Good morning, and welcome to Pendragon's Interim R esults presentation, during which we will cover the results for the first half of 2022, provide a performance review, and give you an update on the great progress we continue to make with our strategy. I am Bill Berman, and with me today is the group CFO, Mark Willis. I will start by reviewing the performance in each of our divisions. Mark will then cover the financial performance in more detail before we run through the strategy. Starting on slide four with a look at some of the first half highlights for the group overall. In summary, we continue to make strong progress with our strategy, with Pinewood being a major driver of its delivery.
Despite the supply constraints and market uncertainty, we continue to have confidence that the changes we are making are the right ones and that they will deliver long-term value to our business. In May, we launched our used car advertising campaign promoting our market-leading used car credentials through CarStore.com. This platform has all the group stock in excess of 10,000 vehicles currently that are now transactional via the CarStore website. The buying process is synonymous whether you are on store or online. Our new campaign has been well received by consumers. I'm excited to announce today that we are in advanced discussions with BYD to act as its lead launch partner for the U.K. market. BYD are the largest new energy vehicle manufacturer in the world, with in excess of 640,000 units sold in the first half of 2022.
I'll talk about that more later on. We have delivered an excellent financial performance in the first half, with underlying profit of GBP 33.5 million, underpinned by 12.4% growth in our gross profit as our strategy continues to deliver. We are also closing the half in a net cash positive position of GBP 2.8 million compared to a closing net debt of GBP 49.7 million in 2021. Cost increases were in line with our expectations for the first half, but inflation remains a challenge with which Mark will cover in more detail later on. I'll come back and cover our view of the current outlook at the end of the presentation. Next, turning to slide six, covering our UK Motor division. We have revised the way we look at our used car strategy.
It now reflects our group-wide omni-channel approach to used car retailing. As the market has continued to evolve, we have adapted our strategy away from a standalone proposition to a group-wide proposition, ensuring we maximize the advantage of our entire used car inventory, our physical assets, and our digital capabilities. To achieve this, all of our used car inventory is now listed on the single platform, CarStore.com. To reflect this, our previously reported Franchised UK Motor and CarStore divisions are now combined under one UK Motor division. We also remain focused on maximizing our performance in our new car business, and in the first half we have invested heavily into major developments at a number of our locations, including sites within BMW, Mercedes, and JLR. Supply continues to be a restricting factor for volume across both new and used cars.
As a result of this, and as a result of our strong performance in lockdown in 2021 relative to the market, we have seen volume declines in both new and used cars in the first half. We continue to invest in our strategy to improve used gross profits per unit, GPUs, and focus on maximizing new car margins where supply is restricted. We have seen material improvements in our GPUs, improving used GPU by GBP 310 compared to H1 last year, and new GPUs by GBP 956. Together with a 180 basis point increase in after sales margins, this has underpinned the 12% growth in gross profit despite the volume declines. Mark will cover the drivers of the cost increases shortly, which as a reminder, last year included government support that was not repeated.
Cost growth of GBP 24.2 million in UK Motor offset the improved gross profit, resulting in operating profit of GBP 37.2 million, down just GBP 0.7 million compared to last year. I'm very pleased with the performance given the combined pressure of low volume and higher cost growth. Turning to slide seven in Pinewood. Again, I will cover Pinewood's progress in a bit more depth as we go through our strategy, but Pinewood continues to be a fundamental to the pace and scale of change that we are delivering. Pinewood's ever-evolving technology is powering our UK Motor business and ultimately will be the benefit of Pinewood's external customers, which make up approximately 80% of Pinewood's customer base.
Further growth in international users was delivered in the first half, as well as developing a pipeline of new opportunities both in the U.K. and internationally to deliver future growth through ongoing dialogue directly with potential retail customers and through engagement via Pinewood's OEM partnerships. Revenue in Pinewood grew 2.5%, while underlying profit declined by 17.9%. This performance was in line with our expectations with the investments we have made in developed resources being reflected in a higher cost base. Turning to slide eight, PVM, our leasing business. PVM also performed very strongly in the period with a 25.9% increase in operating profit to GBP 10.2 million, up from GBP 8.1 million in the first half of 2021.
