Why Did City West Country Post a £6m Loss in 2025? An In‑Depth Look at the Dealer’s Finances

City West Country, the Exeter‑based new and used car retailer, announced a pre‑tax loss of £6.08 million for the year to 31 December 2025. The result marks a stark reversal from the £5.42 million profit recorded in the previous financial year and has prompted the board to describe the period as a “challenging trading environment”.

Financial performance overview

According to documents filed at Companies House, the loss was heavily influenced by an exceptional provision of £7.65 million linked to inter‑company debt. Removing that one‑off item would have left the dealer with an operating profit of roughly £1.63 million.

Turnover also contracted sharply, falling 27 % from £219.7 million in 2024 to £160.23 million in 2025. Revenue from vehicle sales dropped to £138.27 million from £190.68 million the year before, while after‑sales income slipped to £21.96 million from £29.02 million.

Key drivers behind the loss

Directors pointed to several macro‑level pressures. The most prominent factor cited was Mercedes‑Benz’s transition to an agency sales model in the UK, which altered the traditional dealer‑to‑manufacturer relationship and added complexity to inventory and pricing management.

Gavin Walker, a director, said: “The year to December 2025 was a challenging trading environment with major global changes in the industry, pressure from multiple macro‑economic events, the settling in the UK market of the Mercedes Benz agency strategy, a change in national political outlook and a very competitive trading environment.”

He added that despite these headwinds, “the demand for new and used cars remained strong throughout the year,” indicating that the decline in revenue was more a function of structural shifts than a collapse in consumer interest.

Impact on cash position and liabilities

While the loss was sizeable, the company’s cash balance improved, rising from £8.9 million at the end of 2024 to £12.83 million in 2025. However, short‑term liabilities surged, with creditors due within one year climbing from £31 million to £63.89 million, more than doubling over the twelve‑month period.

Workforce and remuneration trends

The dealer expanded its workforce, averaging 678 employees in 2025 compared with 647 in the prior year. This increase contributed to higher staffing costs, which totalled £23.31 million.

Directors’ remuneration also rose, from £989 000 to £1.1 million, with the highest‑paid director receiving £401 399. No dividends were declared for the year and the board did not recommend a final payment.

Strategic moves and future outlook

During 2025 the group made a strategic acquisition of an additional Mercedes‑Benz light commercial vehicle (LCV) franchise in the South West, aiming to supplement its existing LCV operations. The company also continued investing across all its sites, a policy that it says will persist.

Walker's assessment of the year’s performance was deliberately restrained: “The directors consider the financial performance in 2025 to be satisfactory considering the wider economic climate and the extremely competitive UK motor retailing marketplace and the general cautious outlook adopted by consumers.”

Brands represented and market position

City West Country represents a portfolio that includes Mercedes, Smart, BYD, Maxus and Chery across the South West region. Despite the recent loss, the dealer maintains a strong presence in both new‑car and used‑car segments, leveraging its multi‑brand representation to mitigate market fluctuations.

Industry observers will be watching closely to see whether the dealer’s continued investment and franchise expansion can offset the pressure from the agency model and restore profitability in 2026.