UK-based global auto dealer and distribution group Inchcape has said that its financial performance for the full year is expected to be significantly ahead of previous expectations, boosted by a UK performance driven by the government’s incentive scheme.
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In a statement to the market, the car retailer said that total revenue for the third quarter was 13.4% below last year in actual currency and 16.5% below last year in constant currency, but was 2.2% ahead of the second quarter in actual currency. Like for like revenue for the third quarter was down against last year by 9.7% in actual currency and 13.7% in constant currency.
“In the third quarter, group revenue has benefited from the impact of the government scrappage incentive scheme in the UK and from slightly better trading momentum in Australia and Hong Kong,” the company said.
“Our gross margin performance in the third quarter has been robust, as we continued to benefit from solid used car margins in several markets and our aftersales business, which represents half of our group gross profit, remained resilient.”
The company said that its UK retail business has experienced a much stronger third quarter than anticipated as it benefited from the scrappage incentive scheme and used car margins being maintained at the level seen in the first half. However, it added that the underlying demand for new vehicles remained weak as third quarter registrations excluding scrappage were down 15.1% versus 2008 and 28.6% versus 2007.
The demand for new vehicles remained weak in mainland Europe with the exception of Greece where the market had been helped by government initiatives. Inchcape said that the Eastern European and Russian markets remained difficult.
“Our trading performance in Hong Kong has improved in the third quarter and we continue to gain share in Singapore in a weakening market. In Australia, we continue to enjoy a strong share momentum in a market that is recovering gradually,” it added.
Inchcape said that it expected its financial position to be significantly ahead of previous expectations. However, it added that it expected conditions to remain challenging in most of its markets until well into the second half of 2010.
CEO André Lacroix said: “While we continue to experience an extremely challenging market environment, we have benefited in the third quarter from stronger than expected trading in several core markets. This demonstrates the benefits of our broad geographic portfolio, the strengths of our business model and the impact of our self-help measures implemented throughout the group.
“With increased share across our key markets, scale positions in established and emerging markets and industry consolidation opportunities in the medium term, we are confident that the group is well positioned to continue to outperform our competitors and to benefit from market recovery.”
