Sytner sees profit drop as interest fees soar and it writes off £25m goodwill

Delayed accounts for one of the most successful car dealer groups in the country show Sytner earnings fell nearly 30% in 2023 – but it still chalked up £125.9m profit before tax.

In a year described as ‘mixed’ by directors, Sytner saw revenues hit a record £7.4bn in 2023, up from £6.8bn the year before.

However, soaring interest charges pushed borrowing costs up to £48m from £28.8m the year before.

Stocking loan interest rose from £15.4m in 2022 to a staggering £40.8m in 2023 as the Bank of England base rate soared.

The group also wrote down its goodwill and franchise value, taking a £25m hit.

Accounts, filed late by the dealer group and only just available to view at Companies House, show profit before tax fell 29.6% from £178.9m in 2022 to £125.9m in 2023.

Last year, Sytner was the second most profitable car dealer behind Arnold Clark, in the Car Dealer Top 100. Arnold Clark’s accounts are now 28 days overdue at Companies House.

Sytner, owned by American car dealer giant Penske Automotive, paid a £100m dividend to its parent company during 2023.

Sytner said it closed two Seat dealerships in Belfast and a Jaguar new car franchise in Coventry during the year.

And the firm explained that in January this year it bought Rybrook’s 16-dealership business, adding four BMW and Mini sites, three BMW Motorrad, two Land Rover, one Jaguar, and one Porsche to the wider group.

Explaining the fall in profits, Sytner added: ‘A fall in used car profitability and the increase in new car availability which in some franchises has resulted in the requirement for increased discounting have both led to a reduction in gross margins achieved. 

‘The group saw a significant rise in operating expenses, driven by high levels of inflation and increasing energy costs.’

In the accounts, Sytner explained that Mercedes moved to an agency style arrangement for the sale of new cars in 2023 where they received a fee for facilitating sales. The firm said this had had ‘no structural or operational impact’ on the other areas of the Mercedes business.

‘The partnership with Mercedes-Benz has been well managed and appropriate training supplied to all colleagues,’ said the group.

A month ago, Sytner announced that long-serving CEO Darren Edwards was taking early retirement after a 40-year career in the motor trade. 

Edwards will step down on January 1 and will be replaced by American John Cragg, who was Penske’s executive vice president of Eastern US operations.

Earlier this year, Car Dealer exclusively revealed Sytner was to axe the CarShop used car supermarket name as it sold off sites, closed one and rebranded the remainder to Sytner Select. Sytner paid £70m for the firm when it acquired CarShop in 2017.

Sytner’s latest accounts also show the group had net assets for £554.5m at the end of 2023, down from £570m at the end of 2022.

It employed 10,633 staff as of the end of 2023 with the highest paid director receiving £2.25m in remuneration during the year.

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