14 January 2018

• SCOTLAND’S NEW CAR SALES LAG REST OF UK
• SMES PAY MORE CORPORATION TAX THAN BIG BUSINESS
• PENDRAGON POISED TO OPEN SHREWSBURY CAR STORE
• INCHCAPE BUYS DERBY’S CATTLE MARKET
• ROLL UP – SWANSWAY SUPPORTS CIRCUS FUN CHARITY
• BONUS FOR GROUP 1 AUTOMOTIVE US STAFF
• STOCKWATCH – Small climb for BCA Marketplace
• LAUNCH DIARY – Bentley’s luxury SUV, the V8 Bentayga
• MONEY MATTERS – New open banking rules come into force
• COMING UP – Consumer Price Index
• OUR BLOG – Complicated scheme sells apprentices – and employers – short

Scotland’s new car sales lag rest of UK

Sales of new cars in Scotland are under-performing those in the rest of the UK and have fallen by more than a fifth (21.8%) year-on-year last month, with the UK figure being down 14%. For 2017, sales in Scotland were down just under 8% on the previous year, with the UK figure being -5.7%.

According to Sandy Burgess, chief executive of the Scottish Motor Trade Association: “While the level of decline is very disappointing, it would be wrong to suggest that the industry is surprised or even shocked to read the results. We have for a very significant time now been reporting on these results as having a very large ‘tactical registrations’ content. Over the last few months of 2017 we have been aware that a number of our larger dealers have been moving away from the process of driving registrations towards a more balanced business model with the additional funding being directed to developing their used vehicle operations.”

He added 2017 had been “very successful” with record levels of quality used cars being sold. The latest Scottish figures show that there was a 68.5% spike in the volume of pure electric and hybrid cars sold last year, though they represent just 3.2% of total registrations in 2017.
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SMEs pay more corporation tax than big business

SMEs in the UK pay more in corporation tax than large firms according to research from Moore Stephens. The accountants said the rate paid by SMEs was 21.7% in 2016, while a big business with a turnover of more than £1 billion paid a rate of 20.1%. In 2010, SMEs paid a headline corporation tax rate of 21% compared to the main rate of 28%, but large businesses have had their corporation tax rate cut by almost a third since then, resulting in an imbalance.

Moore Stephens said small firms were often paying more because many were not aware they were eligible for tax relief. Partner Mike Cooper said: “The statistics suggest that larger corporates may be somewhat better at identifying and claiming the available reliefs than their SME counterparts. Furthermore, there are several tax reliefs targeted at SMEs, like Research and Development tax credits and 100% Capital Allowances reliefs, but despite this, they remain stubbornly under-claimed, mainly through lack of awareness.”

SMEs benefited from a corporation tax rate discount of one quarter on the full rates a few years ago, which Moore Stephens has urged the government to consider reintroducing. Mr Cooper added: “A corporation tax discount for the SME sector would be timely to further encourage the dynamic enterprise culture the UK aspires to and support the much-needed drive for growth.”

Pendragon poised to open Shrewsbury Car Store

Evans Halshaw, which is part of Pendragon, is to open a new Car Store on the outskirts of Shrewsbury, Shropshire, creating employment for around 50 staff.

The site in the village of Battlefield will house hundreds of cars and a virtual store, allowing over 20,000 used vehicles to be viewed from group stock. The dealership will also offer after sales services including MOTs, and will buy customers’ existing cars through its Sell Your Car service.

The development occupies a 1.5-acre site at Battlefield, which was purchased by Evans Halshaw from Morris Property, in a location with a number of other dealerships, including Mercedes Benz, Ford and Volkswagen.

Pendragon has plans to open at least 40 Car Store outlets – having opened its first in Birmingham in 2015 – and has said it will spend some £100 million on buying sites.

Inchcape buys Derby’s Cattle Market

Inchcape has purchased Derby’s Cattle Market where it will build a “prestigious” new showroom on the 11.5-acre site, which is on the West Meadows Industrial Estate. It is understood there were “dozens” of offers for the site, according to agents, Cushman and Wakefield. Development will take around a year, according to sources and it is not yet known if Inchcape will consolidate its existing properties in Derby – it currently has Toyota and Mercedes dealerships at Pride Park in the city. The city council has said some of the money generated from the sale will be used to fund a new multi-million-pound swimming pool complex.

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Roll up – Swansway supports circus fun charity

Preston’s Swansway Motor Group has donated over £3,200 to charity Circus Starr, a charity which helps disabled and disadvantaged children ‘run away’ to a host of fun circus-related activities for a day, along with their families and carers.

Donations come from Swansway’s Motability Scheme and the final quarter of 2017 saw the retailer sell 161 cars via this. Director David Smyth, director of the group which operates Preston Audi and the Volkswagen Van Centre in the city, said: “For each car we sell on the Motability scheme we give £20 to Circus Starr. That is the cost of one child and their parent or carer going to a Circus Starr performance. But, for the children who attend, this is so much more than just a trip to the circus. I’m a dad of three kids and what Circus Starr does is very humbling, if Swansway can help in just some small way then we’re delighted to do so.”

