Auto Retail Agenda: 11 October 2021
09 October 2021
- BREARLEY LOSES COURT CASE
- MERCEDES-BENZ RETAIL LOSES £20.8m; PSA RETAIL LOSES £9m
- EDDIE HAWTHORNE: ‘WHERE’S THE EV INFRASTRUCTURE?’
- FUTURE OF RETAILING REPORT EXPLORES SEISMIC SHIFTS
- AUTO TRADER IN £5m ITV SPONSORSHIP
- RECORD HIGH US WHOLESALE PRICES
- TESLA MOVES HQ TO TEXAS DESPITE DIRECT RETAIL BAN
- STOCKWATCH: Vertu, Marshall up but Halfords falls again after stabilising in September
- COMING UP – Auto Retail Live – The Future of Auto Retailing
- GET READY FOR INTEREST RATE RISES
- STOCK MARKET AT RISK OF ‘SHARP CORRECTION’
- ENERGY PRICE CAP TO REMAIN THIS WINTER
Brearley loses court case
James Brearley, Pendragon’s former Stratstone managing director and now Inchcape Retail CEO, has lost a case against his former legal team Higgs and Sons.
Brearley and three others alleged professional negligence over advice surrounding his attempt to set up a JLR dealership in Wolverhampton following his departure from Pendragon in 2015.
Dismissing the case, which started in June in the High Court, Mrs Justice Sarah Falk concluded “there was a breach of duty by Higgs in failing to provide adequate advice on 22 April and 16 April 2015”.
However, she added: “The claimants have not established their case as to what Mr Brearley would have done if he had received competent advice. The effect of my findings is that the surviving claims… fail both in respect of the Wolverhampton opportunity and in respect of the costs of the Pendragon proceedings.
“In any event the claimants have not demonstrated that there would have been a substantial chance of Pendragon permitting Mr Brearley to pursue the Wolverhampton Opportunity.”
Mr Brearley’s plans to open an Arch concept Jaguar Land Rover dealership were stopped following legal action by Pendragon in 2016. Pendragon previously operated the franchise in Wolverhampton.
Mr Brearley’s JRB Automotive eventually sold the site for the showroom to Jardine Motors later in 2016.
Commenting on the result, Mr Brearley highlighted that the judge had found there was a breach of duty by his former law firm but maintained the action was a private matter.Auto Retail Agenda has approached Higgs and Sons for comment.
Mercedes-Benz Retail loses £20.8m; PSA Retail loses £9m
Mercedes-Benz Retail lost £20.8m before tax in the year ended December 2020, down from a £72.5m loss in 2019 (heavily influenced by a revaluation of freehold properties). Revenue fell from £1bn to £706m. New passenger car volumes fell 45% – mainly through targeted reduction of low-margin corporate business, down 77%.
Mercedes-Benz continues to search for buyers of the retail group, insisting it is prioritising those with long-term economic success, the continuation of Mercedes-Benz operations, safeguarding jobs and supporting customers.
PSA Retail lost £9m in the year ended December 2020, compared to an £868k profit in 2019. Revenue fell from £1bn to £894m. The company “continued to reinforce its strategy of reducing operating costs in 2020 in order to remain competitive”, although administrative expenses actually rose from £38.9m to £43.1m.
Eddie Hawthorne: ‘Where’s the EV infrastructure?’
Arnold Clark’s Eddie Hawthorne is embracing electric cars but says the government is not keeping up, according to an interview in the Sunday Times.
Customers in showrooms are asking how you charge them – and “that’s the biggest stumbling block”. Mr Hawthorne adds Arnold Clark is even struggling to electrify its own parts distribution vehicles due to shortcomings in power delivery into its retailers.
The retailer, which opened a £5.5m innovation centre to promote EVs, puts around 5% of its profits into greening other parts of the business. It is also heavily digitising and last year’s pre-tax profits of £156.5m “will be better,” said Mr Hawthorne, “thought our digital business”.
Future of Retailing report explores seismic shifts
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Auto Trader in £5m ITV sponsorship
Auto Trader has signed a £5m 12-month partnership with ITV. It will sponsor ITV2 Showtime, “the most-watched digital channel for 16-34 year olds”. The aim is to reach beyond already-converted in-market car buyers “to a more mainstream audience”.
WORLD NEWS
Record high US wholesale prices
Wholesale used car prices in the US rose 27% year-on-year to hit a record high in September – and Manheim analysist predict they will remain elevated well into 2022. High sales conversion rates suggest aggressive buying by retailers looking to maintain relatively normal used vehicle inventories. “They could already be anticipating the spring selling season,” said Cox chief economist Jonathan Smoke.
Tesla moves HQ to Texas despite direct retail ban
Tesla is moving its corporate HQ from California to Texas, its third-largest market after California and Florida. Ironically, opposition from auto retailers in the state mean it is a region Tesla cannot sell cars directly, as it does in other areas (the legislature is up for review in 2023). Texas, however, has no personal income tax, whereas California imposes the highest levies in the nation. According to the Bloomberg Billionaires Index, Elon Musk is the richest person in the world.
STOCKWATCH
Closing prices on 8 October 2021 and weekly change
Vertu, Marshall up but Halfords falls again after stabilising in September
Auto Trader Group 581.4p (-2.7p / -0.4%)
Caffyns 500.0p (n/c)
Cambria 82.5p (n/c)
Halfords 278.4p (-21.0p / -7.2%)
Inchcape 810.0p (+1.5p / +0.1%)
Lookers 64.3p (-0.1p / -0.1%)
Marshall Motor Holdings 239.0p (+15.0p / +6.4%)
Motorpoint 372.0p (+5.0p / +1.3%)
Pendragon 19.05p (+0.75p / +4.0%)
Vertu 54.6p (+4.4p / +8.3%)
COMING UP
Tuesday, Auto Retail Live – The Future of Auto Retailing: register now
Tuesday, UK retail sales
Tuesday, UK unemployment
Wednesday 7am, Vertu trading update
Wednesday, UK GDP
Friday, Contactless card payments increase to £100
MONEY MATTERS
Get ready for interest rate rises
MPC member Michael Saunders has warned of “significantly earlier” interest rate rises – which could come before the end of the year. This would help control soaring inflation as the CPI rises above 4%. However, it would also hit the fifth of households on variable mortgages, and businesses sitting on a £1.4tn debt pile.
“Markets have priced in over the last few months an earlier rise in Bank rate than previously,” said Mr Saunders, “and I think that’s appropriate.”
Stock market at risk of ‘sharp correction’
Investor panic over stagnation and higher interest rates could result in global stock markets crashing, the Bank of England has warned. A number of risky bets by investors could see share prices “correct sharply” in coming months. Next week’s GDP data is expected to show August was “a last hurrah for post-lockdown growth”.
Energy price cap to remain this winter
Energy prices will remain capped during the winter despite soaring wholesale prices. Business secretary Kwasi Kwarteng said the cap was “non-negotiable” and will shield millions of consumers from energy price hikes this Christmas. The cap was last increased on 1 October (increasing the typical energy bill by £139 a year) and it will be reviewed again in April 2022 – with some predicting £400 a year rises in bills.
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