29 July 2018

• MITSUBISHI RETAILERS FACE CI UPGRADE COSTS
• FORD TO PUT FOCUS ON MONEY MAKING SUVs AND VANS
• CAR TRADE TO BUCK GENERAL RETAIL TREND, SAYS CBI
• MPs VISITS HIGHLIGHT AUCTION CONCERNS
• SECURITY THREAT WITH CONNECTED USED CARS, TECH EXPERT WARNS
• SHOULD PLC EXECS TELL SHAREHOLDERS OF HEALTH ISSUES?
• AUTO RETAIL LIVE Q3 WEBINAR
• WORLD NEWS – PSA gets Opel/Vauxhall back into profit; WLTP distorts pricing, says Mercedes
• STOCKWATCH – big fall for Inchcape
• LAUNCH DIARY – SsangYong Turismo, Honda Civic diesel/auto, Kia Ceed, Mazda CX-5
• MONEY MATTERS – Pay deals highest since 2008, mortgage approvals up
• COMING UP – CBI conference on cyber-security
• OUR BLOG – Are connected cars a time bomb for retailers?

 Mitsubishi retailers face CI upgrade costs

Mitsubishi is consulting retailers about a new CI refurbishment plan although how much it could cost or when the work needs doing by have yet to be decided.

The look is based on Mitsubishi’s latest brand message `Drive your Ambition’, and features black, white and grey colour schemes with red accent lines. The external architecture has a `dynamic slope’ and the showroom is designed to provide a better customer experience.

Guillaume Cartier, Senior Vice President of Global Marketing & Sales Division at Mitsubishi Motors said: “We are implementing the new dealer identity to ensure that customers can experience a consistent Mitsubishi-ness including look and feel and service quality wherever they are in the world.”

A spokesman for Mitsubishi Motors in the UK which has 112 main dealers, told Agenda: “This has come from Japan and we have no further detail on it in terms of either costs or time-frame at the moment. Our franchising team will be gauging UK dealer network response but the more meaningful discussion can only really be had when we have those details of costs and timescales.”

In the Auto Retail Network Franchising Report 2018, Mitsubishi climbed into the top 15 for return-on-sales, at 1.1%. It sits exactly half way in the ARN Index which reflects the worth of each brand from a franchised retailer’s perspective, at 19th out of 38.

Ford to put focus on money making SUVs and vans

Ford wants profitable SUVs and LCVs to play a bigger part in retailers’ business to get the UK and European operations back into profit.  It expects a full year loss in Europe this time after making around £180 million in 2017.

The Transit, Kuga SUV and Ranger pickup and imports such as the Mustang make money but account for less than half of its sales volume and revenue.

Jim Farley, Ford’s head of global markets, said vans have 13% profit margins in Europe, adding: “Clearly we have to redesign Europe, centering the operations on our profitable LCV (and SUV) business.”

The UK was Europe’s main profit centre but the post-Brexit fall in the pound was blamed for most of the losses. He said: “In 2016 we made £901 million in Europe and most of it was in the UK. Brexit and the continued weak sterling has been a fundamental headwind for our European business.”

Car trade to buck the general retail trend, says CBI

Motor retailers could bounce back from a worse-than-forecast first half with the CBI business organisation saying it expects sales to rise strongly next month and continue throughout the rest of the year.

Fewer car retailers than expected have had a year-on-year sales rise but volumes are expected to increase next month. 45% reported sales up on a year ago, 24% said they were down, giving a balance of +21%. This was below the CBI’s prediction of +33% but from its latest Distributive Trades Survey it says dealers expect volumes to increase sharply next month.

In contrast, other sectors think they may have peaked. The CBI says although most have done well in the year to July with sales staying above average for the time of year, orders placed with suppliers are dropping, dampening hopes   of continued growth.

MPs visits highlight auction concerns

Mileage fraud, dieselgate and debit card charges which cost the auction sector getting on for £2 million a year were issues highlighted when MPs visited two sales sites.

North Shropshire MP, Owen Paterson, was at Aston Barclay Car Auctions in Prees Heath, Shropshire, and Tim Loughton, MP for East Worthing and Shoreham, visited Shoreham Vehicle Auctions in West Sussex as part of a fact-finding trip.

Louise Wallis, head of National Association of Motor Auctions, said the government’s recently published Road to Zero strategy was also on the agenda for its promise of working with NAMA to publish electric vehicle guidance for sellers, dealers and auction houses.

She said: “The visits provided an opportunity to find out more about the importance of motor actions to the UK economy.”

Security threat with connected used cars, tech expert warns

Dealers should check that the `connected’ functionality of any used car they sell has been disabled in case the previous owner is still able to access data such as its GPS details, has the ability to unlock the doors, sound the horn or even summon a 999 service.

The warning comes from tech website, The Register, which says a buyer of a Land Rover Discovery was upset to find the previous owner could still access the car’s InControl system and on online account accessed through a JLR app.

It says the manufacturer claimed its tech system is secure and that it is the dealer’s responsibility to make sure the vehicle is unbound before being sold.

https://bit.ly/2LZd1XB

Should plc executives tell shareholders of health issues?

The shock death of Sergio Marchionne has raised questions about whether key executives at plc companies should tell shareholders about health issues which could affect their performance.

