Scottish car dealer Brian Gilda says the new excise duty and pay-per-mile plan may force some buyers to rethink investing in an electric vehicle.
The chairman of Peoples said the budget announcements came after new brands introduced by the company from China “are flying”.
He added: “When you look at their performance compared with some of the more established European brands it’s quite something, given they’ve only been here for a limited period, and the outlook is even better.
“In the medium term we will still face some challenges, particularly in the wake of the recent budget which was very disappointing as it affects our industry.
“It will undoubtedly impact discretionary spending, while the new electric vehicle excise duty and pay-per-mile costs may force some consumers to rethink investing in an EV.
“However, despite this, our brand is strong. We’ve taken a range of proactive steps to position the business for the future and we’re already seeing encouraging signs of growth in aftersales where demand is more stable and margins more robust.”
He said major changes to the business last year have enabled Peoples to handle a 75% fall in profit before tax and preference share dividends from £5.15m to £1.28m, and a 2% dip in turnover from £283.4m to £277.6m.
His comments follow a difficult month for the sector following the cyberattack on Jaguar Land Rover. The the Society of Motor Manufacturers’ latest data ?shows car output declined by 23.8% in October.
Commenting on the EV charges, Mike Hawes, chief executive of the SMMT, said: “With even the OBR [Office for Budget Responsibility] warning that this new tax will undermine demand, it is now essential that government works with industry to reduce the cost of compliance and protect the UK’s reputation as a location for investment.”
More encouragingly, almost half the cars made were battery electric, plug-in hybrid or hybrid as industry continues to decarbonise its products.
Also, a return to overall volume growth is on the horizon, with the latest independent production outlook expecting a total of 828,000 cars and vans to be made next year, driven by new electric car models coming into production.
Mr Gilda described the past year as “one of the most challenging periods for the UK retail motor industry in recent memory”, but said the company’s decision to introduce new global brands has helped it remain agile.
The trading environment was impacted by supply constraints, interest rates and cost-of-living pressures.
Peoples ended its 42-year legacy of Ford exclusivity last year and introduced Chinese brands Omoda/Jaecoo, BYD and Maxus.
“Although our turnover fell only modestly, profitability declined more sharply, reflecting both external pressures and structural shifts within the sector,” said Mr Gilda.
“Pricing and margins came under pressure and operating costs continued to rise – but despite these conditions, our group remains resilient.
“We made the decision to broaden our offering to the marketplace at the right time, reducing
our dependence on any one single OEM [original equipment manufacturer].
“We were determined to ensure that despite a challenging environment, we kept the machine running across our six dealerships and retained the skilled and dedicated people who are the backbone of the business.”
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