• MYSTERY SURROUNDS PENDRAGON TAKEOVER REJECTION
• RETAILERS HELP VW FINANCE 100K USED CARS SO FAR
• MERCEDES-BENZ WARNS ON COUNTERFEIT PARTS
• BMW SAYS CHIPS ARE DOWN FOR REST OF 2022
• CARVANA FOLLOWS CAZOO IN COST-CUTTING
• CHINA’S BYD SIGNS HEDIN IN SWEDEN AND GERMANY
• STOCKWATCH: Pendragon and Lookers up
• COMING UP: UK GDP
• ECONOMY ON A TIGHTROPE
• UK BUSINESSES IN ‘CRITICAL DISTRESS’ UP BY A THIRD

Mystery surrounds Pendragon takeover rejection

Mystery surrounds last week’s bid for Pendragon that had to be turned down after one of its top five shareholders blocked the 29p-a-share approach. The board-approved offer came just four months after a 28p a share offer from Hedin Group was turned down by American CEO Bill Berman and the Pendragon board.

At 29p a share, Pendragon would be worth around £411 million.

Pendragon’s top five shareholders are Hedin Group, Schroder Investment Management, Odey Asset Management, Briarwood Chase Management and Hosking Partners.

Two industry experts told Auto Retail Agenda they believed Hedin was the likely shareholder blocking the deal. Auto Retail Agenda has contacted Anders Hedin and Hedin Group for a comment, but they are yet to respond.

Hedin Group holds 26.3% of Pendragon shares. However, founder Anders Hedin also has an additional personal stake in the firm, which takes his total interest to 27.1%.

Hedin Group reportedly made a 28p a share offer for Pendragon in March but was turned down by the board. At the time, it was understood Hedin was considering a further bid.

In a statement by the retailer, it revealed: “The proposal was contingent on receipt of irrevocable commitments from all of Pendragon’s major shareholders. The board of Pendragon concluded that the proposal merited engagement with its five largest shareholders and received strong support for the proposal from four of these shareholders who were willing to sign irrevocable commitments.

“However, Pendragon was unable to engage with one of these shareholders and therefore, given this lack of certainty, the bidder has withdrawn its non-binding offer and both parties have terminated discussions.”

A spokesman for Pendragon refused to reveal who the blocking shareholder was, or comment on rumours the new bidder was based in the USA and why the 29p a share was accepted by the board when the 28p offer was not.

 

Retailers help VW finance 100k used cars so far

A strong performance from Volkswagen Financial Services UK retailer partners has helped it finance a record 100k cars so far in 2022. New technology that has expanded its reach on retailer partners’ online platforms has been pivotal. Every other used car sold through its retailer network is now financed by VWFS.

The company has also started to finance vehicles in its ‘second tier’: its franchisees’ own used car supermarkets.

 

Mercedes-Benz warns on counterfeit parts

“The counterfeiting industry has organised crime structures and often generates higher profits than drug trafficking,” said Mercedes-Benz, as global trade in counterfeit parts continues to increase. Pirates are increasingly using online platforms and social media channels to sell parts – which are much harder for OEMs to monitor. Brake discs, wheels, body and steering parts are common counterfeit parts; worryingly, quality is poor and they often do not meet minimum legal safety requirements.

 

BMW says chips are down for rest of 2022

BMW Group had assumed semiconductor supply constraints would ease during the second half of 2022. However, the company says it no longer expects the situation to improve appreciably over the remainder of the year.

The company warned of a deteriorating outlook for the motor industry, as soaring inflation and rising interest rates dampen consumer demand.

https://bit.ly/3A37jiN

 

WORLD NEWS

Carvana follows Cazoo in cost-cutting

Carvana will cut expenses in the coming months, including job cuts, after losing nearly $1bn in H1 2022 – its two largest quarterly net losses since its April 2017 debut (it has only once turned a quarterly profit). The online used car retailer has “shifted our priorities for the first time in company history to favour efficiency and cash flow in recognition of the changes to the market and economic landscape,” said CEO Ernie Garcia.

In June, Carvana’s British equivalent Cazoo announced a “business realignment plan”. Industry Expert Mike Jones said it looked like “cash conversation is top of mind for the company, ahead of growth”.

https://bit.ly/3SIg9d8

 

China’s BYD signs Hedin in Sweden and Germany

Hedin Mobility Group will distribute BYD, China’s largest electrified car brand, in Sweden and Germany. Its first store will open in Sweden in October, with German stores opening soon after. Deliveries will begin in Q4 2022. EV and plug-in hybrid brand BYD also earlier signed up Louwman Group to distribute cars in the Netherlands.BYD stopped producing internal combustion models earlier this year.

https://bit.ly/3QtMPVU

 

STOCKWATCH

Closing prices on 5 August 2022 and weekly change

Pendragon up 5.7%; Lookers up 11%

Auto Trader Group 653.4p (+23.8p / +3.7%)

Caffyns 550.0p (n/c)

Halfords 173.6p (+1.5p / +0.8%)

Inchcape 837.5p (-3.0p / -0.3%)

Lookers 84.0p (+8.8p / +11.0%)

Marshall Motor Holdings 397.0p (n/c)

Motorpoint 193.5p (-1.5p / -0.7%)

Pendragon 23.3p (+1.3p / +5.7%)

Vertu 56.9p (-1.6p / -2.7%)

 

COMING UP

Wednesday, SMMT used car sales

Thursday, RICS housing market survey

Friday, UK GDP

 

 

MONEY MATTERS

Economy on a tightrope

“The bank does not do gloom on this scale lightly,” reports The Sunday Times on the latest MPC meeting last week. Things could turn out better than it expects – but they could also turn out worse: the economy is on a tightrope. 9 in 10 adults say their cost of living has increased, up from 6 in 10 in November 2021. There are fears thing could go “badly wrong” in the autumn when the energy price shock enters a new phase.

However, 70% of households do not have a mortgage. The GfK consumer confidence index has stabilised, albeit at a low level. Business confidence also edged up slightly in July, according to the IoD. And while high inflation is expected for the next year, five-year inflation expectations have fallen and are not much different from normal.

https://bit.ly/3bCaxAc

 

UK businesses in ‘critical distress’ up by a third

37% more businesses are now in critical financial distress compared to a year ago. The latest report from insolvency adviser Begbies Traynor shows the end of government-backed schemes has put further pressure on businesses, while 3 in 4 say inflation is having a negative impact on trading. Businesses whose trading is linked to consumer confidence are faring particularly badly.

https://bit.ly/3SpWyOy