Lookers, a major car dealership, has faced a challenging financial year post-acquisition.
- The company reported a £5m pre-tax loss for 2023, compared to a £73.9m profit in 2022.
- Despite the loss, Lookers achieved revenue growth and increased vehicle sales in 2023.
- The firm’s financial pressures were compounded by inflation and higher interest rates.
- Lookers has experienced changes in the supply dynamics of new and used vehicles.
Lookers, a prominent car dealership based in Cheshire, experienced a year of financial reversals following its acquisition by Global Auto Holdings. In an unexpected turn, the company reported a pre-tax loss of £5 million for the year 2023, a stark contrast to the £73.9 million pre-tax profit recorded in 2022. This shift follows the £504 million deal that transitioned Lookers into a privately-held entity, removing its presence from the London Stock Exchange.
However, not all figures were negative. Lookers’ annual revenue saw an increase, climbing from £4.31 billion to £4.59 billion. The company sold 97,218 new vehicles, marking a 15.8% growth, alongside 80,880 used vehicles, an increase of 2.2% from the previous year. The firm’s board noted that all channels exhibited revenue growth, particularly highlighting the upswing in fleet and commercial vehicle sales which contributed significantly to the rise in new vehicle volumes.
Encountering difficulties with semiconductor shortages in 2022, Original Equipment Manufacturers had prioritised the more lucrative retail channel, consequently reducing volumes for fleet and commercial vehicles. With these constraints easing in 2023, a shift occurred that fuelled substantial growth in these channels.
Despite these successes, Lookers faced notable financial pressures. Inflation led to a £14 million rise in operating costs, while increased interest rates added £17 million to finance costs. Furthermore, the reintroduction of new car supplies impacted used vehicle margins, affecting overall gross profit.
A statement from the board encapsulated the situation: ‘The group’s trading performance was strong, with all channels showing revenue growth. New vehicle volumes grew 15.8 per cent, driven by fleet and commercial vehicle sales.’ The board acknowledged that the easing of supply restrictions played a key role in reversing the pattern seen in 2022, allowing fleet and commercial sales to recover.
The year 2023 marked a complex financial period for Lookers, highlighted by significant gains in sales but challenged by loss in profitability.
