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Mike Allen, executive director with stockbroker Panmure Gordon said the first quarter had turned in a strong performance from listed dealer groups and this looked set to continue with H1 results hitting “record levels”.
“The UK recovery is building and has taken a lot of people by surprise. Clearly PCPs are driving he market but we have been surprised by the strength of the used car market. The growth for aftersales is quite positive in terms of the retention strategies put in placed a few years ago,” he said.
Allen (pictured), speaking at the ASE/MotorTrader Financial Conference 2014, said consumer confidence was strong and wages looked set to rise, which was good for motor retailing as consumers would be better able to afford high value products like cars.
He said carmakers would continue to target the UK with European recovery some years away.
“Europe is still a key issue. There is a huge austerity problem in Europe, which will take years to unwind. In the recession of the 1990s, it took five years. It could take 10 years plus for European sales to go back to 2006 levels,” he said.
Allen said in the UK, dealer groups had been expanding by acquisition and this has boosted earnings. But in recent months there had been a pause in the equity market as investors drew breath.
“Investors do need some persuasion that this level of profitability is sustainable in the coming 12 months,” said Allen.