The Zurich hospital which treated the FCA and Ferrari CEO revealed he had been seriously ill for more than a year but neither company said it was aware of that.

https://bit.ly/2LGIOiN

Auto Retail Live Q3 webinar

On Tuesday we invite you to join our quarterly webinar with guest speakers from Lookers, Auto Trader and Suzuki which deals with WLTP, the outlook for the second half of the year and offers tips to help you meet Q3 targets.

Our guests are Andy Bruce, CEO of Lookers, Dale Wyatt, Director of Automobile at Suzuki and Naomi Hahn, Audience and Brand Director at Auto Trader.

The session is broadcast to your tablet or PC. To register or if you have any questions just call the office on 01572 724687.

WORLD NEWS

PSA makes Opel-Vauxhall profitable

Cost cutting has helped PSA Group push Opel-Vauxhall into the black less than a year since buying it from GM.

Opel was losing GM up to £900 million a year but PSA has already cut 3,700 Opel manufacturing jobs and recently said it is looking to sell the R&D activities that employ another 4,000.

Its first-half net income to June 30 rose 18% to £1.32 billion, as revenue jumped 40% to £34.4 billion. PSA now has £7.3bn cash reserves, up one-third since December.

https://reut.rs/2v35VKb

WLTP and battery supply hit Mercedes and Smart

Mercedes-Benz says WLTP is affecting production and pricing with Dieter Zetsche, Daimler chief executive, saying it now only builds approved cars even if they have not been ordered and that getting cars through the test is distorting normal supply and demand.

“We build those cars that can pass certification but this may not be the vehicle that the customer had ordered. This has an impact on pricing.”

On a separate issue Zetsche said a shortage of battery cells is harming sales of electric Smart cars and hybrid Mercedes.

https://reut.rs/2Lup42Q

STOCKWATCH

Closing prices at Friday July 27 and weekly movement.

BCA 235.5p (-6.5p)

Cambria 58.5p (-0.5p)

Caffyns 425.0p (no change)

Inchcape 727.0p (-72.0p)

Lookers 105.4p (-0.6p)

Marshall Motor Holdings 159.5p (-1.5p)

Motorpoint 240.0p (-2.0p)

Pendragon 24.0p (-0.4p)

Vertu 50.0p (-1.0p)

LAUNCH DIARY

August

SsangYong Turismo. Update for largest MPV on sale with 4×4 option. From £20,495.

Honda Civic. 1.6 diesel and automatic gearbox for the first time. Prices tbc.

New generation Kia Ceed. From £18,295.

Updated Mazda CX-5 with petrol/automatic for the first time. From £24,795.

MONEY MATTERS

Pay deals the highest since 2008 recession

Businesses are giving the highest annual pay deals since the financial crash ten years ago, averaging 2.5 % in June.

Wage data analysts, XpertHR, said offers have averaged 2.5% for the past six months, a rise of 0.5% from the average since 2008.

This trend is expected to continue with public sector workers being given rises as the government loosens its austerity policy.

Mortgage approvals highest since September

House buyers and owners rushed to lock themselves into lower mortgage rates ahead of an expected rise as lenders approved more mortgages and remortgages last month than at any time since September 2017.

UK Finance, representing major lenders, said banks approved 40,541 mortgages for house purchases in June. Total net mortgage lending was up £2.2 billion pounds on the month.

Eric Leenders, UK Finance’s managing director for personal finance, said: “Growth in mortgage lending continues to be driven by remortgaging, as borrowers take advantage of attractive deals ahead of an anticipated Bank rate rise.”

COMING UP

September 12: CBI-organised conference on cyber-security. Expert speakers, advice on frontline security by staff online use and investing in security on a budget. (London)

Our blog: Are connected cars a time bomb for used car sector?

Other than knowing where the on/off button is on my PC my IT skills are those of someone from the Stone Age so perhaps I am not the best person to comment but I have long been inherently distrustful of the way that today’s cars are becoming ever more interconnected.

At a time when GDPR seems like a big issue, a report from a self-described IT geek says there are valid concerns that sellers of used cars could potentially be causing themselves a headache if they do not make absolutely sure that the car has all the online access available to the previous owner switched off, disabled, call it what you will, before it changes hands.

The story stems from the buyer of a second hand Land Rover Discovery who found that the previous owner could still access a worrying amount of data and functionality on line. Data such as tracking journeys, functionality such as calling an emergency service.

I say these are valid concerns but I also say that they are so far largely unaddressed concerns too.

It’s naive to think this is something that will not come back to bite the car trade. Look at the recent scandal surrounding Cambridge Analytica. 50 million Facebook profiles were `harvested’ for political means and the scandal concerned the unauthorised access and distribution of what was assumed to be private data.

For motor retailers the question must be this. When there is a public exposure on this, that someone else can track your journeys, – surely only a matter of time – who carries the can? Is it the manufacturer who built the car and its tech systems or the dealer who sold it?

From the report I read, the manufacturer, JLR, seemed quite adamant that it is the seller, not the maker, who has the duty of care to their customer.

It’s early days in this matter but one the trade needs to be at the very least aware of and perhaps asking questions now while there is still time.

GDPR? This has the potential to make that look like a vicarage tea party.

Tags: Aston Barclay Auctions, Ford, Inchcape, LCV, Mitsubishi, PSA, Shoreham Vehicle Auctions, WLTP