30 September 2018

• AUCTION INDUSTRY TO LAUNCH CROSS-COMPANY STOCK WEBSITE
• EXPANSION THE FUTURE FOR EASTERN WESTERN, SAY DIRECTORS
• MAZDAMYWAY ROLLED OUT IN MANCHESTER NEXT MONTH
• RETAILERS CAN RECLAIM VAT ON DEPOSIT CONTRIBUTIONS, SAYS HMRC
• HARTWELL OPENS UK’S ONLY MS-RT HUB
• EX-PEUGEOT DEALER `BETTER OFF WITHOUT FRANCHISE’
• LIVE SHOW OPPORTUNITY FOR SUPERCAR RETAILERS
• MARKETING MANAGERS LACK PRACTICAL DIGITAL SKILLS – CLAIM
• WORLD NEWS – German BMW retailers advised to sign new franchise contracts, BMW profit warning, German makes pull the plug on some PHEVs
• STOCKWATCH – poor week for BCA, Inchcape, Marshall
• LAUNCH DIARY – improved BMW i3, Isuzu D-MAX, Volvo V60 R Design
• COMING UP – NADA, ASE annual financial conference
• MONEY MATTERS – calls for business rates freeze, print/TV/direct mail don’t deliver, business investment on hold
• OUR BLOG – are we on the verge of more retailer buy-outs?

 

Auction industry to launch cross-company stock website

The auction industry is to launch a website to let retailers view available stock from a variety of different remarketing companies. Due in Q1 2019, it will be open to members of the National Association of Motor Auctions (NAMA), several which have already signed up. Remarketers can upload images and vehicle information and dealers will not be charged for access.

Speaking exclusively to Auto Retail Agenda, a senior source at an auction company said: “It’s up and running and we’re testing it at the moment. Once we’ve got it up to standard, all NAMA members will be invited to join. It will be a group search engine to make sure all the buyers get in front of all the products going up for auction, all the time.”

He said members would be required to collectively cover costs associated with development and operation of the website but nothing more and claimed their images and grading would need to meet NAMA standards.

“We’ve got to make sure those members only come on board if their NAMA grading is up to spot – if they’re presenting their pictures properly etc – so we have a high standard.”

 

Expansion the future for Eastern Western, say directors

Multi-franchise group Easter Western Motor Group is continuing its strategic policy of strengthening the current portfolio with its manufacturers by taking over other retailers selling the same brand.

Reporting a 10% rise in turnover from £550 million in 2016 to £606m for 2017 and an 8% increase in gross profit from £56.3m to £59.7m, the annual report for the Edinburgh-based company said that during the year it took over BMW and MINI dealer, Grassicks, in Perth in line with the plan.

“This strategy of acquisition further cements our relationship with one of our key franchise partners and is in line with our strategy of growing and developing with existing brand partners in new geographical territories.”

Already this year it has added VW and Mazda retailer Barnetts Motor group, giving it sites in Dundee and St. Andrews. It has added the John Clark Group’s Nissan outlets in Dundee and Perth and the Phoenix Honda business in Stirling, taking its representation with Nissan to 5, VW and Honda (4) and Mazda (2).

 

MazdaMyWay rolled out in Manchester next month

Manchester Mazda retailer, RRG, is the next dealer to operate a MazdaMyWay home test drive service as the manufacturer rolls out the scheme beyond London.

Simon Culley, head of MazdaMyWay, told Agenda: “We have recruited the brand champions for RRG who are on a five week training programme and this will be going live mid/end October.”

Four more schemes will begin before the end of Mazda Motors UK’s financial year and Simon said a recruitment drive for brand champions is being launched in the south west and in Scotland.

Two more dealers around the capital are in discussions with the manufacturer and a further 10 schemes are planned for 2019.

 

Retailers can claim VAT back on deposit contributions, says HMRC

Retailers who have made Dealer Deposit Contributions (DDC) – not to be confused with a Manufacturer Deposit Contribution – in the last four years may qualify for a VAT refund.

A new brief from HMRC has cleared up confusion around the issue as different retailers had different VAT accounting treatments. HMRC has now ruled that this contribution payment is effectively a discount on the headline price of the car so VAT is only payable on the lower amount.

Dealerships accounting for VAT on the full sale price of the car may have accounted for additional output VAT and could claim this back from HMRC.

https://bit.ly/2xTBpnk

 

Hartwell opens new MS-RT hub

Hartwell has opened the only MS-RT hub in the UK with a launch event this weekend at its Dunstable retail centre.

