Auto Retail Agenda: 24 October 2022
22 October 2022
- PENDRAGON IS LATEST HELD TO RANSOM
- CONSTELLATION IN NEGATIVE MOODY’S OUTLOOK
- FORD NAMES PROVING GROUND HQ AFTER LATE MARSHALL CHIEF
- ROBERT FORRESTER TO SPEAK AT AUTO RETAIL LIVE
- LITHIA CONFIRMS INTEREST IN UK RETAIL
- CARVANA BECOMES A ZOMBIE
- STOCKWATCH: Lookers announces £15m share buyback programme
- COMING UP: Cazoo Q3 results
- UK FINANCIAL OUTLOOK DOWNGRADED BY MOODY’S
- 2022’S THIRD NATIONAL INSURANCE SALARY CHANGE DUE
Pendragon is latest held to ransom
Pendragon is refusing to pay a $60m (£54m) ransom from dark web hackers, despite a threat to leak sensitive information.
The auto retail group, which is currently the subject of a takeover bid, told The Times it had been undergoing a cyberattack for a month “by a gang connected to a sophisticated group known as LockBit 3.0”. It says it is in daily contact with the gang, which has provided proof of the data breach.
“We refuse to be held hostage by this group and we will not be paying the ransom demand,” said CMO Kim Costello.
The firm says only 5% of its database had been breached before security experts protected the system. It has notified OEM partners and staff, and cyber law enforcement agencies have been alerted.
In August, Holdcroft suffered a ransomware attack which saw some systems and files permanently deleted and employee data possibly compromised. In April, TrustFord was hit by a serious cyberattack while, in March, a group of LSH Auto employees began legal proceedings against the firm for not being told about a major data breach.
Constellation in negative Moody’s outlook
Moody’s has changed a series of outlooks for Constellation Automotive Group from stable to negative. It blamed subdued demand due to a lack of new car volumes, and an underperforming used car market “leading to materially higher leverage well above Moody’s expectations”.
Profitability is at risk due to the recent capital-intensive pivot to produce ‘retail ready’ cars. Moody’s expects gross leverage to peak just above 10x by March 2023, up from 7.5x in the 12 months to April 2022.
“More positively, the company has time to improve performance and wait for demand to recover ahead of its first material refinance need in 2026.”
Ford names proving ground HQ after late Marshall chief
Former Marshall chairman Richard Parry-Jones, who sadly died suddenly in April 2021, is to be honoured at Ford’s famous Lommel proving ground in Belgium. The HQ has been named the Richard Parry-Jones Appraisal Center, as tribute to his work as group vice president of global product development for a nearly a decade from 1998. Richard transformed the fortunes of Ford in the 1990s with a series of dynamically outstanding models, most famously the original Ford Focus.
Robert Forrester to speak at Auto Retail Live
Vertu CEO Robert Forrester, Ford customer service director Sarah Brettle and REALtime Communications data and insights director John Law have been confirmed as panellists on the next Auto Retail Live webinar looking into the future of aftersales. The free online event is on 15 November and registrations are now open: sign up here.
WORLD NEWS
Lithia confirms interest in UK retail
Lithia CEO Bryan DeBoer has voiced his interest in entering the UK market, commenting that European businesses typically trade at lower multiples than US retailers. “If we can find the right team, because of the strong value of the dollar, it seems like it’s a good time to be able to do that.”
He also referenced August’s failed bid to buy Pendragon, saying it wasn’t just about the raw assets, but “fleet and leasing exposure that helps open up a new horizontal and… a DMS system that’s pretty savvy and may help us with our $110m annual cost of our DMS stack today”.
“I would be surprised if, 12 months from now, they [Lithia] haven’t made a deal in the UK,” said Morningstar analyst David Whiston. “They’ve already been doing some work on it.”
Carvana becomes a zombie
Carvana has “crashed into zombie territory [firms that haven’t produced enough profit to service their debts] just in time for Halloween”. Analysts last week downgraded the firm due to “bloated costs stricture [and] high cash burn”. The company’s negative earnings and profitability are a red flag in a rising-rate environment, and commentators are now urging investors to avoid stocks with poor fundamentals in a bear market to reduce their portfolio risk.
STOCKWATCH
Closing prices on 21 October 2022 and weekly change
Lookers announces £15m share buyback programme, which began on 19 October
Auto Trader Group 486.2p (-37.4p / -7.4%)
Caffyns 525.0p (+10.0p / -6.5%)
Halfords 159.4p (-13.4p / +1.9%)
Inchcape 708.0p (-3.5p / -0.4%)
Lookers 78.9p (+12.0p / +16.4%)
Motorpoint 142.0p (-8.0p / -5.4%)
Pendragon 26.4p (-0.3p / -1.1%)
Vertu 42.1p (+1.2p / +2.8%)
COMING UP
Thursday, Cazoo Q3 results
Thursday, Inchcape trading statement
15 November, Auto Retail Live: Future of aftersales
MONEY MATTERS
UK financial outlook downgraded by Moody’s
Rating agency Moody’s has downgraded the UK’s financial outlook to negative. The move follows an earlier cut in the outlook for the UK’s credit rating by Fitch, from stable to negative. Moody’s has, however, maintained the UK’s sovereign rating at Aa3.
The government’s “ability engender confidence in its commitment to fiscal prudence” will be considered by Moody’s in resolving the negative outlook.
2022’s THIRD National Insurance salary change due
From next month, workers will see the third change in National Insurance on their salaries in eight months. Before April, it was 12% on earnings from £9,568-£52,270, and 2% on earnings over £52.270. In April, an extra 1.25% ‘social care levy’ was added to both figures, and the amount you start paying NI increased to £9,880. In July, the threshold was raised again, to £12,570.
From November, the extra 1.25% will be reversed; it was a rare mini-budget decision not changed by chancellor Jeremy Hunt. The threshold change means workers will pay less NI from November than they did at the start of the year.
Tags:
Carvana, Cazoo, Constellation, Ford, holdcroft, Lithia, Lookers, Marshall, Moody's, Pendragon, Realtime Communications, Robert Forrester, Vertu 
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