ALD’s used cars generate record profits

We don’t usually focus much on Q3 reports – half-year and full-year results are material enough, thank you very much. But ALD’s third-quarter results are interesting on two accounts: they break a record, and they reveal wider industry trends. Driven by used-vehicle sales, ALD had one of the best third quarters in its history. 

Let’s start with the record-breaking stuff. In the third quarter of 2021, ALD Automotive realised a profit of €1,974 per used car sold. That’s an all-time high. To put that into context:

• In the first nine months of 2021, ALD sold around 247,000 used cars, for a total of €277.7 million, with an average sales margin of €1,126 per unit.
• However, looking only at the third quarter, ALD sold around 77,000 used cars (just 31% of the year-to-date total), resulting in a revenue of €152.4 million (almost 55% of the year-to-date total).

Semiconductor shortage

That adds up to the record-breaking profit per unit in Q3. As to why records are being broken: the ongoing semiconductor shortage is continuing to constrain the supply of new vehicles, and thus continuing to push up the value of used vehicles. ALD’s excellent used-car results will be replicated, more or less, by other lessors. 

Despite the year-to-date increase in volume and the Q3 increase in value, ALD’s used-car sales channel proportions have remained largely the same: 15% of the used vehicles is sold retail, the rest wholesale. Overall, ALD expects to have an average profit per used vehicle more than €1,000 higher than their previous forecast.

Unexpected windfall

That unexpected windfall has a flipside: like everybody else and with everybody else, lessors have to compete for new vehicles, which continue to be in short supply. Contract extensions are one way of dealing with that problem. Anyway, those supply-side issues do not seem to have hindered ALD this quarter, either in terms of growth or electrification. 

• ALD’s full-service lease contracts increased to 1.38 million by the end of September, reflecting year-on-year organic growth of 0.7%. With the acquisition of Bansabadell Renting (Spain) and Fleetpool (Germany) to be added in Q4, the total funded fleet at year’s end will be up to 4% larger than at the close of 2020. 
• ALD continues to outperform the market when it comes to electrification. Year to date, 27% of ALD’s new car deliveries in Europe were EVs – double the market average. ALD’s global average is 20% EVs. 

Integrated approach

That market-beating electrification result is down to a number of factors. Firstly, the increasing appetite of fleet customers for EVs. Also, ALD’s wide range of partnerships with EV manufacturers, to wit: smart, Polestar, Tesla, and Lynk&Co. And last but not least, ALD Electric, a product offered in partnership with charging specialist ChargePoint, is an attractive product offering an integrated approach to charging.

Finally, to put ALD’s overall good results into context:

• In the first nine months of 2020, ALD generated a net income of €347.5 million, of which Q3 represented €140.6 million (40.5%). 
• In the same period of 2021, ALD’s net income increased by 75.5% to €610.1 million. The Q3 result increased by even more: +83.5% to €258.1 million, or 42% of the year-to-date total. 

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