MS-RT is a joint venture between vehicle specialists Van-Sport and motorsport legend, Malcolm Wilson, and produces eye-catching and heavily upgraded Ford vans and pick-ups.

A Hartwell spokesman said: “We’re launching our first dedicated MS-RT showroom and our new Dunstable showroom on London Road is the UK’s only MS-RT hub.”

 

Ex-Peugeot retailer better off without franchise

A Peugeot retailer axed during the PSA restructuring of the network earlier this year says it can prosper `without the constraints of a franchise’.

Wellingborough-based Broad Green, part of the Grosvenor Leasing group, lost the franchise in March and the business is now being redeveloped as a used car and LCV retailer and plans are `well-advanced’ to position it as a broker in the personal contract hire sector.

Another Grosvenor dealership, Vauxhall retailer York Ward & Rowlatt was also hit by the PSA/GM shake up. Revenues fell by 8% to £5.3 million which it says was due to lower fleet sales and the result of Vauxhall’s lack of SUVs.

Total revenues from sales at Grosvenor’s new and used car dealerships were down 5.3% to £84.7m.

 

Live show opportunity for supercar retailers

Supercar retailers can demonstrate their models in action at a two day live motor show next year being held at Blackbushe aerodrome near the M25.

The London Supercar Show ‘Live’ will see cars being driven on a ¼ mile strip with both retailers and owners able to demonstrate them.

Show organiser, Tony Robinson, said: “The concept for The London Supercar Show ‘Live’ is to provide the perfect platform for supercar owners, dealers, the aftermarket industry and enthusiasts to share their passion and combine the excitement of live, high performance demonstrations together with a business environment where people can seek out their next upgrade, accessory or car purchase.”

The event runs on May 11/12 2019.

www.thelondonsupercarshowlive.com

 

Marketing managers lack practical digital skills – claim

Marketing directors may have a good understanding of general marketing and digital strategy compared to the rest of their team but lack practical digital skills, a study has found.

The report from the Chartered Institute of Marketing found that when, for instance, they were tested about their knowledge of pay per click, marketing directors scored just 29% compared with executives (34%), managers (31%) and department heads (39%). On ecommerce knowledge, marketing directors scored 26% compared to executives (37%), managers (41%) and department heads (42%).

When their data and analytics skills were put to the test, marketing directors scored 32%, compared with executives (33%), managers (35%) and department heads (42%).

https://bit.ly/2xB3QaC

 

WORLD NEWS

BMW’s association of 550 independent German car dealerships advised members to sign new five-year contracts with the carmaker before an October 1 deadline to avoid disruptions to sales and spare parts.

The agreement came hours ahead of a deadline that could have paralysed distribution and service channels and follows binding assurances from BMW that it would address outstanding concerns.

BMW proposed new franchise terms to the dealers in August that would have significantly cut their income. The retailers account for around 11 billion euros (£10bn) of BMW revenues, while the carmaker only directly owns 50 dealerships in Germany.

https://reut.rs/2QhLWjR

 

BMW profit warning

BMW issued a profit warning this week and dropped its forecast from the 8 to 10% operating profit it has returned every year since 2010 to 7% this time

Its shares fell 3.9% after it joined Daimler and several suppliers in pointing to WLTP and the US-led global trade conflict and tariff rises for hurting profits.

https://reut.rs/2QYxxKH

 

Germans pull the plug on some PHEVs

VW, Mercedes and BMW are reported to have stopped sales of some of their plug-in hybrids in Europe after the higher CO2 readings under the new WLTP test regime push them into a higher tax bracket.

The new rules could take away tax incentives offered to cars with ultra-low emissions in certain countries and according to Automotive News manufacturers must decide whether the extra cost to fit a bigger battery is worth the incentives given.

https://reut.rs/2zDzc1A

 

STOCKWATCH

Closing prices at Friday September 28 and weekly movement.

BCA 204.0 (-10.0p)

Cambria 53.5p (no change)

Caffyns 425p (no change)

Inchcape 669.0p (-26.5p)

Lookers 106.4p (-2.0p)

Marshall Motor Holdings 147.5p (-7.5p)

Motorpoint 215.0p (-4.0p)

Pendragon 27.2p (1.3p)

Vertu 43.3 (-0.3p)

 

LAUNCH DIARY

October 1: Updated Isuzu D-Max pick-up range. Bigger payload, trailer control on 4×4 models. From £16,799.

