By Costas Pitas
LONDON, Feb 18 (Reuters) - British car dealer Pendragon said on Tuesday it expected another strong year in 2014, reporting a rise in profits boosted by customers using easily available credit to buy cars.
The company said an 18 percent increase in new car sales and a boost to its highly profitable aftersales business helped push full-year 2013 pre-tax profits to 38.9 million pounds ($65 million), up 14 percent.
CEO Trevor Finn told Reuters that more than 70 percent of Pendragon’s new cars were bought using some form of credit.
“You can buy a car that’s more reliable, more fuel-efficient, lower cost of operation and for a monthly payment that was probably similar to what you were paying on the previous car,” he said.
In a bid to shift stock since the car market suffered from 2008, British carmakers and dealers have pushed cheap financing deals and discounts, sometimes selling at a loss.
The firm, which runs over 250 retail outlets and trades under the names Stratstone, Evans Halshaw and Quicks, also said that a 22 percent rise in website visits helped boost sales as customers perused online before buying in person.
“Our used car sales have grown by 49 percent over the last five years and that’s as a function of the internet becoming much more prevalent in people’s minds when they’re looking,” Finn told Reuters.
The firm also said it was confident that 2014 would be another year of good performance in line with expectations.
Overall industry figures showed Britons bucked a fall in car sales in Germany and France by buying 2.265 million new cars in 2013, the highest number since 2007 and an 11 percent rise on the year, spurred on by record low interest rates.
Pendragon revenue stood at 3.85 billion pounds in 2013, up 6 percent and the firm said its total dividend of 0.4p per share in 2013 was 300 percent higher on last year.
The company also said it had hit its target of having debt to underlying core earnings on a ratio of 1.5 times 18 months early on June 30 2013. The ratio stood at 1.2 times at the end of December.
Although the firm said it wanted to return money to shareholders and maintain a ratio between 1.0 and 1.5, Finn said the firm was looking at ways to expand in parts of Britain where it currently does not trade.
“We don’t have any representation in Bristol, Ipswich, Norwich. There’s quite a few cities where we don’t have some footprint and if the right opportunity came in those markets, we’d take it.”