PVM's profit growth continues to be driven by profit on disposal of defleeted vehicles, where the residual values for disposal vehicles were set three or four years ago. With disposals therefore continuing to benefit from increase in used car prices we saw the second half of last year, the profit per disposal per vehicle increased by 130% to over GBP 4,500 in the half. The fleet size, much like UK Motor retail sales, is being restricted by supply, but PVM is continuing to focus on generating orders and currently has an order bank in excess of 2,400 orders, subsequently higher than pre-pandemic run levels. We also believe there continue to be exciting opportunities for fleets looking at electrification and the benefit this will bring to the employees from a tax perspective, which will support future growth.
I will now hand the call over to Mark to run through the financial performance for the first half before I cover this strategic update.
Thank you, Bill, and good morning, everyone. I will cover the majority of the key financial messages on this first slide, which is slide 10 in your pack, followed by a quick review of a few detail points across the P&L cash flow and balance sheet. Starting with revenue, which is up 3.9% on a like-for-like basis, and as Bill covered, we saw volume declines in both new and used cars, with revenue growth therefore being principally driven by increases in the average selling prices of used cars, which were up 31.8% compared to the same period last year. That's driven by the high price inflation we saw in the second half of FY 2021, having a full year impact onto the first half of 2022.
We delivered further growth in gross profit, which is up 12.4% versus last year at GBP 232.2 million, delivering a gross margin rate of 12.6% compared to 11.6% in the same period last year. Our focus on driving strategic initiatives that benefit used car gross profit per unit and maximizing our new GPUs in the supply-constrained conditions underpin this performance with used GPU up, as Bill referenced, 22.7% and new GPU up 59.1% compared to last year. These were supported by the gains in our sales margins and through the high disposals we've seen in PVM. Underlying operating costs grew by GBP 20.8 million. That's up 13.1% against last year, and there were three key drivers of that increase.
First, half one 2021 benefited from GBP 8.3 million of government support in the form of both rates and furlough, which was not repeated in 2022. Second, as we guided at the start of the year, we increased our levels of investment into marketing, principally in our used car strategy. These increases added approximately GBP 7 million of costs in the first half, and that remains in line with our guidance of GBP 10 million for the overall for the full year. Finally, the impact of inflation was principally seen in utilities and labor and drove the remaining GBP 6 million of cost increase in the first half. Although we entered the year with hedging in place for circa 50% of our electricity and circa 25% of our gas use, the higher prices on the unhedged elements drove some incremental cost increases.
During the course of the first half, our average employee cost increased by approximately 6%, which included pay rises and investment into benefits in order to maintain a competitive position in the market. I anticipate now that our full year costs will be approximately GBP 40 million higher year-on-year, which is an increase of approximately GBP 10 million on previous guidance, and that's driven by the ongoing impact of labor inflation and the unhedged element of utilities. As a result of the gross margin rate improvements, offset by the cost increases, we reported an underlying profit for tax of GBP 33.5 million in the first half. While this is GBP 1.8 million lower than in 2021, adjusting for the removal of that government support, this is a strong performance in comparison. Turning next to slide 12 to look at the summary group income statement.
As I said, I won't repeat the comments from the previous slide, so just briefly cover the increase in interest on this slide, which has increased by GBP 1.8 million to GBP 18.6 million in the half, mostly driven by higher borrowing rates associated with our new banking facility we outlined at the full year, but also with the impact of increases in the base interest rate, as well as an increase in vehicle stocking interest, again, driven by that higher bank base rate, combined with higher average units per car. After non-underlying items, the group reported profit before tax of GBP 32.9 million, an increase of GBP 2.1 million versus the prior year. Looking next at cash flow on slide 12.
