‘Pothole epidemic’ and cold winter hits AA profits

Bad road conditions and extreme weather in the UK have led to a drop in profits at the AA.

The motorists’ organisation saw its pre-tax profit decline 65% to £28m for the first six months of 2018.

AA boss Simon Breakwell said the severe winter caused a “pothole epidemic”, which contributed to breakdown callouts hitting a 15-year high.

AA had previously warned that drivers and insurers were losing £1m a month repairing damage caused by potholes.

The firm’s shares fell sharply in February, after it warned that its full-year profit would fall short of analysts’ expectations.

• Pothole ‘epidemic’ costs £1m a month, says AA
• AA shares plunge 28% on profit warning

An unusually high number of breakdowns this year has driven up costs for AA.

The number of breakdowns between January and July increased by 8% to 1.9m and to meet demand, the company had to call on third-party patrols.

However AA benefited from an increase in roadside sales of products and services to help drivers deal with the cold weather.

Overall revenue at AA grew a modest 2%, to £480m.

The company, which says it has a “traditional 50-year plus core demographic” has struggled to attract younger customers, who either do not own cars or are unwilling to pay for roadside assistance.

In an attempt to remedy this, the AA has invested in an app and its Car Genie digital device, which is installed in members’ cars and can alert the driver to potential motor problems before a breakdown occurs.

The hope is that such digital products will appeal to younger customers.