LONDON (ShareCast) - (ShareCast News) - Car dealership Pendragon warned on Monday that full-year profit will be hit by weaker new car demand and pricing on used cars, as it announced that chairman Mel Egglenton has stepped down with immediate effect.
The company said it now expects pre-tax profit of £60m in 2017 against previous expectations of around £75m, but sees a return to profit growth in 2018.

Chief executive Trevor Finn said: "Following a strategic review, the board is now committed to focussing on reshaping the business to accelerate transformation.

"We are placing our software and online technologies at the heart of our business as a platform to fulfil customers' vehicle and servicing needs.

"We believe this strategy will provide more reliable and sustainable returns."

Pendragon remains committed to its strategic goal to double used car revenue over the five years to 2021 and in order to maintain growth in its used car and aftersales business it will continue to invest in capacity across the UK in both of these areas. Meanwhile, it is conducting a strategic review of the premium brands to evaluate by manufacturer the investment appeal of their franchise proposition.

In addition, it will review capital requirements by manufacturer and only allocate capital where it sees strong future prospects for reliable returns.

Pendragon expects the new car market to continue to decline this year and during the first half of next year as car manufacturers adjust to the reduced level of demand for new cars. Nevertheless, it said its business is underpinned by stable aftersales profitability and it expects its used car volumes to continue to grow.

The group said revenue grew by 3.7% in the three months to the end of September on a like-for-like basis.

The company also said that chairman Egglenton was leaving for personal reasons, with Chris Chambers, a non-executive director since January 2013 and the senior independent director since November 2014, appointed as chairman.

Spreadex analyst Connor Campbell said: "It's the latest sign of retail-woe in the UK, especially among companies dealing with big ticket items, as the household spending squeeze continues."

At 0815 BST, the shares were down 18% to 23.91p.

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