Cash generated from operations was strong at GBP 88.3 million, and that included a working capital inflow of GBP 24.2 million, which is primarily timing related, and we expect to unwind in the second half. Net capital expenditure of GBP 6.5 million comprised of capital expenditure of GBP 19.1, which included investments that Bill called out into a number of locations, including CarStore stores in Chesterfield and Warrington, investment into OEM brands, including refurbishments at BMW sites in Hull and Derby, our Mercedes site in Huddersfield, and our JLR in Mayfair. The CapEx was offset by inflows from disposal of excess property, and that was principally the sale of a vacant site we had in St. Albans, which we sold for GBP 10.5 million, and that was a material gain on the net book value of GBP 2.6 million pounds.
Lease payments and receipts were lower by GBP 2.1 million pounds. As we continue to successfully manage the exit of vacant properties from our store rationalization program in 2019 and 2020, these savings have more than offset the impact of inflationary rent increases. Over the course of the last three years, we've successfully reduced our vacant leasehold property, generating over GBP 6 million in annual rent savings and a further GBP 3 million reduction in rates bills. As a result of the movement set out on the slide, the group had a closing net cash position of GBP 2.8 million at the end of June. Finally, for the financial statements, I will cover the key changes to the balance sheet on slide 14. Net assets have improved further to GBP 271.6 million.
That's an increase of GBP 46 million since 31 December 2021, and the key movements include an increase in property assets to GBP 222.5 million, an increase reflects the investments we've made into our estate in the first half, less a disposal of St. Albans. Inventory increased by GBP 17.1 million from the end of December from GBP 512.8 million to GBP 529.9 million. That's driven by a combination of an increase of approximately GBP 50 million in the level of new car inventory held prior to onward delivery to customer, and that remains significantly below historic levels of new car inventory as a result of the ongoing supply shortages. That was partially offset by a reduction in used car inventory of approximately GBP 30 million as supply has tightened.
The increase in payables of GBP 60 million is principally driven by the increase in creditors associated with the increase in inventory, together with the working capital timing benefit I just outlined. Finally, the net liability for defined pension scheme obligation has moved from a GBP 23.6 million liability at FY 2021 to a GBP 4.2 million asset at HY 2022. The improvement of GBP 27.8 million comprises contributions of GBP 6.5 million, a net interest expense recognized in the income statement of GBP 0.2 million, and net actuarial gains of GBP 21.5 million. I'll now pass back to Bill to cover the strategy.
Thanks, Mark. Delivering our group strategy has been a key contributor to the performance announced today. I will now highlight the continued progress we've made in the first half. By way of recap, at Pendragon, our vision is to transform automotive retail through digital innovation and operational excellence. Starting on slide 16 recaps our strategy announced in late 2020. As outlined at the end of full year 2021, substantial progress has been made against the UK Motor objective of operating from a lean and efficient cost base. While tactical opportunities continue to be pursued, the objective has now been replaced with the enhancement of our new car representation across the U.K. The existing established and broad portfolio of OEM brands at Pendragon will grow to respond to the increasing demand for EVs.
I'm excited to announce today that we are in advanced discussions with BYD to act as its lead launch partner in the U.K. market for both sales and after sales. Turning next to slide 17, against the objective of accelerating digital innovation, the group, enabled by Pinewood, has made excellent progress to strengthen its omni-channel capabilities. Sales+ is a DMS app developed by Pinewood that enables our store associates to seamlessly manage the sales process across digital and physical channels. First half additions to this app have included the automated inclusion of insurance products and customer offers, which is driving penetration improvements on a year-over-year basis. Associates and customers, whether in-store or at home, can now seamlessly amend in real time, finance type, deposit, term, annual mileage, and insurance products. The increased levels of transparency and optionality have been well received.
By the end of the year, menu pricing for insurance products will be live. Insurance products will be presented according to good, better, best principles to drive further levels of transparency, flexibility, and product penetration. The group-wide vehicle acquisition management and pricing platform is focused on optimizing both turn speed and margin of used vehicles. Market-based pricing has been furthered with the inclusion of internal demand and vehicle supply indicators. Improved levels of automation are reducing manual inputs and driving unit economics and turn speed. In the second half, there are a number of data improvements on the roadmap to continue the optimization of used vehicle pricing. Sales+ is being further developed to allow customers to seamlessly conclude their part exchange and sell their car journeys either in-store or remotely. Finally, our market-leading digital F&I capabilities have been strengthened during the first half.
