Inchcape (INCH) became the second auto dealership in a week to warn of weakening sales. Pendragon (PDG) had earlier issued a profit warning saying a price correction was taking place in the UK that would drag on performance. Inchcape, a FTSE 250 constituent that operates in numerous international markets, described the UK market as “slowing, as expected, resulting in continuing margin pressure on vehicles”.
The announcement was hardly surprising given parallel developments in the unsecured lending market in the UK, but the share price pulled back anyway. It should be remembered that the group’s domestic market is coming off a succession of multi-year highs, so a sense of perspective is required. Management maintains that year-to-date performance is consistent with 2017 profit expectations, with distribution revenue up 21.4 per cent at constant currency, contrasting with a 3.6 per cent increase in retail revenue.
