Peter Vardy profits leap in 2012 06 | 06 | 2012
SCOTS-BASED DEALERSHIP group Peter Vardy is set to embark on a five-showroom expansion plan over the next five years after posting bumper profits in the first three months of the year.
The grandson of legendary car salesman Reg, Peter Vardy has benefitted from increased demand for his BMWs, Minis and Vauxhalls.
Following the takeover in 2010 of Vauxhall showrooms in Aberdeen and Edinburgh, Vardy has spent the past year restructuring his business.
At the core of the restructuring has been a debt-for-equity swap to turn loans from his father, Sir Peter, and his mother, into shares in the business. These Vardy plans to buy back in the coming years.
The debt-for-equity swap has strengthened the company's balance sheet and has resulted in him gaining the financial firepower to push ahead with his acquisition strategy — buying a showroom each year over the next five years.
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The vary name, of course, is synonymous with the motor trade. Reg Vardy set up a haulage business near Durham in 1923 and opened his first car dealership in 1945.
Four years later, he was appointed as a dealer by Ford and steadily grew his business. His son, Peter, joined the family trade at the age of 16.
Under Sir Peter – who was knighted in 2001 – the firm grew to 100 showrooms and 6000 staff, with a turnover of around £1.7 billion a year.
In 2006, he sold Reg Vardy to Pendragon for £506m and stood down as chief executive. His son also left his post as manager of the Rossleigh Jaguar franchise in Edinburgh.
Father and son then set up Glasgow-based Peter Vardy Limited (PVL) in 2006 and now have seven BMW, Chevrolet, Mini and Vauxhall dealerships spread across Scotland, in Edinburgh, Aberdeen, Kirkcaldy, Motherwell and Perth.
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Ahead of filing its accounts at Companies House, Vardy revealed that PVL turned over £207.9m in 2011, up from £181.8m in 2010.
And though operating profits remained flat at £2.1m — a result of Vardy using cash to make changes to the business — this year has already seen significant growth. During the first three months of 2012, operating profits have exceeded £2.2m.
In addition to strong growth in its servicing and parts business, the profits were hugely boosted by a massive rise in used car sales: the company is already 168% ahead of this year’s target.
“Used car sales have really taken off," Vardy explained, "mainly on the back of our increased efforts to source stock.
"We are also seeing reward for our efforts to offer a quality approach to car retailing with a 3.6% return on sales, which, within our industry, is a very impressive result. I’m pleased sales continue to go well into this quarter.”
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Jim McGill