Profits motor at Scottish car giant Arnold Clark despite pandemic sales hit

Arnold Clark, Europe's largest privately owned car retailer, believes the business is now in a stronger position than before the pandemic after posting annual results which revealed it increased profits despite the impact of lockdowns on showrooms.

The figures also show that at peak, the Glasgow-headquartered group had more than 12,000 staff on furlough and it received over £64 million in payments from the UK government.

Turnover fell by 14.9 per cent to £3.8 billion in 2020 although profits improved significantly to £156.6m – up a third from 2019 - helped by impressive online sales and service departments being able to remain open.

Before the lockdown in March 2020, the company said it had seen a very positive start to the financial year, but when showrooms closed it lost over £800m of revenues in just four months as 65,000 fewer vehicles were sold.

The closure of physical showrooms hit sales but the firm's investment in digital platforms helped it weather the storm.

New car sales plunged by 26.5 per cent to 46,509 cars and used car sales were down by 20.2 per cent to 204,627.

Although it acknowledged the total furlough payment received was “a large sum of money”, the firm pointed out it equated to around two months of its usual payroll costs. The firm said it decided not to furlough any staff in the second lockdown as it felt it was capable of continuing without additional support from the UK government.

Chief executive Eddie Hawthorne highlighted the huge impact of the pandemic and said the early 1990s recession and the financial crash “paled into insignificance” in comparison.

“It has however, brought home the importance and resilience of our staff, reminded us to focus on the basics and has highlighted the benefits of being a well-funded and prudently run family business with a long term view,” he said.

Hawthorne said there had been some difficult decisions made to deal with the challenges faced.

“I have been honest about the impact on the business, the need to restructure, the decision that six smaller branches would not reopen, the closure of several departments and the difficult but necessary decision to reduce our headcount.”

Total employee numbers fell by around 350 during the year to 12,516. The highest paid director – presumed to be Hawthorne, received a £3m package, down from £5.4m.

The Clark family shareholders agreed that no dividends would be paid during the year.

Hawthorne also spoke about the impact on the mental health of staff, many of whom had to work from spare bedrooms or kitchens.

“We have missed the chance conversations, unplanned questions, the ability to learn from colleagues, along with the training and camaraderie our branch and office environments provide,” he said.

He said he and other board members were personally committed to ensuring employees were supported.

Hawthorne said the group had benefited from its investment in digital services and platforms in recent years and believed the business would perform strongly in the current financial year.

“Our business is now leaner and in a stronger position than when we entered 2020. We have enhanced our digital model, increased our efficiency and improved customer service.”

During the pandemic the firm made 1,000 vehicles available free of charge to key workers and provided 120 minibuses to the NHS to transport staff and patients to hospitals.

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