Arnold Clark's £2.3bn turnover 23 | 04 | 2011
SCOTS CAR giant Arnold Clark has consolidated its position as Scotland's largest privately-owned company after it reported a 6.1% increase in annual turnover to a staggering £2.271 billion. But the Glasgow-based company also confirmed it has experienced a 32% fall in pre-tax profits at his car dealership empire, down from £73.9 million to £50.5m in 2010.
The drop in profits was blamed on the ending of the car scrappage scheme in March and VAT returned from its discounted 15% to 17.5%, highlighting the wafer-thin margins in the industry.
Sir Arnold Clark emphasised it was “difficult to predict with any great certainty what 2011 will bring”, particularly in relation to what spending cuts would mean in terms of public sector redundancies.
“I am delighted to announce our better-than-expected results for 2010,' he said, referring to the 2010 figures. "Turnover has increased 6.1%. This growth is particularly pleasing given that we lost a large portion of two trading months to the unusually heavy snowfalls.
“The heavy snow and freezing weather in January coincided with our annual “Real Sale” event and resulted in a poor start to the year. Arctic conditions returned in December leaving many of our branches, particularly those in northern and eastern Scotland, under several inches of snow for at least two weeks and effectively unable to trade during that period.
“The fall in pre-tax profits to £50.5m was not unexpected as 2009 was an exceptionally strong trading year due to a number of factors which mitigated the effects of the downturn on the motor industry.
"The year 2010 saw VAT return to 17.5% and the scrappage scheme, which had accounted for almost 15% of the new car market, came to an end in March. As anticipated, used car values returned to a more typical pattern during 2010 and, although residual values remained relatively strong, vehicle margins declined from the highs of 2009.”
Clark also warned that the planned Government spending cuts had yet to be effected in many cases and highlighted that the rise in VAT to 20% would “inevitably have an impact on large value purchases such as motor cars”.
However, he highlighted continuing appetite for expansion. New car sales rose by 3% to 77,626 while used car sales fell by 2.1% to 116,338. Arnold Clark employs more than 8000 staff, operates 145 showrooms and sells new cars from 20 manufacturers.
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Jim McGill