Eastern Western’s earnings were squeezed by rising employment and expansion-related costs in 2025, although the Scottish dealer group stayed in profit.

Pre-tax profit dropped 14.5% to £11.3 million, while operating profit was down 13% from £20.1m to £17.5m in the year ended December 31.

The top 30 AM100 group’s operating margin tightened from 2.18% to 1.96%, and its pre-tax margin slipped from 1.44% to 1.27%.

Revenue fell 3.1% from £920.8m to £892.5m.

Eastern Western said the decline was mainly due to Mini and Honda switching from wholesale to agency sales, a model under which the group earns a handling fee instead of booking the full value of each vehicle as revenue.

The business also shut its Harley-Davidson and Kawasaki franchises in April 2025.

Despite lower revenue, gross profit rose 2.1% from £106m to £108.2m. However, administrative expenses increased 3.3% to £104.5m.

Eastern Western said the main pressure on profitability came from higher employer National Insurance contributions and increases in minimum wage rates.

Total payroll costs climbed 5.5% from £71.9m to £75.8m. Within that, social security costs rose from £6.5m to £7.8m.

The dealer group employed an average of 1,674 people during the year, up from 1,624 in 2024.

Other operating income declined from £15.2m to £13.8m, including a fall in finance commission from £10.6m to £10.2m.

During 2025, Eastern Western opened three Chery dealerships, marking its first tie-up with a Chinese car brand, and added a fourth site after the year-end. The group said hiring staff three months before the first locations opened, along with other start-up costs, had a material effect on performance in the final quarter.

Eastern Western also bought Audi Edinburgh and Audi Stirling from Lookers Motor Group on November 1, 2025. The assets were acquired for £7.7m, and the deal created £2.7m of goodwill. The broader cost of the acquisition was reported at £8.1m.

Eastern Western said margins on new and used vehicles remained robust, with every franchise outperforming its manufacturer’s comparative average for used vehicle gross profit.

Aftersales revenue increased by 6%, while gross profit from the division rose by 8%. Labour gross margin improved by 1.1 percentage points despite further increases in technician employment costs.

The group cautioned that new car supply had returned to pre-pandemic levels, bringing added stock risk in an environment of higher interest rates.

New and used vehicle stock rose from £100.9m to £128.3m. Total stock increased from £105.6m to £133.2m, while vehicle funding went up from £71.9m to £105.6m.

Eastern Western finished the year with net assets of £113.7m, up from £108.7m, and net current assets of £23.8m.

The group used existing cash to fund the Audi acquisitions, £2.9m of leasehold improvements and the £2.4m purchase of a 33,000sq ft industrial unit in Halbeath. The property will be converted into an aftersales centre supporting its nearby Mercedes-Benz, Toyota, Honda, Nissan and Volkswagen dealerships.

Cash at bank and in hand fell from £12.2m to £5.6m at the year-end. The directors said the cash position had since recovered to more than £10.9m by the time the accounts were signed, and that the business had outperformed its original 2026 budget in every area.