Car dealers Caffyns has seen its pre-tax profit slashed after the value of second-hand vehicles fell significantly.
The company reported pre-tax losses of £1.5m in the year ending March 31, 2024, down on the previous year when its profit hit £3m.
This drop was despite revenue of £262m – up from £251m the year before – and used car sales rising two per cent.
In its financial statement posted to the London Stock Exhchange, the company said: “Although not a perfect match, used car data from the Society of Motor Manufacturers and Traders showed the number of used cars being transacted in the UK rose by 5 per cent in the 2023 calendar year.
“The used car market suffered a significant price correction in the final quarter of 2023 and, as a result, our unit margins in the year fell significantly from their level in the prior year.”
The firm’s new car sales fell by 3 per cent, with bosses blaming the conflict in Ukraine for putting strains on supply chains, and cost of living pressures continuing to curb customers’ discretionary spending.
Industry-wide, however, new car registrations increased by 16 per cent in the same period, up to 1.95m, as many of the major car manufacturers were able to increase production levels following a slump.
The company said that lower new car registrations over the past four years had reduced the number of nearly-new cars in the market, which had made sourcing good quality, well-priced used cars “very challenging”.
It added: “We remain focused on generating further improvements in the levels of used car sales, used car finance income and service labour sales.
“These three areas will be key to achieving increases in profitability in the coming years. In addition, we continue to make very good progress utilising technology to enhance customers’ experience throughout their buying journey, as well as improving our aftersales retention.”