Investors FAQs

Since 2016, Inchcape has transformed from a mixed Retail and Distribution business into a fully automotive distributor. Back in 2016, Distribution made up just 40% of Group revenues. Since then, we've:

• Divested £4.5 billion in retail-only revenue, including our UK retail business in 2024 c.£2bn in annualised revenues
• Acquired £4 billion in Distribution revenue
• Tripled our OEM partnerships
• Nearly doubled our market footprint
• More than doubled our new vehicle volumes
• Nearly tripled our annualised distribution revenue

This shift to Distribution—a capital-light, higher-margin, more cash-generative model—has delivered stronger returns and created a platform for scalable, long-term growth.

Inchcape operates two main commercial models, tailored to market dynamics such as size, infrastructure maturity, and geography: 

1. Third-party retail model: This is our typical set-up, covering around 90% of our volumes. In this model, we manage the full distribution value chain but partner with independent dealers for retail. Around 80% of our dealer network is owned and operated by third parties, making it a capital-light and a highly flexible structure that allows us to scale and introduce new OEMs efficiently. 
2. Vertically integrated model: Covering around 10% of our volumes, this model is used in select, smaller markets like Singapore and Hong Kong, where we directly own and operate dealerships. This model gives us more control over customer experience and retail standards, especially in markets with fewer physical locations. This model is typically higher margin given we capture the Distribution margin (5%-7%) plus the Retail margin (1%-2%). 

The choice of model depends on what’s most effective for a given market, with the third-party approach being less capital intensive and more scalable. 

We operate in 40+ markets across three key regions: the Americas, Europe & Africa, and APAC.

Our focus is on smaller to medium-sized, more complex markets where OEMs typically appoint independent distributors rather than managing distribution themselves. These markets often have higher GDP growth and lower motorisation rates, making them attractive long-term growth opportunities. This is Inchcape’s sweet spot—markets that are harder to reach but offer strong potential for growth, and where we have built deep expertise over decades of operation.

We operate within a Total Addressable Market (TAM) of approximately 10.8 million vehicles sold annually, across smaller, complex, and higher-growth markets where we specialise. Currently, Inchcape holds only holds 3% market share.

If we reach our medium- to long-term goal of 10% market share, we could effectively triple the size of our business. In most of our markets, we hold less than 10% share, which we view as upside potential. In those where we exceed 10%, we typically work with more OEMs—averaging five partnerships per market—and deliver operating margins above 6% on average.

We aim to grow through:

1. Developing existing OEM partnerships via network expansion and volume growth.
2. Winning new distribution contracts, including in-house conversions and new market entries.
3. Strategic acquisitions in a fragmented industry, consolidating local distributors under Inchcape.

We provide value to OEMs through three key differentiators:

1. Consistent Performance – We act as a trusted partner in the value chain, combining deep local market expertise with global systems, processes, and scale.
2. Digital & Data Capabilities – Our data-led approach enhances brand building, optimises pricing, and drives growth across digital and physical networks.
3. Proven Track Record – With partnerships spanning over a century, OEMs trust us to deliver long-term results and strong financial returns.

All of this is underpinned by a responsible business approach that defines how we operate.

We work with a broad and prestigious portfolio of OEM partners, unmatched in scale and diversity across the global automotive distribution industry. These relationships span all major manufacturing regions from Japan, Europe, China and the USA, and include both long-standing and newer partners.

Longer term partners include Japanese brands such as Toyota and Lexus (over 50 years) to European brands such as Porsche (35+ years). Emerging partners include a select group of high-potential Chinese brands, where we have formed strategic partnerships, supported by the Derco acquisition. These partnerships are focused on global expansion and diversification across drivetrains.

Our ability to maintain and grow these relationships reflects the strength and consistency of our distribution model, as well as our appeal as a partner of choice for OEMs seeking market penetration and performance.

Our competitors fall into two buckets. They are typically regional automotive distributors, either operating in multiple countries or focused on a single market. The second would be smaller independent automotive distributors that are family owned.

Inchcape stands apart by offering global scale, advanced digital capabilities, strong data analytics, and robust cybersecurity — all increasingly critical for OEM success. These strengths position us ahead of smaller players and support our belief that the distribution market will continue to consolidate in favour of larger, tech-enabled partners like us.

Value-added services are high-margin offerings that go beyond vehicle sales, designed to keep customers in the Inchcape ecosystem and grow long-term value. These include:

• OEM-certified parts (e.g. brake pads, panels) – exclusive distribution of parts, lower in absolute revenue terms but higher margin.
• Finance & Insurance (F&I) – we partner with banks and funding providers to offer attractive financing options that increase sales and customer loyalty.
• Digital platforms – like our proprietary Digital Parts Platform (DPP) recently launched in some markets across APAC and AI tools that optimise inventory, pricing, and service delivery.
• Electric Vehicle (EV) services – including battery maintenance, home charging support, and low-carbon mobility solutions.
• Service packages & used cars – we provide aftersales support and leverage our distribution and third-party retail network for used cars.

