14 August 2018

Marshall Motor Holdings has issued a warning that the impact of the new fuel consumption testing regime (WLTP) could last “over the remainder of the year and possibly into 2019”. Describing the change as “significant for automobile manufacturers”, the group said: “the extent of this impact is not yet known and it will vary by manufacturer and by vehicle model”.

The company added: “Industry forecasts suggest there is likely to be some impact on vehicle supply and longer lead times for some models and brands of new vehicles.

“In addition, because implementation of the new regime coincides with the key September plate-change, it is anticipated that the spread of vehicle registrations and sales throughout Q3 and Q4 2018 will deviate from historical norms.”

The warning came as Marshalls issued its interim financial results for the half year to end of June 2018. Underlying profit before tax (on a like-for-like basis) was up 1.2% at £16.4m with revenue (LfL) marginally down at £1.16bn. This comes on the back of a strong 2017 with full year results at record levels.

The group has benefited from the closure of five loss-making dealerships and one used car centre but lost revenue and profit from its leasing business (Marshall Leasing) which was sold in November last year. Chief executive, Daksh Gupta, told investors the disposal “has enabled us to focus exclusively on our retail businesses”.

Marshalls took a commercial decision last year to withdraw from certain low margin fleet business. The company said this action has improved the group’s fleet business profitability but has also impacted comparative sales volumes in the period. The decline of diesel sales, especially in premium brands, has also had an effect.

New car gross margin during the period was 7.0%, down 40bp on the same period last year (H1 2017: 7.4%) but used vehicle margin at 7.2% during the period was 37bp ahead of the comparable period last year. At 46.1%, aftersales margin remained strong, albeit 37bp below the comparable period last year.

Tags: Daksh Gupta, Financial results, half year 2018, Marshall Motor Holdings, Marshalls