Car dealerships Horse Marshall Motor and Lukers climbed today after both companies raised profit guidance on the back of an ongoing second-hand vehicle sales boom.
Despite the lack of a global chip in new car sales, Marshall said he expects full-year profits to now exceed £50 million, up from at least £40 million announced in August.
The firm, led by CEO Daksha Gupta, said it has seen an “unprecedented” 26.3% increase in its used vehicle prices over the past seven months.
Watchers also said it expects full-year profits to be “materially ahead” of previous expectations after seeing “excellent” margins on both new and used cars last quarter.
Marshall’s shares rose 8%, or more than 17p, to more than 225p, while Lookers was up nearly 5%, or 3.3p, over 64p.
Semiconductors are needed to make car features such as parking cameras and lane control, and global chip production has slowed amid the pandemic, with supply chain and logistics issues stalling production and supply of new cars.
Consumers face long waits for new models and this has helped lift the market for used cars along with pandemic savings and public transport vigilance.
Today both dealerships cautioned that they expect chip shortages to continue next year as well.
Marshall stated that delivery times for the new vehicles have been “significantly extended”, and despite the “strong” order book for the new cars, Lookers cautioned that “the material and increasing uncertainty about the availability of these vehicles” made of”.
Analysts at Peel Hunt said the margin-boosting issues for older cars “are unlikely to end on January 1”.
The updates came a day after FTSE 100 engineering group Melrose warned it was being hit by global chip shortages.