Covid-19 brought temporary “significant losses” to the owners of a major Dundee car dealership during the pandemic period as it eyes a move to greater online sales.
However, newly filed accounts for the Eastern Western Motor Group, which owns Barnetts Motor Group, show the firm entered the lockdown restrictions in a strong financial position.
Turnover at the Edinburgh-based group, which owns a number of dealerships across Tayside and Fife, rose from £700 million in 2018, to £770m for the year ending December 31 2019.
The growth saw an increase in pre-tax profits from £7.2m in 2018, to £8.4m last year, after the amortisation of goodwill at £500,000 and a charge for head office costs.
Managing director, Keith Duncan said the firm had seen trading “exceed expectations” since lockdown ended.
He said: “We have seen strong bounce back since lockdown and expect to finish 2020 in a position that is at least as strong as 2019.”
Commenting in the groups annual report, company secretary Nasser Mohammed said: “Covid-19 has impacted businesses materially in early 2020.
“Significant losses have been incurred during the closure period.
“As a group, the directors are pleased to report, the post-lockdown July to September results have outperformed the original budget for the period, consistent with the expected pent-up demand and are encouraging for the remainder of the year.”
Mr Mohammed said the pandemic has exposed a weakness in the online capabilities of many car retailers and more work needs to be done in conjunction with manufacturers to create real “A-Z online retailing”.
He said: “During lockdown, the group enjoyed a degree of success from its online selling tools, but it was also clear more development work is needed.
“Most car manufacturers are working on online retailing solutions and although the group has the skills and resources to develop its own online model, it is felt the adoption of manufacturer solutions would provide better brand experiences.”
The group has 33 outlets, with two Dundee facilities on Riverside Drive, as well as BMW, Mini and Nissan dealerships in Perth.
The group also has units in St Andrews and Dunfermline.
The firm holds a broad range of car and commercial vehicle franchises, including Mercedes, Mazda, Volkswagen, Lexus and Honda.
The group also has a Harley-Davidson motorcycle outlet and a vehicle accident and repair centre.
The average number of staff, including its directors, rose from 1,455 to 1,526 over the reporting period.
Mr Mohammed said: “We were pleased with the 10% increase in turnover and the corresponding 12.5% increase in gross profit.
“We are particularly pleased with this result considering in 2019, the general UK market registrations decreased 2.37% and the Scottish market decreased by 5.45%.”
Mr Mohammed pointed to a like-for-like increase in new car sales of 11% and growth of used car sales of 6%.
He said: “Against the general Scottish market, we were pleased with both our new and used vehicle sales performance.
“Major areas of risk are Brexit and now, Covid-19. The economic fallout from the coronavirus crisis is likely to be significant.
“The group continued to trade after restrictions were lifted and current models anticipate a profitable year in 2020 though at a reduced level.”