The agency model is an interesting concept, he said, because of the potential control over pricing and discounts that a manufacturer could claim. However, it also potentially confers significant cost and risk to the OEM.Brands could be liable for many more costs under an agency agreement, with people-related costs, stock holding and distribution all potentially on the manufacturers’ shoulders.

Cazoo’s controversial $8bn float this week

Cazoo is now being described as an ‘octo-unicorn’ with an $8bn valuation. When it floats on Friday, founder Alex Chesterman’s stake will be worth $2bn. 60 employees will be paper millionaires and 2,250 staff will receive windfalls.

Traditional investors warn Cazoo is a bubble waiting to burst, “a company valued so highly that it can never live up to its promises”.

Cazoo bulls say any comparisons with traditional retailers is pointless as they will not be able to achieve the global scale of Cazoo. US alternative Carvana is valued at $60bn, while thriving UK retailer Vertu is valued at £188m.

Sanjay Vidyarthi, an analyst at the broker Liberum, is sceptical: “I can see how people make a read-across from Carvana and extrapolate this big valuation — but fundamentally, is Cazoo really worth more than the entire UK motor retail sector? It doesn’t feel right.”

The fact Cazoo is going public via a Spac is also controversial. The company has experienced redemptions of 70%, from sponsors seeking returns pre-float; this cut potential cash from sponsors from $805m to £241m.All eyes are now on Friday’s float – and whether Cazoo will be a Deliveroo-style flop or defy the sceptics with a share price rise.

https://bit.ly/2WjGXru

 

CO2 monitors encouraged

300k CO2 monitors are being installed in schools to lessen Covid outbreaks, and businesses are now being encouraged to follow suit. The units help improve ventilation, which will be more challenging as cooler winter weather approaches. Many businesses are already installing CO2 monitors and air filtration systems to boost employee health.

https://bbc.in/2WeE5Mi

 

Old car petrol bills to rise

Petrol bills for older cars will rise £100 a year with the introduction of E10 fuel. As many as 700k cars incompatible with E10 will have to use pricier super unleaded. According to a government guide, some cars as late as 2010 will be unable to use E10.

https://bit.ly/2UEjnFl

 

Le Mans 24hr effect ‘immeasurable’

Toyota has won the 2021 Le Mans 24 Hours – and a former Ford lead product and sales consultant says the boost for retailers whose brand wins the famous race is huge. “I was at Ford when we came back with the GT in 2016 and the effect it had on the dealers was immeasurable,” said Matthew Warrener, now founder of retail development agency Auto Atai.

“It was significant across every department, every individual and the customer experience. Even without the win, the awareness, hype and pride were off the scale. Massive ROI.”

 

 

WORLD NEWS

Sonic Automotive $15 minimum wage

Hourly employees at Sonic Automotive will receive a $15 (£11) minimum salary from 1 September. A spokesperson believed this beats every Sonic competitor. Sonic has 8,500 employees and the average uplift per employee is $3,250 (£2,400). The UK National Living Wage for those aged 23 and over is £8.91.

https://bit.ly/3y9Eqgq

 

Chip woe for VW, Toyota

Volkswagen Wolfsburg, where 60k people assemble cars, restarts this week after the summer shutdown – but on just one shift due to the global semiconductor shortage. Other VW plants in Germany are having an extended summer closure.

Toyota is also cutting production across the globe and says its September production plan will be slashed 40%. There are reports the order time for automotive chips has stretched to 20 weeks.

https://bit.ly/3gor7Tl

 

 

STOCKWATCH

Closing prices on 20 August 2021 and weekly change

Vertu the standout performer after latest glowing interims

Auto Trader Group 637.2p 635.0p (-2.2p / -0.3%)

Cambria 80.5p 81.0p (+0.5p / +0.6%)

Caffyns 450.0p (n/c)

Halfords 373.2p 370.4p (-2.8p / -0.6%)

Inchcape 917.0p 901.5p (-15.5p / -1.7%)

Lookers 69.2p 67.7p (-1.5p / -2.1%)

Marshall Motor Holdings 247.0p 248.0p (+1.0p / +0.4%)

Motorpoint 329.0p 332.5p (+3.5p / +1.0%)

Pendragon 18.3p 18.55p (+0.25p / +1.3%)

Vertu 46.7p 51.0p (+4.3p / +8.8%)

 

 

COMING UP

Friday, Cazoo floats on NYSE

 

 

MONEY MATTERS

Booming UK house prices to continue

House prices will continue rising thanks to low interest rates and changing home preferences says the Resolution Foundation. The current boom will not falter with the end of the stamp duty holidays in England, Scotland, Wales and Northern Ireland. House prices increased 13.2% between June 2020 and 2021. Wales saw the UK’s biggest increase in house prices.

https://bbc.in/3j5oszD

 

ESG shuns criticised

Fund managers who shun companies over ESG (environmental, social and governance-based investing) issues have been criticised by Phillip Morris boss Andre Calantzopoulos. Some managers are excluding tobacco, oil and other firms but “excluding doesn’t resolve the problem”.

https://bit.ly/3B1loL5