Auto Retail Agenda: 18 June 2018
17 June 2018
- ROCKAR PROMISES PROFITABILITY IN 2018
- PEUGEOT TASK FORCE TO SOLVE WLTP SUPPLY ISSUES
- MITSUBISHI OPENS FIRST DIRECT SALES STORE
- STARTIN GROUP BUYS ITS FIRST SUZUKI FRANCHISE
- RECORD PERFORMACE SHOULD CONTINUE AT PORSCHE RETAILER
- UNDERVALUED LOOKERS’ SHARES FORECAST TO RISE
- LATEST WHO’S WHERE IN AUTO RETAIL PUBLISHED THIS WEEK
- PLATFORM SHARING SHOULD HALVE DEVELOPMENT COSTS, SAYS OPEL
- STOCKWATCH – BCA up in quiet week
- MONEY MATTERS – Poor factory figures hit rate rise chance, out-of-town retail still strong
- LAUNCH DIARY – Volvo S60, DS 3 Café racer, BMW 8 Series
- COMING UP – SMMT International Automotive summit
- OUR BLOG – How dealers have to clear up manufacturers’ mistakes
Rockar promises profitability in 2018
Omni-channel auto retail specialist Rockar has posted a loss of £2.8 million for 2017 in its latest results, a worsening of almost £1m, against 2016 figures. However, speaking exclusively to Auto Retail Agenda founder Simon Dixon said he expects Rockar to become profitable in 2018.
Results for the parent company called Rockar 2016 show group turnover increased to £46.6m from £15.9m in 2016. During the year, Rockar disposed of its Hyundai retail outlets to Motorline for an undisclosed sum. The results show that the Hyundai operation made a pre-tax loss of £158,000 on a turnover of £18.6m in 2017 an improvement on 2016’s £407,000 loss on £14.6m turnover.
However, it was Rockar’s Jaguar Land Rover division that accounted for most of the pre-tax losses. During 2017, its first full year of operation, the site in Westfield shopping centre made a loss of £1.8m on a turnover of £26.9m. In the preceding six months, this business lost £1.2m on a £1.3m turnover.
Commenting on the figures Mr Dixon said: “If we were a traditional dealer we would want to make money immediately, but we’re not. We are bang on where we expected to be in our plan and we will go into profitability this year –2018.”
Mr Dixon added that this applied to both the overall group and the JLR operation. “We will continue to be investors in our platform and any money we make, we will continue to invest in the business.”
Rockar is expected to open its first Ford concession within clothing store Next, in Manchester’s Arndale Centre next month, and in the past year has also helped Mitsubishi set up an online sales operation.
The Mitsubishi relationship has also now grown into the setup of a physical dealership. Mr Dixon added: “We’ve just had a soft launch with Mitsubishi in Lakeside, but like the Ford operation in Next in Manchester we’re not the franchise holder, we’re working with manufacturers to show them new ways of retailing.”
Peugeot task force to solve WLTP supply issues
Peugeot is aiming to solve vehicle supply issues caused by WLTP regulations with a team of people dedicated to managing retailer orders. The switch from NEDC mpg and CO2 testing to WLTP testing is causing shortages of supply at many brands due to homologation issues. Under regulations for the changeover, car makers producing NEDC compliant cars in June and August only have until 31 August this year to sell or register these vehicles, so many have already stopped production until they are WLTP compliant.
However, NEDC tested cars built up until 31 May this year can be sold new up to August 2019. Speaking exclusively to Auto Retail Agenda, Peugeot managing director, David Peel said: “Official guidance on timing and requirements has been very late and not clear. We have a situation with some of our vehicles where we have a gap in production. We’ve increased our production on vehicles that we know will have a gap in production. The biggest gap we’ve got is about two to three months.
“When a dealer sells the car, the dealer contacts our task force, they will qualify what type of customer is going to take the car and when. So, if you’re a customer that wants a vehicle in June, July or August, we are going to allocate you a vehicle built in June. If you’re a customer that puts an order in and wants the car for September, we’re going to allocate you one built in May.
“Talking to our dealer partners, we seem to be in a much better position than some. The way we’ve communicated with our network is better than a lot of the other manufacturers today.”
