-thin margins. Competition comes from Scottish heavyweights such as Belmont-owner John Martin and Eastern Western, as well as national chain Pendragon, which trades under the Evans Halshaw banner.