20 January 2019

• TOP VOLVO RETAILERS AVERAGE PROFIT OF £400,000
• PEUGEOT RETAILERS SEE PROFIT GROWTH
• IMDA AIMING TO RECRUIT FRANCHISED DEALERS
• MOTOR DEPOT TO OPEN NEW SITE NEXT MONTH
• FAMILY RUN SUBARU RETAILER NAMED DEALER OF THE YEAR
• WORLD NEWS – Lotus to be built in China, second round of Tesla job cuts
• STOCKWATCH – Inchcape continues to climb
• COMING UP – VRA focus on EV, Auto Retail Q1 briefing
• LAUNCH DIARY – McLaren, Kia, BMW
• MONEY MATTERS – interest rate unlikely says KPMG
• OUR BLOG – will diesel policy backfire?

Top Volvo retailers average profit of £400,000

The top quartile of Volvo’s retailers made, on average, more than £400,000 profit in 2018, with UK managing director Jon Wakefield saying there is the opportunity for more to come.

The overall average is in good shape, too, said Wakefield: “We’ve still got one or two to come in, but we are forecasting it will be well above the £200,000 per site. That is polarised – the top 25% made in excess of £400,000 last year.”

He said that these figures were not only sustainable, but the brand’s current growth (it passed 50,000 sales in the UK for the first time in 28 years in 2018 and is aiming for 60,000 in the coming years) means there is more opportunity.

Peugeot retailers see profit growth

Franchised Peugeot retailers saw record return on sales in 2018 as the network continues to build profits for its dealerships.

Last year saw an approximate average of 1.0% return on sales and cash profits of more than £100,000 with the top 75% of dealerships generating a 1.5% ROS and an average profit of more than £200,000, according to Peugeot.

In 2015 those figures stood at 0.6% and less than £65,000 respectively but Peugeot and its retailers are working to an average minimum ROS of 1.5% across the board.

IMDA aiming to recruit franchised retailers

Owner-managed franchised retailers are being welcomed by the Independent Motor Dealers Association as it aims to double its membership this year.

Stoke-on-Trent based used car retailer and new IMDA chairman, Umesh Samani, said: “Since we launched in November 2017 we have attracted retailers of all sizes and that includes some of the smaller, owner-managed franchised dealers. We have around 330 members with more pending and it would be nice to get to 700 by the end of the year.”

Motor Depot to open new site next month

Fast-growing used car supermarket Motor Depot is on the verge of opening another used car store with a site at Preston.

The 200-car facility is scheduled to open its doors within the next few weeks, bringing to 11 the number of centres owned by the group. Last year it added sites in Barnsley, Stoke-on-Trent and Sheffield and in late 2017 it opened one in Newcastle.

Family run Subaru retailer named Dealer of the Year

Family owned Subaru retailer K T Green has been named the marque’s Dealer of the Year 2018 as the Leeds-based dealership was recognised for its performance in sales, servicing, parts and customer satisfaction.

Geoff Cox Subaru, in Ripley, was named Best New Dealer 2018, Eaglesham Garage the Most Improved Dealer and S&S Services, Ayr, the Highest Volume Dealer.

WORLD NEWS

Lotus to build in China

Lotus owner Geely has planning permission for a £1 billion plant in China capable of building 150,000 cars a year and where a new generation of the sportscars and possibly a new high end SUV could be made. Lotus sold 1,630 cars globally last year and just 247 in the UK.

https://reut.rs/2sxhoAY

Second round of Tesla job cuts

Tesla announced its second round of job cut in seven months as it fights to rein in costs just days after lowering the price for its cars. It plans to reduce the full-time headcount by 7% and last June it revealed a 9% payroll cut.

https://bloom.bg/2FASCZh

STOCKWATCH

Closing prices at 18 January and weekly movement

BCA 206.0p (-4.0p)

Cambria 57.5p (+1.5p)

Caffyns 375.0p (n/c)

Inchcape 596.0p (+12.0p)

Lookers 102.6p (+2.6p)

Marshall Motor Holdings 155.0p (n/c)

Motorpoint 204.3p (+0.3p)

Pendragon 22.2p (-0.1p)

Vertu 39.8p (+3.9p)

COMING UP

January 23: VRA focus on challenges of EVs at Fleet Auction Group, Coalville.

January 29: Economic review (Office of National Statistics)

February 7: Auto Retail Live Q1 Briefing. Register here.

LAUNCH DIARY

January 16. McLaren 600LT Spider. From £201,500.

January 21: Kia ProCeed estate. From £23,835.

April 13. BMW 7-series. From £69,430.

MONEY MATTERS

Interest rate rise unlikely – KPMG

Interest rates are likely to remain at the current 0.5% for at least the next six months, according to KPMG Chief Economist, Yael Selfin, as the Bank of England looks to support a slowing economy.

https://bit.ly/2Fz1BtY

OUR BLOG

Will diesel policy backfire?

Those who appreciate irony may enjoy the latest example of the Law of Unintended Actions which may soon be played out in the motor trade.

Here we have a government which has committed itself to banning the sale of new diesel vehicles so our cities can become green and pleasant places where we can breathe in pure air. Yeah, right. Anyway, we all know that diesels are on death row with sentence to be carried out by 2040 and no hope of a retrial.

Or is there? Will the used car market drive a resurgence, however temporary, for diesel…?

The average used car buyer, of which I am one, doesn’t really give a stuff about company car tax or VED rates when it comes to choosing their next vehicle. We want a car with affordable running costs and when it comes to SUVs, that option can only be diesel. Petrol? Way too thirsty. PHEVs? Way too expensive.

Which is interesting given the utter dominance of SUVs in the second hand market and that translates into a healthy demand for diesels at precisely the same time sales of new ones are taking a dive. It is a little too early yet for the trickle down effect to be apparent but at some time soon the upward curve showing demand for second hand diesel SUVs will meet the downward curve showing supply and simple economics pretty much dictates a rise in values.

Enough to add a premium on new diesel SUVs? Could be, according to respected trade analyst Philip Nothard (I first came across him more than 20 years ago when he ran a D.C. Cook Renault dealership in north Staffs) who this week said the conditions are there to give new oil-burners some very attractive residual values.

And if the RVs are good enough to outweigh the higher tax on them, might that yet lead to higher demand for them on the new car market?

And wouldn’t that be ironic as politicians fell foul of the Law of Unintended Actions.

John Swift

Editor

Auto Retail Agenda

Tags: IMDA, Motor Depot, Peugeot, Santander, Subaru, Toyota, Volvo