Before-tax profits at Belfast-based car dealer group Charles Hurst jumped close to 88 per cent in 2021 from the previous year due to the easing of Covid-19 restrictions coupled with an “imbalance of supply and demand” for new vehicles and a “strong market” for used cars, the company has said.
In accounts filed with Companies House in the UK, the group, owned by UK-based Lookers, reported revenues had increased “significantly” in its last financial year, from £550.5 million (€632.47m) in 2020 to £674 million in 2021, slightly ahead of pre-pandemic 2019 when sales topped £660 million.
Before-tax profits at the dealer, which also operates an Audi dealership in Dublin through a separate company, and counts Ferrari among the brands it represents in Northern Ireland, jumped 88 per cent, from £2.2 million in 2020 to £18.6 million last year, some 70 per cent higher than 2019.
The sharp increase was “mainly due to an easing of Covid-19 restrictions” in Northern Ireland throughout 2021. However, the company also pointed to “the imbalance of supply versus demand due to semiconductor shortages, and a strong used vehicle market that saw vehicle values appreciate in eight out of the 12 months during 2021.
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Global supplies of semiconductor microchips, used in everything from children’s toys to cars, have been in short supply for the best part of two years, largely due to stockpiling by companies during the pandemic, freak weather events that closed plants in the United States and now the war in Ukraine. This has led to car makers such Honda, General Motors and others halting or cutting production of new vehicles at various times since the beginning of 2021, driving up the price of new cars.
The shortage of new cars, coupled with booming post-lockdown consumer spending, has also heightened demand for used vehicles on both sides of the Border.
In a strategic review attached to the group’s 2021 accounts, Chares Hurst’s directors highlighted the ongoing chip shortage as one of the principal risks the business is facing. They said “general inflationary pressure, and in particular on energy costs, together with supply chain disruption (notably the semiconductor shortage) are key drivers” in their belief that the “profile [of macroeconomic] risk is increasing”.
The latest filings also show that the group has significantly cut its workforce since the start of the pandemic after its UK parent embarked on a cost-cutting programme in 2020.
In 2021, Charles Hurst employed 810 people, down nearly 15 per cent from 2020, a decline of more than 20 per cent from 2019 when its headcount stood at 1,023.
