Auto Retail Agenda: 24 January 2022
23 January 2022
- AFTERSALES GAP TO COST RETAILERS £1.3bn
- CAZOO SHARE CRASH COSTS DAILY MAIL
- UNIPART WINS VOLKSWAGEN GROUP CONTRACT EXTENSION
- DE BEERS CFO JOINS INCHCAPE BOARD
- EX-DAIMLER ZETSCHE LEADS NEW AUTO SPAC
- CHINA TO CUT EV SUBSIDIES 30%
- STOCKWATCH: Vertu shareholders received first dividend payment for two years last Friday
- COMING UP: BRC Shop Price Index
- PAYPAL ADDS CREDIT CARD PROTECTION
- OLDER WORKERS MISSING FROM WORKFORCE
Aftersales gap to cost retailers £1.3bn
Retailers face a loss of routine service revenue amounting to £1.3bn over the next four years, due to the shortage in new car availability. Real Time Communications estimates there may be 1.8m fewer vehicles aged 1-3 years by the end of 2022.
This major servicing shortfall is currently being masked by the high-margin new and used car boom, but is expected to bite in 2022 as 2019 cars fall out of franchised networks. What’s more, it won’t be resolved until the continuing chip shortages are addressed.
(An Infineon executive has warned the chip shortage will last until 2023.)
The average service value of a new car to a franchised retailer during its warranty period is £150 in the first year, £350 in the second and £150 in the third – which is how RTC calculates its £1.3bn figure. “The true impact is yet to be realised,” said RTC’s John Law. “The numbers clearly show a potential big loss in aftersales revenues for the next few years.”
RTC is urging retailers to identify opportunities from existing customer data and mine their DMS to find new opportunities, “constantly encouraging motorists to return ot the retailer rather than go elsewhere”.
The growth in used car aftersales won’t offset the new car losses either, it adds, as warranties are traditionally one year versus three.
Cazoo share crash costs Daily Mail
Cazoo shares have crashed from a launch price of $10 to $4.15 since floating via a Spac in August 2021. This has cost Daily Mail & General Trust shareholders £565m. (DMGT backed Cazoo in its early stages.) Cazoo floated on the NYSE for $7bn and is now valued at $3.1bn.
Cazoo’s valuation “has been a source of disbelief among traditional UK car retailers” reports The Sunday Times; founder Alex Chesterman argues it’s justified because Cazoo has more growth potential in the UK and Europe.
Unipart wins Volkswagen Group contract extension
Unipart Logistics has won a two-year contract extension to support the Volkswagen Group UK and Ireland aftermarket supply chain. 500 Unipart employees work in VW’s Tamworth hub, servicing more than 900 retailers and trade partners. Unipart provides logistics, network service support and bespoke services for the retailer network.
De Beers CFO joins Inchcape board
Sarah Kuijlaars, chief financial offer at diamond company De Beers, has joined Inchcape plc as non-executive director. Ms. Kuijlaars had a 26-year career at Shell and is a member of the WomenCorporateDirectors foundation.
WORLD NEWS
Ex-Daimler Zetsche leads new auto Spac
Former Daimler CEO Dieter Zetsche has joined Kensington Capital to head a new automotive focused Spac. It will raise $200m to acquire a business “operating in the global automotive and automotive-related sector”. As with other Spacs, Kensington has two years to find a merger target and complete a deal, or refund investors.
China to cut EV subsidies 30%
China is to cut ‘new energy vehicle’ subsidies by 30% in 2022 and will withdraw them entirely from 2023. The country deems the market has matured enough in terms of demand to grow without government aid. Restrictions on the purchase of electric and plug-in hybrid NEVs, which were aimed at cutting congestion, will also be lifted.
STOCKWATCH
Closing prices on 21 January 2022 and weekly change
Vertu shareholders received first dividend payment for two years last Friday
Auto Trader Group 683.6p (-3.4p / -0.5%)
Caffyns 575.0p (n/c)
Halfords 340.0p (-17.0p / -4.8%)
Inchcape 857.5p (-22.0p / -2.5%)
Lookers 70.6p (-3.6p / -4.9%)
Marshall Motor Holdings 397.0p (n/c)
Motorpoint 300.0p (-8.0p / -2.6%)
Pendragon 21.2p (-2.5p / -11.1%)
Vertu 64.2p (-10.6p / -15.2%)
COMING UP
Tuesday, public sector net borrowing
Wednesday, BRC Shop Price Index
9 February, Radius Law automotive law update conference: sign up here
MONEY MATTERS
PayPal adds credit card protection
A ruling by the Financial Ombudsman Service means anyone buying through PayPal will get credit card protection if anything goes wrong. Purchases of more than £100 on credit cards are subject to Section 75 of the Consumer Credit Act, meaning the issuer is liable for any breach of contract. This now extends to credit cards processed by PayPal.
Older workers missing from workforce
There is a shortfall of 630,000 over-50s in the workforce as growing numbers are neither in work nor looking for it. This is bad news for an economy blighted by skills shortages, says the Institute for Employment Studies. “We do not have enough people in the labour market for the level of demand in the economy.”
Stephen Timms from the Commons Work and Pensions Committee is now encouraging employers to look to older people to fill job vacancies. “There is a very big opportunity, and a huge need.”
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