Tayside and Fife car dealer Barnetts Motor Group said a wave of pre-registration activity was putting the squeeze on profit margins of “genuine” ex-demonstrators as it booked a rise in annual sales.
Writing in a strategic report accompanying its latest accounts, the firm’s directors said many manufacturers were using a buoyant new car market to “push ever increasing targets on their UK dealer networks in an effort to maintain or grow their market share”.
They added: “Whilst we have been relatively unaffected by this so far and have pre-registered very few cars over the last year… it is clear that there is significant pre-registration activity across many brand networks, as dealers fight to stay on the bonus levels needed to make their business profitable.
“The number of nearly new cars in dealer stocks is making it difficult to sell genuine ex-demonstrators profitably.”
The comments came as the Dundee-based group, which sells Mazda, Peugeot, Volkswagen and Volvo, revealed that turnover had risen by 11.8 per cent last year to £58.5 million. Profit before tax came in at just over £1m, up from £753,000.
The firm said the increase in turnover was attributable to increased sales of new cars, with 21 per cent more units sold in 2014 at an average transaction price 4.5 per cent higher. Used unit sales fell by 6 per cent as manufacturers’ offers made it more attractive for customers to opt for a new motor.
Towards the end of 2014 and into the first quarter of 2015, the group undertook a makeover of its Mazda showroom to match the Japanese marque’s latest corporate identity. It said this had been “well received by staff and customers alike” with new models in the pipeline including the CX-3 and MX-5 set to bring in more buyers.