Q4: Volvo V60 R-Design. Sportier styling and expected to be best selling spec. First deliveries from late 2018. From £35,410.

December: Improved BMW i3 EV with a range of 192 miles (WLTP figures). From £35,180.

 

COMING UP

October 18: Government estimate of September retail sales in volume and value terms, seasonally and non-seasonally adjusted.

November 16: Auto Retail Economic Forum, London. Key speakers discuss retailing in 2019.

November 28: ASE annual Financial Conference. Topics for dealer owners and FDs, manufacturers’ network managers and auto finance businesses. Northants.

January 23/28. NADA, San Francisco.

 

MONEY MATTERS

Call for two year freeze on business rates

Retail trade body, the British Retail Consortium, is calling on the government to put a freeze on business rates while companies deal with fragile consumer confidence and rising operational costs.

Last month saw slowing footfall and while retail parks did well in most regions, August marked the 17th month of consecutive decline for shopping centres with no regions experiencing growth.

Helen Dickinson, BRC chief executive, said: “With fewer shoppers visiting the high street and a difficult overall trading environment the pressure is increasing on retailers as rising public policy costs continue to bite.

“The Government must take action now and commit to a two year freeze on business rates to help reduce the pressure of this disproportionate tax on retailers and allow for a fundamental reform of the business taxation system.”

Print, TV and direct mail ad spend don’t deliver good ROI, says Next

High Street retailer Next plans to more than double its digital advertising spend and halve that on print, TV and direct mail, saying they no longer deliver the ROI they once did while digital gives `impressive’ returns.

Chief executive Simon Wolfson said it will increase its digital marketing spend by 125% for the year to the end of January 2019, from £12m to £28m, with an increased focus on mobile marketing. During H1 of 2018, website sales rose by 16.8% to £892.3m, while in-store sales fell 6.9% to £925.1m.

https://bit.ly/2QWWeqW

Business investment put on hold

Companies are reining in their investment until there is a clearer picture of the post-Brexit economy, official data has revealed.

The ONS report said business investment fell 0.7% in Q2 compared with Q1, a sharp reduction from a previous official estimate that investment grew by 0.5% and marked the second consecutive quarter of shrinkage.

It said the fall was driven mostly by reduced investment in machinery and buildings. In annual terms, business investment was also down, falling 0.2% for the first decline in a year and a half.

 

OUR BLOG

Are we on the verge of more retailer buy-outs?

I WAS reading a report last week which forecast an acceleration of the current trend towards mergers and acquisitions in our industry. The gist was that on the one hand bigger companies are looking to get economies of scale and efficiency from increased sales volumes of cars, parts and finance/warranties etc and on the other smaller companies look at the costs of opening the doors for business, both now and in the years ahead, and think `It’s time to get out.’

Lo and behold we write in this week’s Agenda of Scottish-based Eastern Western Motor Group continuing its strategy of strengthening its relationship with its existing franchise partners by taking on more outlets. A few days before we ran a news alert about Stoneacre’s likely buy-out of North East-based Mill Garages which, among other things, will double its number of Volvo franchises and given the way Volvo is going, that is a very nice brand to have too.

A day or two later it was reported that auto business consultants, ASE, has teamed up with an American company, basically to help US retailers on the lookout for investment opportunities buy dealerships here just as Penske did with Sytner and Group 1 Automotive which itself has become rather acquisitive and taken over other franchises.

Nothing especially new here, it’s not exactly a `hold the front page’ moment to say that several years from now there will be fewer retailers than there are today.

It’s the rate of change though, that and the apparent opportunity to buy and sell. Analysts say the UK car retail market is relatively stable (have they heard of Brexit?) and attractive to outside buyers and especially those from America to whom sterling looks attractively weak. For smaller businesses looking at the level of investment needed as car technology changes so fundamentally you can see why some might be looking at easier ways of spending their time.

For them, now might seem a good time of getting out while the going is good. Or, as happened a few weeks ago with family-owned FCA dealer, Platts, in my native Stoke-on-Trent, if the going is not so good. In fact, if doing business is like pushing water uphill.

That the retail landscape will change over the next several years is hardly in doubt and cars will be sold through fewer but much bigger businesses. It’s just how fast that change happens which may be the front page news.

 

John Swift

Editor
Auto Retail Agenda