John Grose Group expresses cautious optimism after recording 12% turnover rise to nearly £176m
- Credit: John Grose
Directors of a car sales group which saw a 13% jump in profits in 2016 are remaining cautious of forces which could affect the automotive industry.
John Grose Group – which has dealerships in Norfolk and Suffolk – saw its turnover increase 12.3% to £175.7m in the year to December 31 and reported pre-tax profits for the period of almost £3.5m.
The company, which sells Ford, Citroen, Kia and Peugeot models, benefited from record sales in the new car market in 2016 of almost 2.7 million nationally, with used car sales also holding steady.
Chairman Ian Twinley wrote in a strategic report filed with the accounts that low interest rates were also helping the industry, but voiced concerns that wage stagnation and a resulting drop in disposable income could reduce demand for personal contract plans (PCPs). 'Low interest rates are an important factor for automotive retail, especially the PCP business,' he said.
The report added: 'Despite the Brexit vote and other surprise events around the world business conditions remain favourable in the automotive sector.'
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During 2016 the company acquired a 12-acre site on Ransomes Europark in Ipswich to provide more storage space for its existing operation.
The group's parent company, PSA Group, strengthened its position in the automotive sector with the acquisition of General Motors' European arm in March, making the organisation the second largest carmaker in Europe after Volkswagen.
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In the strategic report Mr Twinley wrote that John Grose's directors would 'watch with keen interest to see how the acquisition will unfold'.
The British car industry has had a good start to 2017. A report from the Society of Motor Manufacturers and Traders in March said almost 472,000 cars were built at UK plants in the first three months of the year, a 7.6% increase on the same period in 2016.
While acknowledging 'healthy' production levels, the enthusiasm of John Grose's directors was tempered. The strategic report said: 'Clearly over-supply could create hyper-competition and threaten residual values, but all the manufacturers have a huge vested interest to avoid that.'
Concerns around any post-Brexit trade deal with the EU remain prominent, as many UK manufactured cars are exported to the continent.