Auto Retail Agenda: 11 April 2022
08 April 2022
- DO AGENCY AGREEMENTS BREAK EU ANTITRUST RULES?
- LOOKERS REPAYS FURLOUGH – BUT NOT BUSINESS RATES
- TOOMEY PROFIT DOUBLES
- WOMEN NETWORK ‘GROW’ LAUNCHED TO HELP RETAILERS
- CARVANA CONSUMER COMPLAINTS FACE GOVERNMENT SCRUTINY
- DMS GIANT CDK ACQUIRED FOR $8.3bn
- STOCKWATCH: Lookers down 9.3% after releasing annual results
- COMING UP: Retail sales, GDP
- BANKS CUT MORTGAGE OFFERS
- MARTIN LEWIS WARNS OF COST-OF-LIVING CRISIS
Do agency agreements break EU antitrust rules?
‘Non-genuine’ agency dealer contracts, which combine traditional distribution and the agency model, risk breaking EU antitrust laws, says European retailer trade group CECRA.
Such hybrid contracts “could be outside the block exemption from EU competition legislation” and be a “potentially anti-competitive practice”.
Automakers, said CECRA, should not be allowed to cherry-pick benefits by combining business models: “They are not allowed to combine different models and taking advantage out of each particular system,” it said in a press release.
“We see some manufacturers becoming imaginative.”
For genuine agency models, it added, “we have no legal concerns. It is up to the actual dealers to negotiate the content of the contracts”.
The NFDA has also alerted about non-genuine agency models, saying they could “create genuine antitrust risk”.
Lookers repays furlough – but not business rates
Lookers boss Mark Raban is “proud and delighted” to have repaid £4.1m of furlough support as profits hit record levels. The retailer posted pre-tax profit of £90m for the year ended December 2021, with sales rising 9% to £4bn. This compares to £1.5m in 2020 and a £45m loss in 2019, when it admitted to overstating profits for three years.
Mr Raban justified not returning £9.8m of business rates relief because it “wasn’t support we claimed for, it was just applied for councils. We were closed for the first quarter, and we weren’t designated essential retail, so we think it’s bona fide.”
Toomey profit more than doubles
Toomey Motor Group saw profit before tax grow from £1m to £2.3m in the year ended December 2021. Turnover was up from £139m to £168m. New vehicle shortages meant the Essex multi-franchise retailer shifted its emphasis to used vehicles, particularly commercial vehicles, “which fed through to increased profitability”.
Women network GROW launched to help retailers
GROW – Generating Real Opportunities for Women – is a new network open to all that’s aimed at increasing female representation across all levels of auto retail. It’s been created by MotoNovo Finance and will launch with a series of virtual online seminars. Julia Muir, founder of the Automotive 30% Club, has endorsed the new initiative.
WORLD NEWS
Carvana consumer complaints face government scrutiny
Carvana, the inspiration behind Cazoo, is facing government scrutiny as buyers are waiting months for used vehicle paperwork to be processed and registrations to be issued. At least four states are now investigating the company for violating vehicle sales rules (and it has settled four lawsuits in California $850k). Some vehicles have gone unregistered for a year, with customers being fined for having no registration.
DMS giant CDK acquired for $8.3bn
CDK is being taken private in an $8.3bn (£6.4bn) acquisition by investment firm Brookfield Business Partners. The price is a 30% on premium on CDK’s final full day of trading. Brookfield said CDK appeals because of its market leadership, recurring subscriptions and the potential of future consolidation in auto retail.
STOCKWATCH
Closing prices on 8 April 2022 and weekly change
Lookers down 9.3% after releasing annual results
Auto Trader Group 644.2p (+6.0p / +0.9%)
Caffyns 550.0p (n/c)
Halfords 244.6p (-14.6p / -5.7%)
Inchcape 650.0p (-28.0p / -4.2%)
Lookers 85.9p (-8.4p / -9.3%)
Marshall Motor Holdings 395.0p (n/c)
Motorpoint 265.0p (-20p / -7.2%)
Pendragon 28.1p (+0.1p / +0.3%)
Vertu 58.3p (-6.6p / -10.7%)
COMING UP
Monday, GDP
Tuesday, retail sales
Tuesday, UK unemployment
Wednesday, RPI and CPI
Wednesday 25 May, ARN Performance Conference
MONEY MATTERS
Banks cut mortgage offers
Lenders are downvaluing mortgage offers and undertaking more punitive checks amid signs the house price boom is turning. A 10% drop is forecast from H2 2022 into 2023. Lenders are apprehensive “we are at the peak of the curve,” said one expert. The cost of living crisis has seen the Centre for Economics & Business Research to downgrade its 2023 house price fall from 0.6% to 2%.
Martin Lewis warns of cost-of-living crisis
Money saving expert Martin Lewis says he is “scared for people” due to rocketing inflation that could lead to “civil unrest. I get all these messages from people tearing their hair out”. PwC says British households could be £900 worse of in 2022 due to an “historic fall” in living standards. The lowest earners could face a £1,300 hit.
Tags:
Agency Agreements, Carvana, Cazoo, CDK, CECRA, cost of living, DMS, Furlough, GDP, GROW, Lookers, Martin Lewis, mortgage, NFDA, Toomey 
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