Auto Retail Agenda: 13 September 2021
11 September 2021
- BMW, MERCEDES-BENZ PLAN LOWER VOLUMES, HIGHER MARGINS
- MERCEDES-BENZ CARS SEEKS IMPLEMENTATION SPECIALISTS
- DEALER-MANUFACTURER RELATIONSHIP IMPROVING
- £750k SELL YOUR CAR WITH US SCAM
- AUTO RETAIL LIVE WITH JARDINE, HYUNDAI, EBAY MOTORS
- INDIAN RETAILER SHOCK AS FORD PULLS PRODUCTION PLUG
- CZECH REPUBLIC TO FIGHT EU IC CAR BAN
- STOCKWATCH – Halfords reports sales growth of 16.8% LFL over two years but warning of cycling disruption sees shares fall 14%
- COMING UP – Pendragon interims, Auto Trader AGM
- NEW PENSION RULE RISKS DIVIDENDS
- BOOM IN BUY NOW, PAY LATER SEES REGULATION LOOM
BMW, Mercedes-Benz plan lower volumes, higher margins
BMW and Mercedes-Benz chiefs plan to continue undersupplying cars and restricting volumes even when the chip shortage eases in order to maintain current high prices.
The companies will also shift their focus toward pricier, higher-end models. It marks a public change in strategy from the two best-selling premium German brands.
“We will consciously undersupply demand,” Daimler CFO Harald Wilhelm told the FT, adding the company will “shift gears towards the higher, the luxury end”.
BMW CFO Nicholas Peter agreed, pointing out a “significant improvement in pricing power in the last 24 months” and revealing the plan is “clearly to maintain… the way we manage supply to maintain our pricing power on today’s level. Customers are ready to wait three to four months, and this is helping our pricing power”.
The pandemic has “opened everyone’s eyes” that a different model is possible, said a Bernstein analyst. “Everyone loves it, including dealers.”Mercedes-Benz’s last quarterly return on sales was 12.2%, up from 8.4% pre-pandemic. BMW’s margin was almost 16%, up from 8.6%.
Mercedes-Benz Cars seeks implementation specialists
Mercedes-Benz Cars UK aims to hire a number of ‘implementation specialists’ on two-year fixed contracts “to transform our retail network”. Each specialist will be allocated a number of retailer partners and work as part of a team supporting topics such as change management and business analysis.
The specialists will be each retailer’s key MBC UK representative and work with them in the physical retail environment, “managing the smooth transition of relevant process changes”.
The recruitment comes ahead of Mercedes’ planned move to an agency model for retail. Last week Auto Retail Agenda revealed the departure of two senior Daimler executives from the Mercedes-Benz Retail Group board. It is understood this is an admin change related to the well-publicised operational changes and planned sale of MBRG.
Dealer-manufacturer relationship improving
The latest NFDA Dealer Attitude survey, due out today (Monday, 13 September) is expected to show a marked improvement in the relationship between retailers and their national sales company partners, according to Auto Retail Agenda sources.
More than two thirds of brands are expected to show an overall improvement in their scores.The rising score is thought to reflect a broader boost to consumer demand as the economy improves post-pandemic.
Check back at 9am on Monday, 13 September for a full analysis of the scores including the fastest climbers as well as the biggest fallers.
£750k Sell Your Car With Us scam
Secondhand car retailer Steven Prosser has been disqualified from acting as a director (and faces other restrictions) for nine years after failing to pay customers a total of £751k.
Sell Your Car With Us Ltd promised to sell vehicles for a commission before paying customers within 14 days. At least 48 customers did not receive any cash and the company also failed to return cars to those who requested them. The company entered liquidation in September 2019, which triggered the investigation by the Insolvency Service.
Auto Retail Live with Jardine, Hyundai, eBay Motors
Jardine Group marketing and innovations director Matt Wrigley, Hyundai Motor head of marketing Matt Dunnakey and head of eBay Motors Group Phil Jones will discuss how car buyers go from needing or wanting their next car to the final purchase this Tuesday at 2pm. The latest Auto Retail Live webinar will be chaired by Al Clarke and anyone who attends will receive a discount on our latest report, Winning and retaining customers in an always-on world.
Register now for the free 40-minute webinar
WORLD NEWS
Indian retailer shock as Ford pulls production plug
The Indian Federation of Automobile Dealers Associations (FADA) said it is “shocked” at Ford’s decision to immediately cease new car production in the country. India has no Franchise Protection Act, although Ford has assured FADA it will compensate retailers who continue to service customers.
Ford is shuttering two plants in India with a capacity to build almost 450k cars, but is only using 25% of that. The company has a sub-2% market share and has lost more than $2bn in India over the past decade. 4,000 Ford employees will be affected, along with around 40,000 retailer staff.
Czech Republic to fight EU IC car ban
The Czech PM has vowed to challenge an EU proposal to ban petrol and diesel cars by 2035.
“It’s not possible. We can’t dictate here what green fanatics devised in the European Parliament,” said Andrej Babis, who is aiming for re-election in October. One of Europe’s largest car producers, automotive accounts for a third of the Czech economy.
STOCKWATCH
Closing prices on 10 September 2021 and weekly change
Halfords reports sales growth of 16.8% LFL over two years but warns of continued disruption to cycling supply chain issues, hitting shares of the UK’s largest cycling retailer
Auto Trader Group 642.0p (+7.8p / +1.2%)
Cambria 82.0p (+1.0p / +1.2%)
Caffyns 487.5p (+37.5p / +8.0%)
Halfords 309.0p (-46.8p / -14.0%)
Inchcape 846.0p (-72.0p / -8.1%)
Lookers 68.0p (+1.0p / +1.4%)
Marshall Motor Holdings 257.0p (-1.0p / -0.3%)
Motorpoint 335.0p (-2.0p / -0.5%)
Pendragon 18.1p (-0.35p / -1.9%)
Vertu 54.6p (-5.0p / -8.7%)
COMING UP
Tuesday, UK unemployment
Tuesday 2pm, Auto Retail Live webinar: sign up here
Wednesday, RPI, CPI
Thursday, Pendragon interims
Friday, Auto Trader AGM
MONEY MATTERS
New pension rule risks dividends
Companies running large pension deficits could be forced to divert cash to cover them under new pension regulations by The Pensions Regulator from October, rather than paying dividends. Company directors will face a legal challenge if paying dividends results in a “material reduction” in a pension scheme’s viability should a company go bankrupt. Under stricter new calculations. 75 of Britain’s 100 largest companies ran pension funding deficits last year.
Boom in buy now, pay later sees regulation loom
Buy now, pay later is predicted to account for one in 10 online payments by 2024, equal to over £26bn in purchases – but a review of the sector by former FCA interim CEO Chris Woolard has called for the sector to be regulated. As a result, from next year, customers of companies such as Klarna will face affordability checks and be able to complain to the ombudsman if anything goes wrong. Many companies, such as Barclays, Apple, Goldman Sachs and John Lewis, are understood to be considering their own deferred payment products.
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