Variable APRs by finance balance are currently being trialed and positively, and so far have been received positively. The dynamic and real-time capability to compare lender offers and associated variance in residual values has been scaled across the group to maximize customer value. By the end of the year or in early Q1, the Pinewood team will be developing a rate for risk capability. Personalized finance rates based upon a soft credit check and deal structure will be presented to the customer to enable more choice. Turning to slide 18, an initiative targeting used car reconditioning is progressing well. The allocation of used vehicle stock across the group has been revised to get the right cars to the right location faster. Revised allocation coupled with process automation to stop the reliance on vehicles being manually brought into stock is driving improvements in vehicle turn speed.
The after-sales performance announced today has benefited from a number of changes in the first half. Technicians critical to our business now have a revised incentive structure that rewards them for higher productivity and early signs are incredibly positive. Vehicle health check conversion and performance has improved year-over-year. An interest-free finance trial for work-identified vehicle. Vehicle health checks is also performing well and allows customers to spread the cost of high-cost work over a longer period of time. Finally, used vehicle warranty products. Changes we have made are driving record levels of penetration and margin per unit. The next iteration of the guarantee pricing model will be introduced shortly. This will unlock additional, that additional value and additional units that do not qualify for OEM warranties and further drive upside across the business. Moving next to slide 19.
As I introduced up front, we are in advanced discussions with BYD to act as its lead launch partner for the U.K. market for both sales and aftersales. BYD is the world's largest manufacturer of new energy vehicles with global sales exceeding 640,000 units in the first half of 2022. Pendragon intends to leverage its diversified assets and capabilities to launch BYD in the market. At launch, we will create stand-alone experience centers in London and Birmingham with plans for future expansion. The first model line to launch in the U.K. will be the BYD ATTO 3. The ATTO 3 is a C-segment SUV with a fully electronic powertrain. This will be the first milestone against our objective of enhancing new car representation. We're looking forward to partnering with BYD in the U.K., the world's largest manufacturer of new energy vehicles.
Turning to slide 20, our new used car strategy. CarStore's mission is to empower customers to buy, sell, and take care of their car's needs the way they want to. As outlined at the full year, the team have landed a market-leading omni-channel hybrid customer proposition. From a traditional walk-in journey to a full online transaction with no associate interaction and everything in between. CarStore's proposition is truly personalized and seamless across digital and physical channels. Further revisions have been made to the proposition in half one. All group used stock in excess of 10,000 vehicles currently is now transactional via the CarStore website. 10,000 used vehicle gives us a greater scale than any other digital disruptor. Going forward, CarStore will be the used car brand and platform for the group.
By the end of the year, incremental used vehicle acquisition will be driven by the newly acquired SellYourCar.com web domain. With recent shortfalls in new vehicle supply, used vehicle acquisition will be a key battleground for the sector over the next several years. The revisions we have made to SellYourCar journeys places at the forefront of the market and enables us to capture greater share. Over time, SellYourCar.com will drive further margin upside for the group. Next, slide 21. I presented this slide at the full year to highlight the market-leading omni-channel capabilities that underpin the hybrid customer proposition. During the first half, we have continued to maintain our advantage versus the competition with an online and in-store journey that are the same. We have greater levels of opportunity, and we continue to improve our customer satisfaction scores. Turning to page, slide 22.
All Evans Halshaw locations have now been enabled with the CarStore omni-channel proposition. CarStore will be the group's used car platform and brand going forward. The first standalone concept store to support the omni-channel proposition and do test and learn launched in Chesterfield in April. The store has been well-received by customers and now acts as a blueprint for future expansion. The next store to open in Q4 will be Warrington. Warrington is approximately 3-acre lot with display of circa 400 used vehicles. We're excited to welcome customers to the new store later this year. The number of small format locations branded as CarStore Direct has been scaled during the first half. 10 new locations are now live across the U.K. for SellYourCar.com purchases, as well as click and collect fulfillment.
