British auto dealer Pendragon flags supply turmoil

By Chris Thomas

(Reuters) - British car dealer Pendragon said pandemic challenges and a global chip shortage would lead to vehicle supply issues in the near term, even as a tighter control on costs and a digital push helped it to cut its losses at the start the year.

Automakers and dealers have been dealt a blow as a global shortage of semiconductors puts the brakes on vehicle production.

"There is going to be some turmoil in the business over the next 6-18 months when it comes to the supply of new and used vehicles," Chief Executive Bill Berman told Reuters on Wednesday, although he indicated that the resultant increase in demand could lead to better margins for the company.

"We are actively working with OEMs (Original Equipment Manufacturers) to make sure we have the proper supply of vehicles, but often times we are kind of at their mercy when it comes to that," said Berman, who has been running the company for just over a year.

Shares in Pendragon, which operates through the brands Evans Halshaw, Stratstone and Car Store, slipped 3.4% by 1040 GMT.

Berman's focus on cutting costs and building digital strategy helped the company report a narrower loss for the first two months of the current year following a return to annual profit for 2020, despite a slump in sales.

In January and February, Pendragon delivered 20,000 vehicles without customers having to visit a dealership during lockdown, Berman said.

Pendragon said it was also targeting underlying pretax profit of 85-90 million pounds by financial year 2025, against a figure of 8.2 million pounds last year.

Through January and February, the Nottingham-based company posted an underlying pretax loss of 4.8 million pounds ($6.6 million), compared with a loss of 8.2 million pounds in the same period last year.

($1 = 0.7307 pounds)

(Reporting by Pushkala Aripaka and Chris Thomas in Bengaluru; Editing by Devika Syamnath and Keith Weir)