Meanwhile, production of up 250,000 VW group models could be delayed in the second half of the year because of WLTP. A VW spokesman said: “Because of the introduction of the new WLTP testing procedure, we expect in the second half of 2018 an effect at the VW group of around 200,000 to 250,000 vehicles that we will build later than originally planned.”
* Read the full interview with David Peel covering his plans for the Peugeot network in next month’s issue of Auto Retail Bulletin. Subscribe here.
Mitsubishi opens first direct sales store
Mitsubishi has opened its first direct sales store in the Lakeside shopping centre in Essex. The store is the first of 12 mall-based outlets planned for cities across the UK. The Lakeside business has been set up by Rockar, but is owned and operated by Mitsubishi and follows the Rockar non-commission sales staff approach.
“This is the first for us and we’ll see how it goes. If this doesn’t work we’ll go back to the drawing board, but if it goes to plan and Rockar smashes it then we’ll roll out 11 or 12 in total across the UK,” said a Mitsubishi spokesman.
The store, which will only sell new cars and not used or servicing, will link in with Mitsubishi’s online sales operation which launched last year and was also set up by Rockar.
Startin Group buys its first Suzuki franchise
Family-run retailer Startin Group has taken on a Suzuki franchise for the first time after buying the Worcester dealership from the Hylton Group for an undisclosed sum.
The six-car dealership on Bath Road, Broomhall, has showroom space for the entire new car line-up, forecourt room for 25 used, with servicing and MOT, warranty and bodyshop repairs on site too.
Dale Wyatt, director of automobile at Suzuki GB PLC, said: “We are very pleased to welcome the Startin Group to the Suzuki family. They are a trusted and recognised name throughout Worcestershire.”
Gerald Freeman, managing director of the Startin Group, added: “Adding Suzuki to our existing portfolio made perfect business sense to expand our reach within the area.”
Record performance should continue at Porsche retailer
Porsche retailer Dick Lovett expects its record performance last year to continue despite the overall downturn in the new car market.
Publishing its 2017 results which showed Profit Before tax of £5.0 million against £4.7m the year before, Julian Winterburn, director said: “Trading continues at record levels. The directors expect the current level of activity to continue for the foreseeable future.”
Undervalued Lookers’ shares forecast to grow
Shares in Lookers are currently undervalued and should rise over the next 18 months, says an investment bank.
J.P. Morgan Cazenove has given an `overweight’ rating to Lookers’ share price meaning they expect them to go up, saying `Our forecasts are unchanged. We expect a flat PBT performance y/y in FY18e, followed by y/y growth of 6% in FY19e.’
Describing them as `inexpensive’ it says it has a share price target of 130p. They are currently worth around 105/110p. A year ago they were near 130p. As with most of the auto sector, values have been hit by Brexit, diesel and the general slowdown.
The analysts say Lookers has strong franchises, noting, `We believe its brand mix is higher quality, with the launch schedule on Audi and Mercedes appearing more favourable than on BMW and JLR. We are also encouraged by the apparent relative strength of OEM relationships at Lookers versus other auto retailers.’
Latest Who’s Where in Auto Retail published this week
The 2018 edition of Who’s Where in Auto Retail, the definitive guide to the location of every major car retailer in the UK, will be available this week. This year Who’s Where, published by Auto Retail Network that also publishes Auto Retail Agenda, includes for free the Market Trends 2018 report which analyses the data from Who’s Where over the past five years to discover the latest trends in auto retail.
For more information and to order a copy go here. http://bit.ly/2MfOJZB
WORLD NEWS
Platform sharing should halve development costs, says Opel
Opel says its stands to halve development costs by platform sharing within the PSA group. Vehicle platforms make up around two-thirds of the material costs for a new car, and PSA platforms come with modules for engines, seats, restraints, cockpits and infotainment systems.
Opel chief executive, Michael Lohscheller, said: “Thanks to the jointly used platforms we will, depending on the programs, save between 20 and 50% of the development costs of every new Opel/Vauxhall model compared to its predecessor.”
Next year’s new Vauxhall Corsa uses PSA’s compact platform, the Grandland X SUV and Combo Life leisure activity vehicle (LAV) its EMP2 platform.
STOCK WATCH
Closing prices at Friday June 15 and weekly movement.