As outlined in the full year, a full launch of the proposition supported by the integrated omni-channel campaign that was created during the first half and then launched in May. In addition to primetime TV advertising to drive awareness of the repositioned brand, we partnered with leading touring car team, Power Maxed Racing earlier this year. The impact of the proposition's launch has been incredibly positive. Digital traffic to CarStore.com is up over 60% on a year-over-year basis. New customers are being attracted to the brand. The H1 Reputation.com score has a market leading 4.7 out of 5, up three basis points on a year-over-year basis. The brand also has an excellent Trustpilot score of 4.7 out of 5. I'd now like to share the latest CarStore advert, which is currently live.
Awe in person. Simply drive it away or let us deliver it to your door. Welcome to car buying that revolves around you. Welcome to CarStore.
Finally, Pinewood on slide 25. As I've outlined, Pinewood has made excellent further progress to enable and strengthen the group's omni-channel capabilities and underlying operating model during the first half. Pinewood's continually evolving technology is driving a rapid change in capability in our motor division. As I've covered throughout the strategy update, we are making rapid progress driven by our ability to drive change in the technology we own and operate. Pinewood has built, tested, and implemented multiple changes, including the Sales+ additions, changes to our acquisition management and pricing platforms, and advances in our F&I capabilities and multiple other developments. On a standalone basis, international users have grown by 3% during the first half.
Looking forward, Pinewood has been developing new business and further circa 1,000 new users across both domestic and international markets are projected to go live with Pinewood our suite of digital products in the second half. Moving to summary and outlook. Finally, on slide 27. In summary, I'm pleased with our ongoing delivery of new vehicle initiatives that will continue to drive performance. I'm very happy with the strong start we have made to the year and continue to believe our strategy will give us a long-term competitive advantage. Since the first half of the year, trading has continued in line with our expectations through July and August. We expect both new and used car constraints to continue into 2023.
At the end of June, we had an exceptionally strong order bank with nearly 25,000 new car orders outstanding across our business units. While the macroeconomic backdrop remains challenging with interest rate rises and other inflationary pressures, we continue to expect to deliver group underlying profit before tax in line with the board expectation to the current financial year. Lastly, I'd like to thank our nearly 5,600 employees for all their hard work and dedication to help us to achieve our common goal. Thank you again for joining us today. Mark and I will now take any questions.
Is it easy to get a mic so that people online can hear what's happening?
Morning, it's Mike Allen from Zeus Capital. First question was just on leasing. I mean, clearly, I think you referred to selling old stock at, you know, high gross profit per unit. Just wondering about the sustainability of that going forward. How much of the old stock have you sold, and what the direction of travel might be in that business?
Yeah, I think a couple of points on that. I mean
Clearly, long term, we expect the margins to come back down towards the normal profit profile that PVM makes. It would remain healthy. Typical contract length is 39 months-40 months. We're cycling through now stock that was written as business three years ago, and obviously the residual value increase that went in the second half of 2022 will benefit the cars that were in the fleet up until that point. It's probably another year's runway of those cars coming off lease, and then the new business is being written at the higher residual values that sit today.
Yeah, Mike, if you think about it too, PVM's inventory first goes through our own filter. We keep the cars that represent what our customers look for. It's a great addition to current used car inventory and supply, which I think gives us a competitive advantage. We have nearly 2,500 orders currently on the books right now, which is exceeding what our disposal rate is at the moment. And then with the addition of BYD coming into it and the tax incentives that represent to you know fleets of vehicles and stuff like that, we're pretty excited about what the opportunity presents there. We continue to see the order bank grow with PVM. With the addition of BYD and the electrification of the fleet over time, I think that actually puts them in a position for growth.
Okay. Sorry, just two more from me, if I may. BYD, do we have an idea of what the price point might be on some of the models?
