By Scott Wright
BRIAN Gilda, founder and chairman of the Peoples independent Ford car dealer, has warned the “headwinds” facing the industry will continue well into 2023 – after reporting his company’s best profits in its 39-year history.
Peoples, which has six dealerships across Scotland and the north-west of England, made a best-ever pre-tax profit of £8.48 million in the year ended July 31, a 6.2 per cent rise on the previous year, against the backdrop of a global shortage of semiconductors that is curbing the supply of new vehicles across the industry.
The rise in profits came in spite of 4.8% drop in turnover to £275.6m, which reflected a fall in volumes. However, the company highlighted a 2% rise in sales of commercial vehicle sales, which it said compared with a market average 24.2% decline across the UK.
Mr Gilda declared the results demonstrated the company’s “resilience” in the face of product supply challenges but cautioned over the outlook for the current year, amid expectations that the semiconductor shortage will persist this year and throughout 2023.
While Peoples has seen a strong start to the current year, with profits for August, September and October up 61% on the same period last year, his expectation is for a “more modest” outcome this year, noting that the figures for the first three months have “flattered to deceive” because September had been such a strong month.
Highlighting his expectation that “things are going to get rockier” during the remainder of the year, Mr Gilda said: “There is no chance of that maintaining itself during the balance of the year. We are doing the best that we can but recognising there are other things that are just outside of our control.”
Addressing the semiconductor shortage, Mr Gilda said: “The information we are getting is that it is gradually getting better. In all my years in the industry … I have never seen people have to wait that length of time for a vehicle. Ninety-nine per cent of customers stayed with us … but it is awkward to say the least and it is going to continue, I suspect, well into 2023.”
Mr Gilda was commenting shortly before the Bank of England lifted interest rates to 3% from 2.25%, which had been widely trailed. He said: “That will have an impact on consumers’ disposable income and what they want to spend, either on repairing a vehicle or replacing it. That is going to have implications for us.”
Despite the challenges, Mr Gilda said Peoples was considering adding to its dealership footprint, with expansion possible on either side of the Border. He said opportunities will arise as business owners seek to exit the industry.
Meanwhile, the company said it was seeing the volume of electric vehicles it sells gradually rising and has invested a six-figure sum to install electric chargers across its dealerships to allow it to increase the number of EVs in its future fleet.
In that context, he said the decision by Ford to axe the long-running Fiesta model was like a “death in the family”, after the manufacturer concluded it could not be adapted as an electric vehicle.
Mr Gilda: “I knew it was coming, but when the announcement came it was still tough to swallow. What is happening is that product will be adjusted forward for other electric vehicles, and also hybrid Fords that are going to be coming through. The whole story is not a bad one, it’s just an ethical one, and we have to wait and see when other product is going to appear in the marketplace.”
Asked if the Fiesta had been seeing sales dwindle, Mr Gilda said: “It was a product which Ford were having difficulty getting the return on that they needed, and it was the wrong size for a battery electric vehicle in terms of their line-up.
“I will be sorry to see them go. There are millions on the road, so we will still be selling Fiestas for a long period of time, and repairing them, because of the amount which are on the marketplace just now.”
The period covered by the accounts saw Peoples set up a seven-strong operating board. Mr Gilda said the new board, which includes daughter Nicola, the company’s operations director, was “more diverse and tasked with ensuring we remain nimble and agile in this challenging market, and this has been key in delivering our best results in 39 years”.
He noted the new board has freed up time to allow him to investigate opportunities. Talks have been held with manufacturers in China.
The accounts show that Peoples employed an average of 363 people over the period, compared with 378 the year before.
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