13 October 2019

• THURLOW NUNN BLAMES DMS FAILURE FOR LOSS
• CITROEN MOVES TO STOP FALLING RoS
• MERCEDES RETAIL LOSSES SWELL TO £29m
• JOHN CLARK PROFITS HALVE IN 2018
• LOOKERS HR BOSS MOVES ON
• VW COULD FLOAT LAMBORGHINI FOR $11bn
• TESLA PLANS ‘CENTRES’ TO OVERCOME US DEALER LAWS
• STOCKWATCH – Anders Hedin ups Pendragon stake
• LAUNCH DIARY – MG HS, BMW M8 Competition Gran Coupe
• COMING UP – FCA update on motor finance
• SMMT SEEKS REASSURANCES FROM PM OVER BREXIT
• BLOG: All change in the VW network

DMS failure pushes Thurlow Nunn into the red

Vauxhall retail group Thurlow Nunn has reported a £3.7 million loss before tax for 2018, despite turnover growing 34% to £105.8m.

The Kings Lynn-based company (which successfully re-signed all of its Vauxhall contracts during 2018) describes the loss as “disappointing”, but insists they do not accurately reflect the year’s trading conditions.

Thurlow Nunn blames a change in DMS for the majority of the loss. In May 2018, it switched from Pinewood to Incadea, then owned by Cox Automotive. “Despite assurances from the supplier, the system was not sufficiently developed at the date of installation, and despite reassurances, the software continued to have many flaws,” it reports in Companies House filings.

The impact, reported the company, was significant, “including the inability to locate and sell vehicle stock and manage the workshops efficiently”. In August 2018, Thurlow Nunn reverted back to Pinewood “but significant losses had already been incurred and continued to occur whilst the system was corrected”.

Pinewood publically announced the return of Thurlow Nunn in December 2018. In the same month, Cox Automotive sold incadea to software company Volaris Group, for an undisclosed sum.

Citroen moves to stop falling RoS

Citroen is expecting to lose up to 25% of the bottom performing retailers in its network over the next year.

Speaking to Auto Retail Agenda, Karl Howkins, Citroen managing director said the current network average return on sales was at 0.1% but pointed out the top quartile were making more than 2.0%.

“The second quartile is making around 0.6-0.7% and the third is just about breaking even, but the fourth quartile is completely off a cliff,” he said.

“We’ve told those dealers they’re not dead, but they’re on life support, and they’ve got to focus on the basics to get through it.” He has seen some dealers turn their fortunes around but adds: “There are other dealers that we’ve given up with, and they’re going to die.”

One year ago, Mr Howkins told Auto Retail Agenda the average RoS was at 0.6% and that “within two years I want the network to be at 1.5% return on sales”.

Retailer numbers have reduced from 158 to 145 over the past 18 months, and Mr Howkins sees this shrinking further to around 130, although there are also some key areas he wants to see filled. And in a new car market which he thinks will contract next year between 10% and 25%, he asserts that the way forward for many Citroen dealers, which recently split from DS, will be to go multi-franchise, with brands either within or outside the PSA group.

Mercedes-Benz Retail losses swell to £29m

Mercedes-Benz Retail Group reports losses before tax grew from £567,000 in 2017 to £29 million in 2018. Turnover was broadly stable at £1.07 billion.

New car volume fell 6% due to “very limited product availability”, with the corporate division suffering pressure on margins and volumes. Used car volumes grew 78% and aftersales beat targets by 4.5%. Extensive organisational restructuring also took place during 2018 and the group issued dividends of £25m in 2018, compared to £50m in 2017.

John Clark profits halve in 2018

Scottish multi-brand retailer John Clark grew turnover 11% from £741 million to £823m in 2018 (its 13^th consecutive year of growth), but profit before tax more than halved to £3.2m. The directors blamed exceptional challenges including WLTP-related stock shortages for its Volkswagen Group franchise partners. The results of its BMW franchises also deteriorated.

Lookers HR boss moves on

Andrew Stephenson, Lookers HR director, is leaving the retailer at the end of this week to join professional services firm Ernst & Young.

Mr Stephenson joined Lookers from DFS in April 2016. In the short term, his role will be split between talent director Tom Dwyer, HR operations director Steve Maule, and group IT director Andy Garrett.

Mr Stephenson was recently placed on the HR Magazine Most Influential 2019 list. Responsible for the HR and people agenda for Lookers’ 8,500 employees, judges cited the firm’s “meaningfully different new benefits package” including “dramatically increased” holiday provision and 12 months’ full maternity pay.

WORLD NEWS

VW could float Lamborghini for $11bn

Volkswagen AG is reportedly assessing the future of Lamborghini. Options include a sale or an IPO. The success of the Urus SUV has grown its valuation to $11 billion, with future products predicted to push margins beyond 30%. VW CEO Herbert Diess wants to focus on the core VW, Porsche and Audi brands, and more than double the VW Group’s market value to $220 million.

Tesla plans ‘Centres’ to overcome US dealer laws

Tesla is planning to open ‘Tesla Centres’ in major US metro areas, offering sales, service and delivery seven days a week. The company believes sales and deliveries are being slowed by prohibitive direct sales regulations in some states, and laws forbidding car retailers to open on Sundays. Selling ‘energy’ at the new sites will get around restrictions, believes the firm.

LAUNCH DIARY

MG HS, new C-segment SUV range-topper features 162hp turbo petrol engine and seven-year warranty, prices from £17,995

BMW M8 Competition Gran Coupe, four-door coupe offers up to 625hp, deliveries from early 2020 with prices from £120,935

Ford S-Max and Galaxy, seven-seat MPVs facelifted, gain seats approved by doctors, ordering now open from £30,490 and £33,210 respectively

COMING UP

Tuesday 7am, FCA update on motor finance

Tuesday, employment and wage growth economic indicators

Wednesday, UK inflation report

MONEY MATTERS

SMMT seeks reassurances from PM over Brexit

The SMMT is one of five key industries behind a letter to Brexit secretary Steve Barclay and cabinet office minister Michael Gove warning of a “serious risk to competitiveness” if the UK drops a commitment to maintain regulatory alignment with Europe. The group is seeking reassurances that PM Boris Johnson’s Brexit deal is still prioritising industry interests.

BLOG – All change in the VW network

Tags: Citroen, FCA, John Clark, Lamborghini, Lookers, Mercedes-Benz Retail Group, Pinewood, SMMT, Tesla, Thurlow Nunn, VW Group