It hasn't been finalized, but it'll probably be pretty much in line with other entrants, things like, you know, the MG products and some of the other ones out there. You know, circa the mid- to high- 30s. Over time, they're gonna have everything from A to D segments coming into the marketplace. We'll have a full spectrum of vehicles in short order.
Last one from me. Do we believe the 1.89 million forecast from the SMMT for the new car market in 2023?
No fault of their own, but nobody's been right on a forecast now in over two years. I think it's as good as you can get. It may be a little bit high just from what happens. I mean, day by day, the number, you know, seems to move. As of late, more inventory has been pulled out than has been added. I don't see that changing anytime in the near future.
Okay. Thank you.
Morning. Sanjay Vidyarthi at Liberum. Just a question on Pinewood. Can you talk a little bit about the strategy in terms of the focus markets, be it countries or customers. How targeted is it in terms of the growth that you're trying to achieve? Is it you going out there and thinking, "Right, this is where we want to grow," or is it customers coming to you saying, "Can you provide us with software?"
It's kind of broken into three different channels. One channel that's worked very well for us is certain OEMs have pushed for our product to be instilled into their stores. A lot of the business we have in Asia has been driven by OEMs. That's one contributor to it. Internally, we have dealer groups that are on our program and are adding more dealers to them and adding things that way. We have a fair amount that's coming into us directly, especially with some of the new advances. Sanjay, to your point, we are actively and aggressively targeting certain parts of the world.
We're really focusing on areas that we are currently in or that we currently can support, and then being able to grow from there. We're looking at things in the Middle East. We're looking at things in North America. Obviously, we're looking for a huge expansion within the Nordic countries that we already exist in, as well as in Southeast Asia.
Yeah. I guess ultimately the words trying to get at is with critical mass, presumably there will be some benefits in terms of the support costs in those regions if you can achieve, you know, rather than fragmentation across many markets' concentration.
Yeah. Got it, yeah. We're not, yeah, I'm not looking to sit here and go into South America tomorrow or something like that 'cause we already have beachheads in key markets that represent huge growth opportunities, and we already have the infrastructure in place to grow off of. Anything that gets added, say in Asia or in the Nordics, is just additive.
Okay. Thank you.
Thanks. Hi, it's Rob Chantry from Berenberg, just standing in for Mike. Three questions. Firstly, can you just give us an update, I guess, on new car supply chain delays and constraints by brand and how that's kind of impacting you? Secondly, on the ground update on online car market dynamics and the level of competition, I guess from your kind of more kind of direct strategy, if it is a response, et cetera. Thirdly, the changes you made, I guess, the business model and reporting. Does that kind of impact any medium term sensitivities in how the business behaves looking out three, four years in terms of basically the sensitivities around that? Thanks.
Rob, on your first question, I don't think we have enough time to go, brand by brand in those challenges. The challenges that are facing the supply chain right now, the media and the different things you hear is always talking about chips. They are a large component of what is affecting the supply chain or affecting overall production, but it's much greater than that. There's limitations on everything from, you know, plastics, to wiring harnesses to neon. Even the war in Ukraine. Ukraine was the largest producer of neon, which is an integral component in electrification of the fleet, as well as they were a huge producer of wiring harnesses, especially for a lot of the German manufacturers.
You're seeing various different challenges based on each OEM as it relates. En masse, they're all pretty much getting hit the same. Stellantis recently came out and said they're kind of back to full production and Renault. A lot of the Asian brands and you know the brands out of Germany and such still have you know lots of delays and lots of shortages. This has been pushed out well into next year. If you think about it, with nearly 25,000 orders that we currently have through our different business units, that is you know six months worth of deliveries and retail sales for us at any given time. We've lost probably by the end of this year, probably in excess of 2.5 million units within the U.K.
It's gonna take a long time for that to come back around. The nice thing about that, though, is that just kinda hedges some of the economic headwinds, whether it's rates, inflation and the such, you know, as we go forward. I really don't see that getting fixed or getting back to normal until probably mid to, you know, late next year. Now, you know, maybe someone finds, you know, 100 million microchips lying around someplace, which I doubt is going to happen. We'll have to see how that plays out, but I think we're slated to take advantage of it. When you're talking about online sales and the dynamics, Rob, I think we are actually probably positioned best to take advantage of that.
