Scottish Ford dealership group books record profits but bumpy road lies ahead
Car buyers will continue to face challenges getting their hands on a new motor throughout 2023, while higher interest rates are likely to dent confidence, a leading industry figure has cautioned.
Brian Gilda, chairman of Scottish Ford dealership heavyweight Peoples, warned that “headwinds are coming” as he unveiled record profits despite a drop in sales at the group, which ranks as the largest independent dealership in Europe retailing only Ford cars and commercial vehicles. He said the worldwide shortage of semiconductors had impacted both vehicle volumes and turnover, but added that a “relentless focus on pursuing real business opportunities” alongside stronger margins had led to the record earnings. Pre-tax profits rose 6.2 per cent to an all-time high of £8.48 million in the year to July 31, according to the latest accounts.
While turnover reversed 4.8 per cent to £275.6m, the group saw a return on sales of 3 per cent. Its commercial vehicle sales were up by 2 per cent, described as a “standout performance” compared with the UK market average which suffered a sharp decline of 24.2 per cent.
Gilda, who founded Peoples some four decades ago, said: “A lot of industries have been affected by the semiconductor shortage and in our case a lot of customers have had to wait quite some time before getting their vehicles and that is going to continue into 2023. We are short of product. However, we retained a lot of customers by keeping them fully informed.
“Commercial vehicles have been strong,” he added. “That’s a sector that will be affected going forward but not to the same degree as passenger vehicles. I think people will pause for a little while and decide what they want to do.”
Gilda said the “ever-growing appetite” for hybrids will extend to pure electric vehicles (EVs) as charging infrastructure continues to improve. In anticipation of this, the firm has invested a six-figure sum installing electric chargers across its dealerships.
“I’m a believer in the electric car,” added Gilda, who currently drives around in a Ford Mustang Mach-E. “People will get used to it. Will they get used to it quickly? In reality, I suspect not, but that’s probably more to do with the costs and current infrastructure.”
He revealed that pre-tax profit for August, September and October was up 61 per cent on the same period last year, but said that was unsustainable.
“We must be realistic - headwinds are coming and we need to be prepared,” he noted. “We therefore anticipate that growth in the coming year will be more modest, but along with the loyalty of our customers, we have a first-class team of directors, management and staff whose tireless commitment will help us to navigate these challenges. I suspect turnover and margins will be affected by what’s happening with interest rates.”
The group’s headcount dipped over the year, from 378 to 363, but Gilda also noted that it was proving “very difficult” to find new staff at times when skilled workers retired. Peoples Group was founded in 1983 and has six dealerships - in Edinburgh, Falkirk and Livingston and three around Liverpool.