A HUGE UK car dealer is reportedly set to shut two if its UK sites before Christmas following eye-watering losses of £26 million.
The eight-figure loss comes after the business was marked by acquisitions and cuts last year.
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Group 1 BMW and Mini is a business located on Stansted Road, Bishop’s StortfordCredit: Google
The site had just got planning permission approved for finishing touches on a BMW showroomCredit: Google
The Group 1 BMW and Mini business in Bishop’s Stortford is said to be closing, according to Bishop’s Stortford Independent.
Clients are yet to be notified so representatives of the dealership and service centre have declined to provide further details to confirm.
One customer, however, has claimed that high overheads were to blame for the closure expected next month.
Showrooms are located on the western side of the Stansted Road car dealership, which for part of the Birchanger industrial estate.
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The eastern side of the road houses the associated workshop within the Goodliffe Park industrial estate.
New finishes to the BMW showroom and workshop building had planning permission approved last year by East Herts Council.
However, Group 1 Automotive’s UK business also revealed pre-tax losses of £26.16 million in the 12 months to the end of last December.
The accounts filed via Companies House for 2024 demonstrated a complete collapse on the group’s previous year which achieved a profit-before-tax of £41.74 million.
Drastic losses in the company have been linked to their £346 million acquisition of Inchcape’s UK dealerships last summer.
Although it was considered a “long term strategic transaction”, there proved to be negative impact on the year’s profitability.
Figures included in documents regarding spending following the deal revealed it ended up costing Group 1 an eye-watering price of £32.2 million.
This included goodwill and intangible asset amortisation, a one-off restructuring and system integration, as well as increased interest charges from acquisition financing.
A “complex macroeconomic environment” also hit the firm meaning dealers were faced with pressures around inflation, interest rates and cautious consumer sentiment.
Turnover, however, did see a rise from £2.45 billion to £3.23 billion.
This was aided by an increase in sales of both new and used vehicles from the firm’s growth.
Whilst Group 1 sold just 23,757 vehicles in 2023, they managed 64,605 last year.
Finance director Mark Leeder wrote in the accounts: “This growth can largely be attributed to acquisitions made during the year.
“In August 2024, the UK group completed the acquisition of 54 dealerships from Inchcape Plc, significantly expanding the retail footprint across England and a major step in the UK group’s growth strategy.
“The UK group also expanded its relationship with BMW and Mercedes-Benz with further dealership acquisitions made throughout the year.”
But gross margins dipped elsewhere from 7.63 per cent to 7.21 per cent.
Turnover of cars by Group 1 in 2024 did see a rise from £2.45 billion to £3.23 billionCredit: Getty
The firm also agreed to a takeover of Soper BMW Lincoln last monthCredit: Getty
This was linked to the easing of supply constraints and normalisation of used vehicle margins.
He added: “Operating costs also rose, driven by inflationary pressures and statutory increases in the national minimum wage.
“In August 2024, the group completed the acquisition of Inchcape UK, a long term strategic transaction, however this had significant impact on the 2024 financial results.”
Group 1 also agreed to a takeover of Soper BMW Lincoln last October in addition to the Inchcape deal.
Since the agreement was made, the firm has come under fire from staff accusing bosses of treating their employees like they are “nothing”.
Dealership closures and job losses have subsequently also been announced in Wirral, Cheltenham, Hyde and Telford this year.
In the accounts, Leeder conceded that the acquisitions caused “significant duplication of operating overheads”.
Staff costs rose by 45 per cent, with remuneration for directors going from £433,000 to £1.45m.
Numbers of staff also more than doubled from an average 3,718 to 7,630.
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However, steps were reportedly being made to “improve efficiency”.
Two days before Group 1’s accounts were published, the company confirmed the termination of Philip Southwick, VP of retail operations, as a director.
