The owners of Dundee’s Barnetts car showrooms took a million-pound hit after council planning restrictions delayed the opening of their Toyota and Lexus dealerships.
Eastern Western Motor Group (EWMG) had a pre-tax profit of £14 million to the end of December 2023, down by almost £6m compared to the year before.
This was in part due to being unable to open the doors of its newly built car salesrooms in Dundee on time and “bizarre conditions” placed on the buildings by Dundee City Council.
The 41-day delay cost the group £1m, directors told The Courier.
Increased costs across the industry, including interest rate hikes and inflationary pressures, also attributed to the drop. Administration costs increased by £8m, directors added.
Despite this, company directors said they were pleased with how the year had gone, with expectations in 2024 the firm will break £1billion in takings.
Eastern Western profits hit by council delay
EWMG is part of Eastern Holdings (EHL), which posted a pre-tax profit of £18.9m to December 31 2023.
This was, similarly, down by £6m on the year previous.
Keith Duncan, EWMG managing director, said: “The board were really pleased with the results, with turnover up c. 6% to £858 million despite a change to how new Mercedes-Benz passenger cars are sold.
“The turnover for new MB cars now sits with Mercedes-Benz UK.
“This removed some £50-£60 million in turnover, which before the changes would have been EHL turnover.
“When we remove the cost of sale from our turnover, we produced an increase in gross profit versus 2022.
“The entire industry suffered from significant increases in costs in 2023, with wage inflation, general inflationary pressures and interest costs driving admin costs up and net profits down, despite increased turnover and gross profit.
“Interest costs alone increased by 80% for EHL, up to around £2.3m on 2022. Overall admin costs were up nearly £8m year-on-year.
“There were some exceptional, one off increases in costs, brought about by opening new businesses and incurring significant cost before producing any income from these new businesses.
“The new Toyota, Lexus and Car Deal Warehouse businesses at Dunsinane Avenue were stopped from opening by Dundee City Council despite there being a full team employed to run the new sites. This delay cost EHL over £1m
“The net effect of this saw net profit before tax (PBT) of £18.9m, down from £24.9m in 2022.
“The board and I were pleased with this result, given the inflationary head winds, interest burden and when we compare to similar businesses across our industry.
Plans for expansion
The company employs more than 250 across Dundee and Perth and there are plans for expansion in Courier Country in 2025.
Barnetts took on the Honda franchise in Dundee in September, after West End in Broughty Ferry had operated it for 44 years. They also took on the Perth Honda franchise on the motor mile.
Keith added: “EWMG now runs eleven businesses in Dundee and Perth, with plans for further expansion in the area.
“We just completed the purchase of West End Honda and Perth Honda in September, with both businesses trading under the Barnetts brand following the purchase of Barnetts Motor Group in 2018.
“Eastern Western expects to see its turnover exceed £1 billion in 2024-25 and now has around 50 businesses under its control from around 40 locations across Scotland.
“EWMG employ over 1,600 staff with around 250 of those jobs in Tayside.”
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