Auto Retail Agenda: 8 November 2021
07 November 2021
- ALFA & DS SET OUT 2-YEAR AGENCY PLAN
- HEDIN PREPARING TAKEOVER BID FOR PENDRAGON?
- VERTU ANNOUNCES NEW SHARE BUYBACK
- ASTON MARTIN ROW WITH RETAILER TO THE SUPER RICH
- MINI WANTS US RETAILERS TO TAKE A MARGIN HIT
- US CAR LOANS NOW MORE THAN OZ GDP
- STOCKWATCH
- COMING UP: Auto Retail Live, GDP, Auto Trader interims
- UK CONSUMERS ‘RELUCTANT TO SPEND LOCKDOWN SAVINGS’
- RETAILER MOVES INTO CRYPTO
- BLOG: Agency agreements: What’s in it for the retailer?
Alfa & DS set out 2 year agency plan
Alfa Romeo and DS retailers will have a year to “align” with their manufacturer over agency agreements. In a rare visit to the UK, the global bosses for the two brands spoke to two thirds of the two networks about the introduction of agency agreements. The remaining third of the two Stellantis brand networks were not told about the meeting leading to speculation they would be not be continuing with the brands.
A spokesman for Stellantis denied that just because some current franchise holders were not told about the meeting did not mean they would lose the franchise.
Speaking to Auto Retail Agenda after the investor event, Jean-Philippe Imparato, CEO of Alfa Romeo, explained the switch to an agency model was necessary to cut distribution costs in order to counter the rising cost of production, particularly from electrification.
Mr Imparato said: “Dealers will have to change their business model. Do not imagine for one second that the current model will be stable in the coming years. This is because if you take a B-segment car; five years ago it cost £10,000, today that’s £15,000. If you put the connectivity, the safety and the EV in, it will cost £30,000. Do you think that customers will double their wages too? No.
“We are changing the way we sell cars and we are changing in a way to absorb that cost. So the cost and way of selling cars is changing. You cannot spend 30% of your value on distribution costs anymore, it’s not possible.
“I can’t say the cost we’ll take out, but it will be significant. If you consider the total production cost and everywhere is adding in the EV costs, safety, connectivity that’s €10,000 per car, more or less you have an idea of what we have to do.”
- Read the full story in the November issue of Auto Retail Bulletin out this week. If you’re not a subscriber, take a free trial here – and then enjoy a discounted rate
- Also see this week’s blog for more on the Alfa Romeo and DS move to an agency model
Hedin preparing takeover bid for Pendragon?
Hedin Group has been building its Pendragon stake in recent weeks, leading to speculation the Swedish firm may be preparing a takeover bid for the 32-year old retailer.
Under stock exchange rules, Hedin must make a takeover offer to other shareholders if its stake goes beyond 29.9%. Recently, Hedin’s shareholding passed 26%. Pendragon has a market cap of just under £260m.
Last month, Hedin announced a new group structure where all automotive companies held in the Hedin Group are now held by I.A Hedin Bil AB. Erik Selin also joined as a new 25% shareholder, delivering a significant cash injection through a new share issue of SEK 3.57bn (around £3bn).
“With a strong and competent shareholder on board, we can expand even faster, which enables further growth and international expansion,” said Anders Hedin in welcoming Mr Selin.
Former largest shareholder Teleios has already exited the retailer.
Last month, former DFS chief executive Ian Filby joined Pendragon as independent non-executive chairman, taking on the role from CEO Bill Berman. The move was praised by Anders Hedin in a statement, who said “we are supportive of the management and look forward to work constructively with the board”.
Former Pendragon CEO Trevor Finn has recently claimed he is a non-executive director of Hedin Group.When asked about the developments, Pendragon declined to comment.
Auto Retail Agenda has also approached Anders Hedin for comment; by the time of our requested deadline, we had yet to receive comment.
Vertu announces new share buyback
Vertu has announced a new £3m share buyback programme will begin once the current one ends. The retailer has already bought back 4.7m shares under the current £3m program, which began in August: “There are just over £240k of shares left to buy back and cancel. The new buyback programme will run to 28 February 2022 and Ordinary Shares will be bought back “at appropriate times”.
In a statement to the London Stock Exchange, Vertu also said it will “continue to consider acquisitions and investment opportunities as part of the pursuit of the ongoing growth of the business”.
Aston Martin row with retailer to the super rich
Aston Martin has claimed Swiss retailer Nebula Project has failed to pay customer deposits worth millions for its Valkyrie hypercar, resulting in a £15m hit to its finances.
Aston Martin is now bringing criminal and civil proceedings against the retailer’s owners who said in a statement they were “surprised and disappointed about the aggressive tone” taken by Aston Martin.
WORLD NEWS
Mini wants US retailers to take a margin hit
Mini has reportedly outraged US retailers by proposing a 3% cut in their 6% trade margin, in order to make future electric models imported from China profitable. Chinese auto imports currently carry a 27.5% tariff in North America.
- Read about Mini’s brand development plans in this month’s Auto Retail Bulletin
US car loans now more than Oz GDP
Total US auto loan debt has swelled in the past decade to over $1.4trn – more than the GDP of Australia. The burden of car-related debt in the US is “growing” claims a leading consumer organisation and many Americans are now “overpaying for their car loans”.
STOCKWATCH
Closing prices on 5 November 2021 and weekly change
Auto Trader Group 610.6p (+5.0p / +0.8%)
Caffyns 500.0p (n/c)
Cambria 82.5p (n/c)
Halfords 281.2p (+14.8p / +5.4%)
Inchcape 867.0p (+41.0p / +4.8%)
Lookers 65.0p (+1.0p / +1.5%)
Marshall Motor Holdings 287.0p (-5.0p / -1.7%)
Motorpoint 335.0p (-23.0p / -6.6%)
Pendragon 18.5p (+0.15p / +0.8%)
Vertu 62.2p (+0.8p / +1.2%)
COMING UP
Tuesday, SMMT used car figures
Tuesday, Auto Retail Live Q4 briefing: sign up here
Tuesday, BRC shop price index
Thursday, Auto Trader interims
Thursday, UK GDP
MONEY MATTERS
UK consumers ‘reluctant to spend lockdown savings’
Weaker consumer spending is partly behind the Bank of England’s surprise decision to hold interest rates at 0.1%. The OBR estimates ‘excess savings’ following lockdown amount to £180bn, or almost £6,500 per household. However, fears over the economy means Brits are being cautious.
Retailer moves into crypto
Clive Sutton has become the 500th partnered auto retailer to cryptocurrency advertising aggregator AutoCoinCars. The site allows retailers to advertise vehicles to crypto users, and acts as the payment processor between buyer and seller. It accepts Bitcoin, Litecoin, Ethereum and many other cryptocurrencies. “What next?” said Clive Sutton. “Horses and farm animals? Got to keep innovating.”
Tags:
Agency Agreements, Alfa Romeo, Aston Martin, Auto Trader, Clive Sutton, Crypto, DS, Hedin, Mini, Pendragon, Vertu 
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