Distribution contract wins are a key growth driver for Inchcape, alongside acquisitions. Since 2022 to 2024 we have won over 40 contracts.
In year one, we typically launch a brand using existing infrastructure, which keeps upfront investment low. We are prudent on early volume assumptions as we invest in brand awareness. Contracts are typically negligible in profit contribution in the early stages.

As we build brand presence and expand the retail network—often through third-party dealers—we aim to grow to a market share of 2% or more. Our ambition is to reach 10%+ market share in each market, which allows us to unlock operating leverage and drive accretive margins.

On average, a single distribution contract by year five, once the contract reaches maturity, is expected to generate:

• £20–30 million in annual revenue
• £1–2 million in annual operating profit

The steady ramp-up of contribution over an average of five years reflects our strategy of scaling efficiently, leveraging existing overheads, and deepening our market penetration. This model represents a significant, scalable growth engine for the Group.

The main profit and loss components of Inchcape’s business reflect our two core product areas: vehicles and parts.

• Revenue: Around 85% of group revenue comes from vehicles, with the remaining 15% from parts. The average selling price (ASP) for vehicles is approximately £21,500.
• Cost of Goods Sold: This includes the underlying product cost and distribution-related expenses such as duties, logistics, insurance, and storage.
• Gross Margin:
  • Vehicles (including finance and insurance income): 10%–15%
  • Parts: 40%–45%
  • Overall group gross margin: 15%–18%
• Operating Costs: These are mostly variable or semi-variable, running at about 10%–11% of revenue. Our distribution model benefits from a lower proportion of fixed costs (e.g., property) compared to traditional retail models.
• Operating Margin: We typically deliver operating margins of 5%–7%.
  Overall, the flexibility of our cost base and margin strength, especially in parts, underpin a resilient and scalable profit model.

Inchcape’s working capital primarily consists of:

• Inventory – £1.9bn (2024), mostly new vehicles (80%) and parts (10%), with average stock cover of three months.
• Inventory Financing – £1.6bn (2024), treated as trade payables, via OEM credit or third-party banks—structured to align with inventory holding periods.
• Trade Receivables & Payables – Net £(0.1)bn (2024), including dealer/finance house receivables and payables to OEMs, taxes, and other costs.

Working capital in our automotive distribution business revolves around managing the flow of vehicles from the OEM order to final sale to the third party dealer, and typically operates on a six-month cycle post-production. It involves three key phases:

1. Ordering & Production: Vehicles are ordered 30–90 days before production. After production, we take ownership when the vehicle is in transit to our distribution centres.
2. Inventory & Financing: Once we take ownership, vehicles are recorded as inventory on our balance sheet. Inventory is financed using OEM supplier terms or third-party bank arrangements, typically allowing up to 150 days of credit, treated as trade payables. This financing is mostly in major currencies like USD, EUR, or JPY.
3. In-Market Delivery & Receivables: The vehicle is sold to our dealer network and the revenue is recognised. We record a trade receivable, which is settled shortly after—either by the dealer or via floorplan financing. Payment from the end consumer is made in local currency, often via finance products.

We manage working capital efficiently using analytics-driven inventory planning and supplier financing structures, ensuring we balance vehicle availability whilst maintaining a neutral working capital position.

Yes, we have set clear medium-term financial targets, published on 4th March 2025, which define our direction through to the end of 2030. These targets reflect our strategy to deliver through the cycle and drive long-term shareholder value.

Our key financial ambitions include:

• 3–5% organic compound annual volume growth, driven by market growth and outperformance
• ~6% operating margins, reflecting consistent and resilient profitability
• 100% free cash conversion from adjusted profit after tax, enabled by our capital-light and cash-generative model
• £2.5 billion in cumulative free cash flow to be generated by 2030

This strong cash generation supports a disciplined capital allocation strategy—maintaining our current dividend policy while also funding share buybacks and value-accretive acquisitions.

Together, these drivers are expected to deliver compound annual EPS growth of over 10% between 2025 and 2030.

In 2025, we began publishing a quarterly Total Industry Volume (TIV) Tracker for our key markets. This report draws on third-party data from government sources and IHS to show total automotive volumes sold in a market and the size of the addressable market each quarter. You can find the latest TIV data in “Results, reports, and presentations” in the Investor Relations section of our website.

For further information on our Business Model and Accelerate+ strategy, please see our “In the Driving Seat” webinar series