Trivett deals pays off for Inchcape

Although Inchcape continued to drive down overheads, its progress was "offset by an unprecedented level of tactical activities in the market". An over-supply of vehicles in the UK market prompted fierce competition on price, squeezing margins for both new and used cars. UK trading margins, which were already thin by international comparison, fell 30 basis points to 2.8 per cent. That's significant because the UK still accounts for over a third of Inchcape's sales, ensuring group margins remained broadly flat on their 2012 level.

The group made better progress on the top line. Retail sales in the UK were 9 per cent higher on a like-for-like basis, helped by the highest new car volumes in five years. But management was particularly enthused by the performance of emerging markets. The increase in disposable incomes among South America's middle classes was reflected in Inchcape's BMW businesses in Chile and Peru, for example, where aggregate sales were up by around a quarter.

The group's position in the Asia Pacific region was enhanced by a deal last March to acquire the Trivett Automotive Group, a premium distributor in Australia with access to the lucrative Sydney and Melbourne markets. The deal expands Inchcape's portfolio down under, allowing it to tap into the 'aspirational' end of the Australian auto market through brands such as Rolls-Royce, Aston Martin and McLaren. With a 10-month contribution from Trivett, sales in Australia were up by a quarter on a constant-currency basis. Initial profits suggest the deal should pay for itself in about seven years.