Auto Retail Agenda: 25 January 2021
24 January 2021
- COUNCIL LOCKDOWN LAWS EXTENDED TO JULY
- MG PLANS 130-STRONG NETWORK IN 2021
- DISCRETIONARY COMMISSION ENDS THIS WEEK
- STONEACRE LOGISTICS HUB
- CARLOTZ GOES PUBLIC
- STELLANTIS’ TAVARES HAS 38 DIRECT REPORTS
- STOCKWATCH – Cambria up 8.6%
- COMING UP – UK unemployment
- DOUBLE-DIP RECESSION RISK
- RETAILERS COULD CLAIM ON COVID LOSSES
Council lockdown laws extended to July
Lockdown laws allowing local authorities in England to close shops and public spaces have been extended to July 17, 2021. The regulation had been due to expire, after being introduced on July 18, 2020.
A Department of Health source told The Telegraph that it was necessary to renew the regulations as they automatically expire after six months. “However, these measures are still subject to the statuary review point.”
Chief executive of UK Hospitality Kate Nicholls said it was surprising they have been extended for so long “when it remains uncertain what restrictions will be in place, and given that the large proportion of the population will have been vaccinated by then”.
Last week, PM Boris Johnson said it was “too early to say when we’ll be able to lift some of the restrictions”. On Sunday, health secretary Matt Hancock said the was still a “long, long way” until lockdown restrictions can be lifted.
MG plans 130-strong network in 2021
MG has announced plans to expand its dealer network to 130 by the end of 2021, after reaching its target of 120.
The manufacturer – which increased sales by 40.84% in 2020 despite the market’s 29.4% fall – said it would add “at least a further 10” retailers this year, after 28 signed up during the past 12 months.
They include Glyn Hopkin in Milton Keynes, St Albans and Cambridge, Perrys in Huddersfield, JCT600 in Bradford, Read Motor Group of Grimsby, Drive in Bristol, Hawkins of Hayle, Tunbridge Wells MG and Masters in Croydon.
In February 2019, MG told Auto Retail Network that it planned to hit 120 dealers by the end of 2020. It is now said to be considering Mitsubishi dealers as potential open points ahead of the latter brand’s plan to stop selling cars in Europe, while some have allegedly approached MG directly.
“Our dealer network is expanding on the back of a record year in which we saw our market share break the crucial 1% barrier… finishing the year with volumes on a par with some much more established rivals,” said commercial director, Guy Pigounakis.
Discretionary commission ends this week
The FCA ban on discretionary commission begins this week. Although the rules appear to still allow a degree of limited discretion around lender selection, AutoProtect compliance expert Tara Williams warned any flexibility is “fraught with risk… we need to accept discretionary commission is ending.
“The only discretion that might reasonably exist is where the customer’s APR for the product is the same, but the commission or financial consideration for the dealer is better. In this situation, there would be no customer detriment.”
Ms Williams stressed that from now on, lender selection must be focused “on fair customer outcomes and not commission earnings”.
Stoneacre logistics hub
Stoneacre has signed a 15-year lease for 65,100 sq. ft of space at the 27-acre St Mowden Park Doncaster industrial development. The retailer will operate a parts and logistics hub from the refurbished site as part of a planned one-stop aftersales philosophy for its retailers in Yorkshire and North Lincolnshire.
WORLD NEWS
CarLotz goes public
Used vehicle consignment company CarLotz began trading on Nasdaq last week. CEO Michael Bor hopes the move will raise the company’s profile and visibility. CarLotz retails vehicles but its biggest and fastest growing division is sales brokered for corporate partners such as fleet and leasing companies, banks, retailers and others. The Richmond, Virginia-based firm currently has eight hubs and plans to expand with three to four more hubs per quarter going forward.
Stellantis’ Tavares has 38 direct reports
38 top executives will report directly to new automotive group Stellantis CEO Carlos Tavares. The former Groupe PSA CEO has direct control over all functions, regions and brands. He also sits on or chairs nine operating committees (which are in lieu of a traditional executive committee). No other automotive leader has more direct reports.
STOCKWATCH
Closing prices on 22 January 2021 and weekly change
Cambria up 8.6%
Auto Trader Group 574.2p (+8.2p / +1.4%)
Cambria 60.0p (+5.0p / +8.6%)
Caffyns 385.0p (n/c)
Halfords 278.5p (-20.5p / -7.0%)
Inchcape 661.5p (+9.5p / +1.4%)
Lookers Shares suspended at 21.0p
Marshall Motor Holdings 130.0p (+0.5p / +0.3%)
Motorpoint 298.0p (n/c)
Pendragon 13.1p (n/c)
Vertu 31.6p (-1.6p / -4.9%)
COMING UP
Tuesday, UK unemployment rate
Thursday, FCA ban on discretionary commission goes live
Tuesday 9 February, Auto Retail Live with Inchcape UK CEO James Brearley, JLR UK MD Rawdon Glover and Auto Trader commercial director Ian Plummer. Sign up here
MONEY MATTERS
Double-dip recession risk
An influential survey has suggested the UK economy is contracting at its fastest pace since May 2020. The IHS Markit/CIPS UK index fell to 40.6 for January: anything below 50 represents contraction rather than growth. Economists had forecast a reading of 45.5.
GDP figures for the fourth quarter will be published on 12 February. Disappointing retail figures for December mean economists are increasingly pessimistic about the health of the economy – and contraction in lockdown 3 means fears of a double-dip recession are growing.
The Times also reports that government borrowing rose to the highest level on record in December, with the deficit growing by another £34 billion during the month.
Retailers could claim on Covid losses
Retailers should review their business interruption insurance cover following the Supreme Court judgement on a test case bought by the FCA regarding losses arising out of the Covid-19 pandemic. Cover “should be interpreted much more widely than insurers believed,” said BDO – including businesses that were able to keep some parts trading and didn’t face full closure. Retailers should seek advice to determine if they have suffered a claimable loss – BDO is one organisation with a Forensics Services team that’s able to review retailer circumstances.
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