Pendragon PLC on Wednesday said that profit in the first six months of the year fell, as the car industry continued to be hit by supply constraints.

The Nottinghamshire-based car dealership chain said that it expects to report pretax profit in the first six months of 2022 of £33 million, down 6.0% from £35.1 million a year before.

It explained that new vehicle volume continued to be hurt by supply constraints, with the wider market down 12% during the first half of the year.

Due to these market conditions, Pendragon said it has focused on maximising margins on each unit and strengthening its ‘already robust’ order bank. It added that new gross profit per unit was higher year-on-year and ‘more than outperformed’ the volume shortfalls.

Used vehicle volumes were down year-on-year, as supply constraints from lower new car production had a knock-on impact on used car availability.

Pendragon also said that profits were reduced by an increase in underlying operating costs of around £20 million. This includes the removal of government support worth £8.3 million and an increase in marketing costs of around £7 million. However, Pendragon added that cost pressures were partially mitigated by cost-cutting.

Looking ahead, Pendragon said it remains mindful of the challenges to both new and used vehicle supply, which are expected to continue for at least the remainder of the financial year.

However, it expects to deliver pretax profit in line with board expectations during 2022.

Chief Executive Officer Bill Berman said: ‘While challenges persist in the form of new and used vehicle supply, we are confident that the progress we are making against our strategic initiatives provides us with a strong platform to navigate this period successfully.’

Shares in Pendragon were up 3.8% to 21.70 pence each in London on Wednesday morning.

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