Car dealer hopes new Alfa will put it back on road to profit

Published on Monday 2 November 2009 21:06

CAR dealership Eastern Western Motor Group is hoping the launch of a sporty little Italian job will lead to a profit rebound.

Accounts filed at Companies House for the year to 31 December show the company had a pre-tax loss of 582,000, compared with a profit of just over 1.6 million in 2007.

Turnover reversed 2.5 per cent to 145.8m, as the Edinburgh-based group fought "challenging market conditions".

But the directors noted that sales and gross profit – down from 19.4m to 18.5m – had "only marginally reduced". They added: "The company's market share within its main area of influence remained strong."

The group said it had continued to integrate its latest marque, Fiat-owned Alfa Romeo, during the year. "With the introduction of the new Alfa Romeo Mito taking place in 2009, the directors are confident that this will enhance trading performance as the franchise also establishes itself as part of the group," it said

Since its launch earlier this year, the Mito hatchback has received glowing praise in the motoring press. The Scotsman said it "would appear to have the ingredients it needs to succeed".

Over the course of 2008, staff numbers at Eastern Western fell by about 30 to 451, although overall staff costs, including pension contributions, remained steady at just over 9.6m.

The firm said: "The directors initiated a cost-reduction programme in late 2008 and took action to reduce working capital, which includes vehicle stocks and debtors.

"The directors are happy that their actions have had the intended effects, and this should have a positive impact on the 2009 financial result."

The directors did not recommend payment of a final dividend.

Accounts were not available yesterday for parent company Eastern Holdings. Marques handled by the group – one of Scotland's biggest independent dealers – include Lexus, Mercedes-Benz and Saab.

Car dealerships and manufacturers have endured a torrid time over the past two years, with a tightening in credit conditions, rising unemployment and high fuel costs.

There have been signs of some stability in recent months, however. Although car production has been in decline, September's fall was the smallest for a year.

The number of cars made in the UK during the month totalled 119,616 – a 16.1 per cent dip on the September 2008 figure.