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Bonus for US Group 1 Automotive employees

Group 1 Automotive has given a $500 (£364) cash bonus to all its non- management staff at 115 dealerships across the US, facilitated as a result of the country’s recent tax reforms.

” We decided the best investment we could make was in the people serving as the face of our company every day,” said Earl J. Hesterberg, Group 1’s president and chief executive officer.

“For almost 13 years, I have watched our loyal dealership operating and support teams move cars in the 100-degree heat of the Texas summer, clean snow off of new car inventory in a 10-degree Boston winter, and spend long days in front of a computer screen processing documents and communicating with our customers. These people are the heart of the Company. They generate our profits and my management team and I feel that the financial benefit of the new tax law creates an opportunity for us to say thank you to these key teammates.”

In the UK, Group 1 owns a number of dealerships including Chandlers, Barons Group and  six Audi dealerships.

STOCKWATCH

End of week share prices

(As at market close, Friday; prices for previous week in brackets)

BCA Marketplace 204.00p (+1.80p)

Caffyns 425.00p (+0.10p)

Cambria Auto 60.00p (-+1.00p)

Inchcape 782.00p (-3.00p)

Lookers 101.00p (-1.80p)

Marshall Motor 165.00p (-1.00p)

Motorpoint Group 214.00p (+1.00p)

Pendragon 26.00p (-1.30p)

Vertu Motors 48.45p (-0.85)

LAUNCH DIARY

Bentley’s luxury SUV, the V8 Bentayga, with new generation 4.0 litre engine, available end of March from £135,800.

Mini is to launch three new models for 2018, with an emphasis on technology and connectivity. The 3-Door Hatch, 5-Door Hatch and Convertible will be available from 17 March.

Kia’s Piccanto is now available in an X-line variant, with crossover inspired styling, connectivity and touchscreen satnav, from £12,595.

MONEY MATTERS

New open banking rules come into force

Open banking has arrived in the UK on13 January, meaning banks and payment companies must share data with third parties, provided there is agreement from the account holder.

The changes are meant to encourage more competition and are expected to lead to new entrants, potentially from technology firms such as Google and Facebook.

It has resulted because of the EU law, the Second Payment Services Directive and has been implemented in the UK by the Competition and Markets Authority.

For businesses, there could be a number of benefits including enabling a view of finances all in one place, better comparisons of relevant products such as loans and business accounts and to allow easier and faster payments. There should also be more use of apps and other software for to assist with cashflow management and accounting among others.

However, critics say that open banking may lead to a higher risk of hacking and data security problems.

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COMING UP

Monday – Rightmove Housing Price Index

Tuesday – Consumer Price Index

Friday – Retail Sales

OUR BLOG

Complicated scheme sells apprentices – and employers – short

The theme of #NAW2018 – National Apprenticeship Week – is showcasing how apprenticeships work and for retailers thinking about taking apprentices on, why not check out the online map about local events taking place?

One retailer known for their quality of training is Lookers, and last year it took on over 160 apprentices, receiving lots of positive publicity, including for encouraging more girls to consider technician roles as a career.

Their apprenticeship programme is also no doubt a part of why Lookers was the only UK dealership to be one of the UK’s best employers to work for in the Chartered Management Institute/Glassdoor Top 20 listing (Lookers is at number 7).

There are growing numbers of students who are interested in becoming an apprentice, with the view that it is a ‘second best’ option fading. There is now a real argument that apprenticeships are a more attractive over the debt acquired from going to university.

Unfortunately, for smaller firms in particular, that may have a limited HR function, the apprenticeship process can appear complex and bureaucratic.

At the end of last year, the number of apprenticeships being taken on actually slumped by 59%, a serious and worrying trend, and with a number of factors being blamed including rules changes introduced last April. This includes the new apprenticeship levy and the fact that apprentices must spend a day away from the workplace per week to access training.

The levy only impacts on large employers who have a wage bill of more than £3 million, with the funds raised through this being used to fund the training of new recruits. But, it has caused a great deal of confusion as to how they spend the money and how it is distributed if they have a group structure. Smaller employers, however, have to pay 10% towards apprenticeship costs, with apprentices required to spend a day away from the workplace being trained – this means both cost and a lack of flexibility.

The government has an ambitious target of creating three million apprenticeships by 2020 but going by plummeting take up, this may be difficult to achieve.

Let’s hope National Apprenticeship Week does get the message out that there are still many positives in offering great training and opportunities. Lookers has shown what can be achieved and needs to be joined by more, not less, auto retailers.

Rachel Gordon

Editor

Auto Retail Agenda

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Tags: Auto Retail Agenda, Evans Halshaw, Inchcape, Lookers, Pendragon, Swansway