Citygate Automotive fell to a £4.05m pre-tax loss in 2025 as rising costs and pressure on margins hit profitability.
The dealer group, which made a pre-tax profit of £217,670 in 2024, increased turnover by 4.9% to £435.3m in the year to 31 December.
It described the result as disappointing but said changes to dealerships , cost reductions and staffing measures had delivered a much stronger performance in the first half of 2026.
“The 2025 result was disappointing in a challenging market environment. However, during the year the business has taken major actions to reshape its portfolio of dealerships, reduce its cost base, and ensure it has engaged the right people to drive a recovery, which has resulted in a much stronger result in the first half of 2026,” it said in accounts filed at Companies House.
Citygate said the government’s zero emission vehicle (ZEV) mandate and competition from Chinese brands with lower production costs were putting pressure on gross margins.
Its cost base increased by 9.5%, with high new vehicle stock levels driving up funding, storage and movement costs. Higher employer National Insurance contributions, an increase in the national minimum wage and start-up costs for its vehicle leasing brokerage also weighed on the business.
Citygate said the ZEV mandate continued to distort the market. Battery electric vehicles accounted for 23.4% of new car registrations in 2025, compared with the mandate’s headline target of 28%.
The group made several changes to its dealership portfolio during 2025, including acquiring the Volkswagen car dealership in St Albans from Marshall Motor Group.
It converted its Twickenham Seat and Cupra dealership into an aftersales operation for Volkswagen cars, Skoda, Seat and Cupra, transferring vehicle sales to its flagship West London dealership.
The Volkswagen car sales operation in Chalfont closed, with business redirected to High Wycombe and Watford. Aftersales remained open.
Citygate sold its loss-making Seat dealership in Reading to Marshall Motor Group. It also terminated its loss-making GWM franchise in High Wycombe, with the franchise due to finish in 2026.
Other changes in 2025 included transferring Volkswagen Commercial Vehicles sales from Colindale to St Albans and converting Colindale into an aftersales site for Volkswagen cars and vans.
