Auto Retail Agenda: 10 January 2022
09 January 2022
- LOOKERS TO FOCUS ON OLDER CAR SERVICING
- ANDY GOSS: ‘DON’T FIGHT CHANGE’
- RETAILERS A RARE HIGHLIGHT FOR ASTON MARTIN
- GOOGLE REVEALS CARVANA SECRETS
- HONDA AUSTRALIA CELEBRATES AGENCY MODEL
- COVID HITS INDIA CAR SALES
- STOCKWATCH – Lookers rises more than 10% on positive trading update
- COMING UP: UK retail sales and GDP
- INFLATION FORCING PRICES TO RISE
- ENERGY BILLS ‘MAY SURGE 50%’
Lookers to focus on older car servicing
Lookers is to balance the reduced servicing needs of electric cars with a greater focus on maintaining older cars. Chief executive Mark Raban said he intends to take on so-called ‘under-the-arches’ motor workshops, as well as putting greater focus on accident repairs.
Lookers is also assessing its corporate leasing and fleet capabilities, plus its “changing relationships with our brand partners”, as part of its aspiration to become ‘the UK’s leading integrated automotive retail and services group’.
The plans are part of a strategic review which began in October 2021 and Lookers will provide an update when it publishes full-year 2021 results on 13 April 2022.
In a year-end trading update, Lookers said profits were heading towards a record high of £86m, eight times what it made in 2020. The company will pay back the £6m it received in furlough in 2021, which means it may begin paying dividends: analysts are expecting at least 2p a share.
* Read the full interview with Mark Raban in January’s Auto Retail Bulletin out this week.
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Andy Goss: ‘Don’t fight change’
Auto retail disruptors have accelerated the digitisation of used cars but major retailers have now caught up, according to Vertu chairman Andy Goss – and the significant spend of disruptors on establishing their brand may have masked a customer proposition that “is not earth-shattering”. Wherever they shop, customers are now in control of the acquisition process and retailers should not fight it but embrace it, he said in a LinkedIn article.
Add in the move to agency and the downsizing of franchised networks in the UK will be accelerated, said Mr Goss. “Consolidation is critical, especially in terms of sustainable, viable returns… there is no need for such vast franchise networks under disparate ownership.
“Embrace change, don’t fight it… otherwise, your relevance will return to a level which will create existential questions.”
Retailers a rare highlight for Aston Martin
Aston Martin said retailer sales to customers were up 82% as it continues its ‘build to order’ strategy rather than building for stock. Chairman Lawrence Stroll has prioritised a ‘demand-led ultra-luxury’ retailer strategy after finding many unsold cars in retailers when he bought the company in 2020.
“We are achieving strong pricing and closed the year with dealer stock at optimum levels,” said CEO Tobias Moers. Aston Martin delivered 6,182 cars, almost half of which were the DBX SUV: it took a 20% share of the luxury SUV sector.
Last week, Britain’s only listed automaker warned of a £15m hit to profits due to delays in the Valkyrie hypercar programme – and there is speculation the future of Moers is in doubt, despite Stroll calling the report “categorically not true”.
Google reveals Carvana secrets
Google has showcased Carvana in a series about digital transformation. CEO Ernie Garcia said the firm’s mission is to turn the anxiety of buying a car “into one that customers actually enjoy and are eager to talk about”.
In a detailed insight (and video), Mr Garcia explains Carvana’s ‘zagging forward’ philosophy and how the company created a virtual experience “that required us to build a technology and logistics network from scratch”.
Cazoo’s Alex Chesterman has freely admitted his venture was inspired by Carvana.
WORLD NEWS
Honda Australia celebrates agency model
Bullish Honda Australia said its switch to an agency model has, six months in, resulted in 89% of customers “strongly agreeing” that buying a new Honda was “exceptionally easy”. Conversion rate has also improved 40%, putting Honda near the top of Deloitte’s benchmark league. The brand claims the network response to the agency model has been “extremely positive” as customers have a “significantly better experience under the new model”.
Covid hits India car sales
India’s retailer association FADA said new Covid restrictions will impact retail sales – which rising healthcare costs will compound. “Customers are shying away from closing their purchase decisions” says the association. December is normally a strong sales month in India but “retail sales continued to disappoint… wrapping up an underperforming year”.
India is the world’s fifth-largest new car market and was closing on Japan in fourth with 3.1 million units in pre-pandemic 2019.
STOCKWATCH
Closing prices on 7 January 2022 and weekly change
Lookers rises more than 10% on positive trading update
Auto Trader Group 714.4p (-25.6p / -3.5%)
Caffyns 550.0p (+25.0p / +4.6%)
Halfords 359.4p (+14.0p / +3.9%)
Inchcape 906.5p (-3.0p / -0.3%)
Lookers 73.9p (+7.4p / +10.5%)
Marshall Motor Holdings 394.0p (+1.0 / +0.2%)
Motorpoint 331.0p (-19.0p / -5.5%)
Pendragon 23.3p (+0.1p / +0.4%)
Vertu 68.2p (-0.6p / -0.5%)
COMING UP
Tuesday, UK retail sales
Thursday, Halfords trading update
Friday, UK GDP
MONEY MATTERS
Inflation forcing prices to rise
Companies are preparing to pass on inflation price rises to customers as the Consumer Price Index hits a 10-year high of 5.1%. Firms who have been absorbing costs for the past year say they can no longer do so anymore. Both import and raw material costs have increased significantly for a range of companies from snack producers to double glazing firms.
Energy bills ‘may surge 50%’
Trade body Energy UK has warned households bills may surge by up to 50% from April when planned changes to the price cap kick in. An average household could pay £700 more per year. Labour says removing VAT on energy costs for a year, and a windfall tax on North Sea gas and oil, would limit the rise to £200 a year; PM Boris Johnson has not ruled out taking steps to tackle the rising cost of energy.
Tags:
agency model, Andy Goss, Aston Martin, Carvana, Covid, energy bills, Furlough, google, Honda, inflation, Lookers, Mark Raban, Vertu 
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