• LSH AUTO LOSSES HIT £18M AHEAD OF PANDEMIC
• HR OWEN ‘JUST ABOVE BREAKEVEN’ IN 2020
• HYUNDAI LAUNCHES BREXIT PRICE PROTECTION
• 2030 EV RULING TRIGGERS ENQUIRIES LEAP
• 1 IN 5 US CADILLAC RETAILERS TO GO
• NEW AUSTRALIA RETAILER RULES ‘DOOMED’
• STOCKWATCH – Marshall up after trading update saw predicted 2020 profit before tax raised from £15m to £19m
• COMING UP – UK unemployment figures
• BDO REPLACES DELOITTE AT LOOKERS
• AUTO TRADER IN FREE ADS DRIVE

LSH Auto losses hit £18m ahead of pandemic

LSH Auto, the UK subsidiary of the world’s largest Mercedes retailer, has reported losses of £18.2 million in its results for 2019 on a turnover of £454m.

The Hong Kong headquartered firm entered the UK mid-way through 2016 when it bought the Birmingham and Manchester market area sites from manufacturer-owned Mercedes-Benz retail. It has lost money in every year since. In the last six months of 2016, it lost £2.8m. In 2017, this worsened to £11.8m; in 2018, there was an improvement, but it still lost £5.0m.

Turnover in 2019 was only marginally ahead of that in 2018 which stood at £446m. The 2019 loss before tax of £18.2m includes a £4.3m impairment to goodwill. Despite this, the group claimed it “continued to perform broadly in line with the wider network” in its annual results.

New and used car sales, of 5,591 and 8,520 cars respectively, were flat compared with 2018. However, the group stated used car profitability in 2019 had been hit by “ongoing market challenges”.

LSH Auto UK also reported that net liabilities had jumped to £29.9m at the end of 2019 against £11.0m a year earlier. It added that it had obtained commitments from its parent firm “to provide the necessary financial support to ensure the company is able to meet its financial liabilities as they fall due for a period of at least 12 months”.

The group raised £50m through a share issue in July this year.

Commenting on the impact of Covid-19 this year, writing in the annual report, LSH UK boss Martyn Webb, said: “It is expected there will be a significant reduction in performance for at least the next 12 months.”

It added “there could be a material adverse change in the value of some assets on the balance sheet, for example, goodwill of £45.2m and right-of-use assets of £112.5m as a result of future impairment”.

Despite several requests for further comment by Auto Retail Agenda, LSH did not respond.

 

 

HR Owen ‘just above breakeven’ in 2020

HR Owen has reported a decline in profit before tax from £8.2m to £1.9m in the year ended 30 June 2020. This, it said, is largely attributable to the sale of an investment property which generated £1.7m and £2.1m in CJRS grants.

The world’s largest retailer of Ferrari and Lamborghini (and the UK’s largest Bentley and Rolls-Royce retailer) saw revenue decline from £532m to £389m, although 2019 figures were over a 14-month period.

“The core business of new and pre-owned vehicles sales maintained just above break even given unprecedented trading challenges during the year,” said the directors. Retailers were closed for more than two months from the 23 March 2020 when HR Owen utilised the CJRS, receiving £2.1m in grants.

Headcount fell from 523 to 447 during the year; in June, the retailer confirmed a “limited number” of redundancies due to the Covid-19 pandemic.

 

Hyundai launches Brexit price protection

Hyundai will price-protect every order taken before the end of 2020 even in the event of a no-deal Brexit.

“Our retailers have been enormously innovative and resilient during 2020, and we are doing what we can to support them,” said Hyundai MD Ashley Andrew. “The remainder of 2020 is a fruitful opportunity for our retailers and we don’t want the uncertainty of a no-deal Brexit to stand in the way of sales.”

The firm warns that in the event of a no-deal Brexit, new levels of duty on goods imported into the UK will likely lead to an increase in prices. It added there are plans for further initiatives to safeguard the business against all iterations of Brexit, including no-deal.

 

2030 EV ruling triggers leap in retailer enquiries

Retailers saw a 40% jump in digital enquires in the week following the Government’s announcement that it would ban the sale of new petrol and diesel cars from 2030.

Data exclusively revealed to Auto Retail Agenda from lead handling expert Rapid RTC also showed that digital car sales enquiries in the UK were running 23% up for the first 10 days of December compared with the same month last year. Following lockdown 2.0, December was also running 5% up on November.

 

 

 

WORLD NEWS

1 in 5 US Cadillac retailers to go

Cadillac will trim its US retailer network by almost 20% (around 150 dealers) by the end of 2021, aided by generous buyout payments. However, this will still leave it with twice as many stores as BMW and Mercedes-Benz. The average Cadillac retailer sold 176 new vehicles in 2019; its German rivals each sold more than 900.

Analysts have warned that Cadillac is so over-dealered, far more than 20% of stores need to close for the remaining retailers to become more competitive. The average buyout on offer is $500k but some retailers are being paid much more.

https://bit.ly/382A0x5

 

New Australia retailer rules ‘doomed’

Australian retailers accuse the federal government of siding with OEMs rather retailers with a set of six best practice principles to manage the relationship between them.

“Car dealers in Australia desperately need a strong set of mandatory protection… against the abuses from car manufacturers,” said AADA chief executive James Voortman. “What we have today is a do-nothing policy.”

https://yhoo.it/3a3HYbS

 

 

 

STOCKWATCH

Closing prices on 11 December 2020 and weekly change

Marshall up after trading update saw predicted 2020 profit before tax raised from £15m to £19m

Auto Trader Group 557.2p (+1.8p / +0.3%)

Cambria 59.5p (n/c)

Caffyns 385.0p (n/c)

Halfords 273.0p (-11.0p / -4.1%)

Inchcape 632.0p (+13.0p / +2.0%)

Lookers Shares suspended at 21.0p

Marshall Motor Holdings 136.0p (+11.5p / +8.1%)

Motorpoint 303.5p (-13.5p / -4.5%)

Pendragon 13.56p (-1.76p / -13.8%)

Vertu 27.95p (+0.7p / +2.4%)

 

 

COMING UP

Tuesday, UK unemployment figures

Wednesday, CPI and RPI

Thursday, Bank of England interest rate decision

Friday, GFK Consumer Confidence

 

MONEY MATTERS

BDO replaces Deloitte at Lookers

Lookers has replaced auditors Deloitte after 14 years with BDO. Deloitte announced in June it would be resigning from its position, after a “potentially fraudulent” £19m black hole was found in its 2019 results. These were finally issued in late November. Lookers’ 2018 results were also restated following an investigation from Grant Thornton. Deloitte was paid £680k in audit fees in 2018, and £20k for non-audit services, compared to £357k in 2017.

https://bit.ly/3me2U2q

 

Auto Trader in free ads drive

Auto Trader is urging retailers to take up its free advertising offer during December to capitalise on a surge in interest following lockdown. The marketplace reported a 19% increase in leads to retailers in the week following the ending of lockdown restrictions in England. An average of 1.1 million people visited daily between 2-7 December, year-on-year growth of 20%. More than half of January’s buyers research their next car in December, added data and insights director Richard Walker.