If you think about it in conventional automotive sales, you know, it was somewhat of a kind of prescriptive way that you had to buy a car. Most people found a car online. I'll kind of stick with used vehicles for the most part. They'd go online, type in 2019 Toyota Camry, find it in a couple different places, price, certain equipment, miles, and then they would be kind of directed through a process. They would engage with the store, or they send the internet lead in, picked up the phone, live chat, or showed up. At some point in time, they had to come visit the store. We would test drive the car, do a part exchange, go over financing options, arrange that, and they'd buy a car.
Somewhat prescriptive, but it's been tried and true, and it's worked, you know, fairly well. Some customers really like that. With the advent of some of the, you know, quote-unquote, you know, disruptors that have come in, they came up with actually a more disruptive model. I mean, a more restrictive model, I should say. Meaning that you still had to find a car online, but then you really couldn't talk to anybody. You could, you know, submit a lead in. You couldn't drive the car, you couldn't see the car, you couldn't touch it, taste it, smell it, experience it. You'd get a value on a trade-in or a part exchange without anyone being able to see it, maybe not necessarily adequate to, you know, the condition of that vehicle.
You had to buy the car, either transfer money or arrange financing, and then you finally got to see the car. Oftentimes, you know, that delivery maybe was a little bit less than perfect. You know, I kind of call it the three sees, see your car, see your keys, see you later. I mean, you've got truck drivers dropping off cars. They can't know every single vehicle that's being able to do this and stuff. It's very restrictive. Obviously, you get the car, and something's wrong with it, you don't like it's not exactly what you wanted. Maybe the person, you know, had pets in it or smoked, and it smells funny. Now to unwind that, you have to go all the way back through that same process. It's very laborious and very difficult.
I've talked to several people that have kind of started down those processes and get to that, I have to buy this thing sight unseen. You know, it's not like buying something on Amazon, you don't like it, you put it back in the box and they pick it up the next day. It's pretty laborious to go out there and do that. What we've developed in and through Pinewood, and this is one of the great things about having Pinewood is in our stable here, is the ability for a customer to sit here and drive the buying process any way they like. Obviously we can do it the conventional method and go down that pathway, and that's great. There's a segment of customers that enjoy that and like that. Some people like going out there. It's fun.
Cars are, you know, it's an emotional buy. It's a fun buy. It's not like buying a widget or something like that. There, it's fun to it. We have the capability to do that pure digital play. They never have to engage with an associate, and we can do the exact same thing and drop that car anywhere throughout, you know, Britain and, you know, right to their home. We're finding is that vast majority of the people, 80%+, are kind of doing a hybrid approach to that, where they're starting online, and that's where most people start, the process. They can come in, into the store and see that vehicle, drive it, see if they like it.
They can go home and then send us, you know, information about their part exchange, or their trade-in and get a value that way. They can look for their own financing. They can do our financing. We're finding customers that are going in and out of that process in multiple different times. Then ultimately, most of the transactions then are being consummated at the store. It gives the customer the control and ability to do that. The thing is, I know it doesn't sound as complicated or sophisticated as it really is, but in a traditional dealership, if you try to do something online, and you try to do something in the store, those are two separate work streams, two different channels that don't really integrate with one another.
Because we have a DMS system and the website and everything integrates through Pinewood's DMS system, we're able to, you know, offer that up, and it's a unique advantage. With that, over time, you know, Pinewood will be selling those capabilities and that technology to its current users and stuff like that. I think that's the kind of direction that is gonna go that way. Big-ticket items are very hard to buy sight unseen with no emotion to them. The traditional method definitely needs to evolve, and I think we've kind of found that niche. I think you're asking about data reporting in the last piece.
Yeah. I know before we've kind of asked questions around sensitivities in the business, meeting certain targets, et cetera. As you've changed the reporting line, does that change anything?
