The reason is that, unlike all the other quoted car dealers, Inchcape makes more sales and more profits outside the UK than it does here, and by quite some way, as our graphic shows. In the first six months of the year, the company made £13.8m in the UK, up from £11.3m last time, but it had to work hard for this increase, with much being accounted for by more finance deals and second-hand car sales.
Gains elsewhere in the world - which oustripped even many of the most bullish City forecasts - have been generated in much more buoyant market conditions. In Singapore, where the government is allowing more people to buy cars, Inchcape enjoyed a 22 per cent increase in operating profits, and there was a 13 per cent rise in profits in Australia, too, where car sales are still at record levels. Only Greece showed a decline, perhaps because last year was boosted by pre-Olympics optimism.
Inchcape operates at the middle-to-top end of the car market, a distributor and retailer for Mercedes-Benz, BMW, Toyota/Lexus, Ferrari and Subaru. It is an efficiently-run company with more cash than it knows what to do with. In the first half of the year it gave back £58.2m to shareholders, £31m in share buy-backs, the rest in dividends.
And yet it still has plenty of money to invest in new territories. Its immediate growth prospects are concentrated in Eastern Europe, where car ownership is expanding at sometimes more than 40 per cent per year. Further out, it is eyeing Russia and, through an under-wraps joint venture partnership, China.
We tipped Inchcape shares at 1,672p a year back, and, at 2.051p yesterday, the are still valued at little more than 12 times this year's likely earnings. That means they are still a good little runner for the long-term.Reuse content