BCA 2230 p (+12p)
Cambria 62.9p (-0.4p)
Caffyns 425.0p (no change)
Inchcape 759.5p (-2.5p)
Lookers 104.4 (-4.8p)
Marshall Motor Holdings 166.4p (+0.9p)
Motorpoint 254.0p (no change)
Pendragon 25.4p (-0.9p)
Vertu 51.1p (-0.1p)
MONEY MATTERS
Poor factory figures hit rate rise chance
Chances of a summer interest rate have slackened following new figures showing British factories had their worst month in five and half years in April, suggesting the economy is still struggling from its weak start to the year.
Sterling slid as data showed the biggest fall in factory output since 2012 due to tepid demand at home and abroad. The Office for National Statistics also said Britain posted its biggest trade deficit since September 2016.
Philip Shaw, economist at Investec, said: “The rebound in GDP as a whole in Q2, if there is one, could be pretty subdued and it certainly questions the likelihood of another rate increase in August.”
Out of town retail stays strong.
Out of town retail vacancy rates remain low despite recent well publicised failures of chains like Toys R Us and Maplins.
Property advisor, Savills, said that less than six per cent of units are currently empty, significantly lower than the 11% seen in 2015 and 12% in 2012.
On a square foot basis, 3.62% of out-of-town retail space in vacant; in 2015 that stood at 5.4% and 6.8% in 2012.
Sam Arrowsmith, associate director in the research team at Savills, said: “Even with additional closures linked to the CVAs announced recently, vacancy rates will not change dramatically. Numerous retailers also remain acquisitive, including Lidl, Aldi, B&M, The Range and Home Bargains, which all plan to open further out of town stores in 2018.”
LAUNCH DIARY
June
Volvo S60 saloon. Global reveal Wednesday 20.
DS 3 Café Racer. 150 units of special edition. From £21,305.
BMW 8 Series coupe. V8 petrol or six cylinder diesel. From £76,270. Order books open now, delivers from November.
September.
Revised Mitsubishi Outlander PHEV. More efficient internal combustion engine and electric motor boost pure EV range to 28 miles, average mpg to 141 and CO2 to 46 g/km. (All measured under WLTP test). Prices tbc.
Facelifted Skoda Fabia hatch and estate, five trim grades, revised three cylinder petrol engines. From £11,160. Deliveries from September.
Paris Motor Show reveal of Skoda Kodiaq vRS.
COMING UP
Tuesday 26 June. London. SMMT International Automotive Summit 2018. More than 350 delegates from auto sector M.D.s, politicians, advertising and journalism discuss threats and opportunities.
OUR BLOG
How dealers have to clear up manufacturers’ mistakes
Who would want to be a dealer facing a mess on the scale caused by some manufacturers and the possibility of a legal challenge at retailer level.
Only this week Mercedes revealed that almost 750,000 cars and vans need a software tweak over emissions, not the first time that dealers have had to carry the can for them over this. The VW group’s issues are well known but despite paying out nearly £19 billion in fines so far the class actions from private motorists have not yet begun. BMW has been blasted for failing to divulge what it knew to be an electrical fault and someone is now dead as a result.
It’s an unholy mess born of corporate cynicism and arrogance at manufacturer level, but what does it means at retailer level?
The legal situation remains to be resolved but lawyers and car owners are already talking about dealers’ responsibilities under various consumer Acts, sales of goods and I dare say other statutes. Only a few weeks ago Caffyns was moved to acknowledge the problem and say there are cases pending although they are confident that it will not get to a situation where they are hit financially. At least, no provision has been made, no war chest put to one side to meet any such claims.
But leaving aside any such possible liabilities, there are more immediate issues for them to deal with on behalf of the manufacturer which landed them in this mess in the first place. Fitting all those recalls into the workshop schedule without bumping other customers further back in the queue, running customers to their work or elsewhere in a courtesy car while theirs is on the ramps, handling irate but fully justified questions about the impact on resale values all this will have….it’s not easy.
And yet I spoke to a VW dealer when the emissions fiasco first came to light and it was obvious a recall programme on a scale rarely seen would be needed. “You know’’, he said “it’s true people will remember VW for this but it is equally true that our customers will remember us for the way we looked after them. With a bit of care and some resources something like this can be a good opportunity for a dealer to make something positive out of a bad situation. At the end of the day, this is a people business and we are good at that.”
It will be a skill much in demand over the coming weeks and months for some retailers.
John Swift
Editor
Auto Retail Agenda
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