Jane Suiter reports on what the car sales boom means at the industry coal face
IRISH motor dealers are operating on some of the tightest margins in business, while distributors are raking in enormous profits.
On average, according to business intelligence company Business Pro, margins in motor dealerships are akin to those in the meat industry with many of the largest firms making losses. On the other had, the distributors which import the cars make enormous profits with margins of up to 18 per cent.
According to James Treacy, managing director at Business Pro, average published profit margins for car dealers are less than 1 per cent with distributors having margins of over 4 per cent on average.
Times are tough for dealers despite the fact that January car sales this year were the second highest on record, beaten only by sales in 2000. Overall the market is expected to grow by around 10 per cent this year with total sales of around 165,000.
Some observers blame EU competition law which took effect in 2003. Dealers can sell any new car they wish so long as they meet the standard set by each car-maker.
However, the cost of meeting these standards can be extremely onerous - they range from the quality of customer bathrooms to the requirement that each marque on sale must have its own completely separate show area. Some dealers are estimated to have spent as much as €10 million redoing showrooms.
From October, dealers will be allowed to open other franchises anywhere in Europe provided they meet the criteria. However, with such tight margins in Ireland, it's unlikely that we will be a target for expanding European dealer networks, although Irish dealers may be tempted to travel.
In 2003 new car sales in Ireland averaged 202 per dealer, compared to 270 for the main European markets. In Britain, where fleet business is huge, the figure was 491.
Nevertheless importation of cars is big business. O'Flaherty Holdings is far and away the biggest distributor - in 2003 it made €45.5 million profit on a turnover of €828 million
The company is owned by Michael and Nigel O'Flaherty. The two brothers are thought to be worth about €277m, the value of shareholders funds in the business.
Coming up behind is Frank Keane Holdings which made €21 million profit on a turnover of €204 million in its most recently filed accounts. The net worth of the company is some €93 million.
Ford, on the other hand, made only €4.3 million on a turnover of €275 million. Other top importers include Toyota and Nissan which have not supplied Irish profits in their latest accounts.
Convest, which has the Citroën and Peugeot franchises, is the main holding company for the Gowan Group. It made €15 million profit on turnover of €234 million. Its main shareholders are Matthew Maughan and Gemma Attilia Maughan who has a 50 per cent shareholding. The net worth of the company is only €106,000.
Bill Cullen's Glencullen Holdings distributes Renault and operates a number of leasing and rental businesses including Diamond Leasing, Smiths in Cork, Citigate Motors and Courtesy Car Rentals. It made €7.2 million on a turnover of €214 million. The company is owned by Cullen and is worth some €46.5 million.
The final Irish owned company in the top 10 distributors is Armalou which owns Scanveco and DAF Distributors. It made €844,000 on a turnover of €101 million.
It is owned by Declan McCourt, Gabriel Hogan and Conal O'Brien whose investment is worth some €6.3 million each with a total net worth of €18.9 million.
THE story is very different for our largest car dealers. The biggest dealer is Motor Services, which is owned by the O'Flaherty brothers. It made a loss of some €716,000 on a turnover of €221 million.
MSL owns Ballsbridge Motors, Park Motors, Grange Motors and the Europa Mazda centre as well as Turners Cross Motors in Cork. It sells Mercedes, Volkswagen, Audi, Mazda and Smart cars.
MSL is to lose its Mazda franchise from July 2006 as part of a Europe-wide strategy by the Japanese firm to replace national distributors with wholly-owned subsidiaries. The company also has a 50 per cent interest in Hispano Cars, importers of Seat, a VW-controlled brand. Overall, MSL controls about 23 per cent of the Irish market.
The second largest dealer is Windsor Motors with a turnover of €159 million and profits of €2.5 million.
Cork-based Johnson & Perrott had a slightly smaller turnover at €125 million but made profits of €5.7 million. It has a dealership for Volvo, Opel and Honda. David Mark Whitaker and David John Whitaker own 37 per cent each of the firm while Philip James Whitaker owns 28 per cent. Net worth is €18.9 million.
Other dealers making good profits include Clareview Motors, owned by Irish Car Rentals - it made €1.3 million on a turnover of €51.5 million. John Leahy and John Culleton, the largest shareholders in the parent company, own 28 per cent and 23 per cent respectively while the company has a net worth of €10.5 million.
JA Boland in Wexford made €1.3 million on a €27.7 million turnover. The group which is 68 per cent owned by James Andrew Boland and 32 per cent by Gerard Boland had a net worth of some €5.3 million.
The Ray O'Brien Group also made €3.2 million on €20.4 million turnover. It's equally owned by Jacinta and Raymond O'Brien and has a net worth of some €5.4 million.
In contrast quite a few of the biggest dealers made losses including Carroll & Kinsella in Blackrock, Dublin, which lost €774,000. Owned by Alphonsus Carroll, Thomas Carroll and Joseph Kinsella, it has a net worth of €5.2 million.
Esmonde Motors, owned by the Murray Group, lost almost €3.9 million. Harold Murray owns around 15 per cent of the group which has a net worth of €14.3 million.
All figures as filed to the Companies Office. Net worth figures were supplied by Business Pro