No, it don't. I mean, it doesn't change the way we think about the business. What we've done is we've lined up the segments with how we run the business, and particularly in correlation to how Bill talks about the omni-channel nature of the business. We sell a car through multiple channels, and we're ultimately attributing the sale into the store it goes to. In old world of reporting, that's fine. You could add the stores up and say, this is one division, that's another. As you move to the omni-channel approach of I might sell the car online, I might go and see it in store, I might have it home delivered, I might do click and collect.
Actually now attributing the store into a division doesn't make sense because I might have sold it somewhere else, and actually the store that had it got the sale, but it did none of the work. We think about it more as a business split into divisions of new, used, and after sales, particularly with the group used omni-channel advertising. EH stores are benefiting from that CarStore advertising that we're doing, which is why we cut the segments back to how we think about running the business.
Thanks. Andy Wade, Jefferies. A couple from me. The first one, July and August trading, you talk about being in line with expectations. Presumably, that means from a supplied and delivered perspective that's in line with expectations. It sounds like potentially the order side of things could have been ahead of expectations given how strong that is.
I think our volumes were a little bit lighter than we had forecasted at the end of last year, this year. As Mark Willis explained earlier, the gross profit more than offset that. We came out with that. On a pure number basis, you know, gross profit and net profit basis, we're aligned to there. Orders right now still are exceeding deliveries, which is a good thing. You know, that'd be a great thing to have forever, but that's not to be.
You know, right now the real challenge is, and Mark explained this a number of times, I mean, we've got, you know, roughly 10 days left in the month, and I can't tell you how many cars for sure are gonna hit ground before the end of the month. There's that kind of uncertainty within the marketplace, you know, from the different OEMs and the such like that. It's not necessarily a terrible thing. It just means that sales that might have traditionally been recorded in September might bleed into October or even into November, which once again, there's by the end of this year, there'll be over 2.5 million units shortfall in new vehicle sales and registrations within the U.K. That's nothing but good news as we look going forward.
Great. Thanks. Looking at BYD, you sort of gave us a bit of color there around potential locations. I think you said London and Birmingham.
Birmingham .
Birmingham, yeah. One, I guess, is there any more you can give us around the sort of plans and the opportunity there? Secondly, I think your lead, their lead partner, is that t he phrasing? Is that exclusive? Are they gonna be working with other people as well? How does that work?
They're gonna be making announcements next month at the Paris Auto Show, which they've announced that, so we can't get in real detail into that. Yes, we are definitely looking to expand upon that as inventory becomes available into the marketplace. They are breaking things off geographically, and within that, we do have exclusivity into that, but that'll be for them to ultimately disclose. They currently have a full suite of electric vehicles all the way from the A segment up to the D segment. You know, their timing of when those are gonna come out and hit the U.K. is theirs at the moment, and hopefully that'll be announced relatively soon. Right now, the plan is to be able to open those two stores hopefully before the end of the year.
Wouldn't see any substantial activity until somewhat early to mid next year. Once again, they have a full stable of vehicles and a great pipeline of new vehicles coming. The ultimate, you know, goal is this will ramp up, you know, very, very quickly. You know, they have big aspirations and goals. You know, you gotta think they went from a completely unknown electric car company that no one's ever heard of to being number one in a matter of a couple quarters. I mean, they're backed by Warren Buffett, I think is one of their larger investors. They've got, you know, great financial background. One of the neat things about that, BYD, that's exciting about it is they've got cutting-edge technology.
They're actually building batteries and different components for a lot of other mainline OEMs, especially within Asia. Big names that you wouldn't necessarily think of that, but they' re what's called a sandglass producer, where they produce almost the entirety of the components for their vehicles. So they don't have the same restraints as others trying to get wiring harnesses out of Ukraine and, you know, steel out of the U.S or, you know, different things out of different parts of the world. So they don't have some of the constraints that others might have.
Gotcha. Very interesting. Thanks.
Okay. No, no further questions. All right.
Thank you very much for your time .
Thank you, a ppreciate it.