21 October 2018

Halliwell Jones profit fall ‘satisfactory’, say directors

Directors at BMW and MINI retailer Halliwell Jones described figures showing a fall in pre-tax profits of more than 60% as ‘satisfactory’ given the trading climate last year.

The Cheshire and North Wales business saw turnover grow from around £66 million to £71m but pre-tax profits dropped sharply from £457,110 to £174,400.

In its financial statement for 2017, the directors wrote that they “believe this result represents a satisfactory performance, particularly given the relatively difficult trading environment that most franchised motor retailers faced during 2017, including within the BMW network”.

No one replied to Agenda requests for more details.

FCA reorganises fleet retailer network

Fiat Chrysler Automobiles is looking to rebuild its fleet and business centre network after cutting numbers from 28 to 15, focusing on territories where retailers already hold all three of the group’s Fiat, Alfa Romeo and Jeep franchise.

Fleet and remarketing director, Andrew Waite, said: “The right number for us is between 30-40, and the right way for that to happen is for them to be brand centres, so in the main they represent all of our car brands.”

Currently groups do not necessarily hold the FCA franchise in a single territory. “It’s quite difficult if I’m talking about FCA’s fleet and business proposition to then have part of our network unable to offer that whole proposition.”

SUV sales mis-match

Retailers could be missing out on SUV orders with analysis showing there are far more online searches for them than sales.

Data from Sophus3, an automotive web traffic specialist, shows while between January and September SUV sales grew at 13% year-on-year web searches for them increased 23%.

Scott Gairns, Sophus3 managing director, said: “We have never before seen such a significant rise in online interest in the car industry within a sector that is already dominating the statistics.”

LCV values showing strong growth

BCA says average LCV values climbed to the second highest on record last month with strong bidding online and in-lane.  The headline value rose 5%, from £7,180 to £7,568, and the longer-term trend continues to show sustained growth across the LCV sector, with year-on-year values up 15% (£1,007).

Car sharing club gets Birmingham City Council contract

A car sharing club which claims to remove the need for 11 privately owned ones with each of its vehicles has been given a three year contract with Birmingham City Council.

https://bit.ly/2yMvSQ4

WORLD NEWS

50:50 chance of German car industry surviving

German car makers have a 50:50 chance of surviving as they are today unless they respond to new emissions legislation and adapt their supply chains.

https://reut.rs/2OuTG5D

VW, FCA and Renault-Nissan bear brunt of September falls

The VW group, Fiat Chrysler and Renault Nissan were hardest hit in the 23% slump in Euro-area sales last month as WLTP came into force.

Volkswagen Group sales fell 48%, Fiat Chrysler 31%, Nissan by 44% and Renault by 27%. Registrations fell to 1.12 million cars in the zone from 1.47 million in September 2017.

STOCKWATCH

Closing prices at October 19 and weekly movement

BCA 193.2p (-13.8p)

Cambria 53.0p (no change)

Caffyns 415p (-10.0p)

Inchcape 516.0p (-113.5p)

Lookers 95.0p (-4.6p)

Marshall Motor Holdings 128.5p (-12.5p)

Motorpoint 219.0p (+10.0p)

Pendragon 24.3p (-1.7p)

Vertu 35.4p (-6.3p)

COMING UP

October 24. Ford Q3 results

October 26. Pendragon Q3 statement.

November 6. Auto Retail Q4 Live Briefing, sponsored by Auto Trader. To register click here https://bit.ly/2Pbq3CH

November 16. Auto Retail Economic Forum 2018, (London).

LAUNCH DIARY

2019 Q1

Audi e-tron. All-electric SUV with approx. 250 mile range. From £70,805.

BMW X7, Range Rover rivalling SUV. From £72,155.

MONEY MATTERS

Brexit deadline for contingency plans already passed – CBI

A CBI survey of 230 businesses found that nearly a fifth of those with Brexit contingency plans say the deadline for implementing them has already passed.

https://bit.ly/2CWKMIe

Fuel duty rise next year – warning

Cash-strapped Chancellor Philip Hammond could raise fuel duty monthly in line with inflation from next year, a fleet data capture company has warned following a suggestion by the influential think-tank, Institute for Fiscal Studies

Government borrowing falls

Public borrowing fell last month to £4.1 billion, £0.8bn less than a year ago and the lowest September figure for 11 years, official figures show.

https://bbc.in/2yOdI0h

OUR BLOG

What does Pendragon say about auto retail business model?

The auto retail industry is not exactly flavour of the month with the stock market at the moment, unless you are big into used car retailing.

It’s not just this week which has seen some big names take a battering (although the 113.5p drop in the price of its ordinary shares will make Inchcape investors wince) but the sector as a whole.

The scale of the challenge facing auto retailers, of how to adapt their business, has been laid bare by Pendragon. Earlier this week it made the headlines with its profit warning based round the WLTP crisis but if you take a longer view you can see something a lot more troubling.

Three years ago, on October 23, 2015, its ordinary 5p shares stood at 44.0p. When the London Stock Exchange closed last Friday they stood at 24.3. They have recovered a little from this year’s low, in February, of 21.4 but the trajectory is not one calculated to inspire confidence.

Last year Pendragon squeezed out a profit of £60 million from a turnover of £4.7 billion, this year it expects to make £50 million. Strip out its money making Pinewood CMS operation and the picture looks even less rosy. Its net debt has risen 50% in the past three years, one of the few KPIs to show an increase – even if it is in the wrong direction!

It wasn’t so long ago that I heard of a BMW retailer who said the shop where he bought his shoes made more money than he did selling cars. Whether factually accurate or not, it underlines the tiny margins in the new car end of the market.

Which leaves us where? When a colossus like Pendragon says the sensible money is in used, which it is, when it disposes of some of its premium brands, which it has, it sends out a clear message that, for too many businesses, the current model is broken.

Is selling shoes is better business than selling cars? Ask Trevor Finn.

John Swift

Editor

Auto Retail Network

Tags: BCA, car sharing, FCA, halliwell Jones, Inchcape, Pendragon