24 February 2019

• FCA MOVED TO PROTECT LOW-INCOME BUYERS
• RYBROOK TO BUY STRATSTONE JLR RETAILER?
• £23 MILLION SCRAPPAGE SCHEME OPENS FOR LONDON LCVs
• LOOKERS `TOP EMPLOYER’ FOR THIRD YEAR RUNNING
• WORLD NEWS – Renault’s credit rating downgraded, Euro probe into parts prices
• STOCK WATCH – Rise for Caffyns, Inchcape continues climb
• COMING UP – Auto Retail Live Facebook Briefing, CBI digital connectivity policy
• LAUNCH DIARY – Range Rover Evoque, Mazda 3, Jeep Wrangler
• MONEY MATTERS – `Pay on time’ campaign launched, Make Tax Digital causing problems
• OUR BLOG – click here

FCA moves to protect low-income buyers

Sub-prime car finance could be given closer consideration in the forthcoming review into motor sales credit by the Financial Conduct Authority which is said to be considering imposing a cap in the rent-to-own sector to protect the most financially vulnerable.

The FCA is said to be moving towards a cap in the RTO market, limiting both the cost of the product and the charge for credit. It is believed to be proposing that credit charges cannot be more than the cost of the product and RTO firms will have to benchmark the cost of products against the prices charged by three other retailers. It is estimated that the cap will cost the RTO industry £23 million per year.

The FCA said: “RTO customers are some of the most financially vulnerable in our society. Only one third are in work, most are on low incomes (between £12,000 and £18,000) and are likely to have missed a bill payment in the last six months. Despite this, firms often charge these customers more than other retailers for essential household goods such as a washing machine or a cooker, and with add-on insurance and warranties in some cases RTO customers can pay up to four times the average retail price.”

A spokesman for the website, www.verdict.co.uk/motor-finance-online, said: “It is unknown if there will be any transferal of the approach into the motor finance review, which is more likely to look at commissions and information provided at the point of sale, but if there is a focus on low incomes and vulnerability it could be that the regulator might consider sub-prime motor finance more closely in its review.”

https://bit.ly/2VcDHbh

Rybrook to buy Stratstone JLR retailer?

Auto Retail Agenda believes that Rybrook is in talks with Stratstone to buy one of its JLR sites which will need new premises. Sources say the deal for the Stoke-on-Trent retailer has been in the offing since before Christmas and although neither side will confirm this, it is believed a formal announcement will be made before the end of the month.

The existing city centre site is several decades old and will need to be replaced with brand new premises. Stratstone has already bought prime site land off Stanley Matthews Way near the Stoke City FC bet365 football stadium which would put it close to Audi, Lexus and Toyota, VW, SEAT and Ford retailers.

£23 million scrappage scheme opens for London LCVs

LCV retailers in and around London are in line for a sales boost with this week’s launch of a £23 million scrappage scheme to help the capital’s smallest businesses and charities scrap older, more polluting vans and minibuses.

The fund was opened in preparation for the 24/7 Ultra Low Emission Zone which starts in central London on April 8. Applicants will be able to receive up to £6,000 towards a new EV or £3,500 to scrap and fund cleaner transport alternatives. It is in addition to existing government EV grants.

A second scrappage scheme capped at £25 million will open later this year for cars.

The Mayor of London, Sadiq Khan, said: “Motorists need our help and support to take positive action, and I am proud to today open this £23 million scrappage scheme today to help enable microbusinesses and charities to scrap polluting vans and minibuses, and switch to cleaner vehicles. The van scrappage scheme will be followed later this year with a £25 million fund to help lower-income households scrap polluting cars.”

Click here to read our blog on this.

Lookers `top employer’ for third year running

Lookers is the only car retailer certified in the latest Top Employers Institute’s index of businesses which provide excellent working environments and have the best programmes to attract, retain and develop talent.

It is the third year running Lookers has been recognised. Among its staff benefits package are one full year’s paid maternity leave, two years critical illness cover and enhanced holiday packages from the first year of employment.

Andy Stephenson, Lookers Group people director, said: “As one of the leading motor retailers we are always looking to attract, recruit, retain and reward talented people from every business sector. The measures and benefits we have introduced have created a meaningful and noticeably different place to work. Our people from across the business do amazing things every day and this award is recognition of their commitment to being excellent and delivering an outstanding customer retail experience.”

James Gooding, UK country manager for the Top Employers Institute, said: “Optimal employee conditions ensure that people can develop themselves personally and professionally. Our comprehensive research concluded that Lookers provides an outstanding employment environment and offers a wide range of creative initiatives, from secondary benefits and working conditions, to performance-management programmes that are well thought out and truly aligned with the culture of their company.”

WORLD NEWS

Renault’s credit rating cut to `poor’

Renault’s credit status has been downgraded from `stable’ to `negative’ by credit rating agency Standard & Poor’s which cited industry-wide headwinds and more company-specific problems which could reduce its ability to generate profits in the next few years.

It said: “The negative outlook reflects the risk that Renault will be unable to return its EBITDA margin to 2017 levels (9%-10%) over the next two years given the numerous headwinds in the global automotive industry and company-specific problems that could reduce its operating profit generation for a sustained period.”

Earlier this month, Renault reported a 6.3% drop in operating profit to £3.14 billion last year.

https://bit.ly/2V9SYcV

European Commission opens probe into parts pricing

Renault, Nissan, PSA Group, Fiat Chrysler Automobiles and JLR are being investigated by the European Commission into claims that they worked together to push up parts prices by as much as 25%, in clear violation of antitrust regulations. Consulting firm, Accenture, has also been named by the report in German magazine, Der Spiegel.

JLR, PSA and Fiat Chrysler declined to comment while spokespeople for Renault and Nissan were unavailable.

This would be the second large-scale investigation by the commission into European carmakers. Last September it opened a probe into whether Volkswagen, Daimler and BMW colluded on clean-emissions technology for cars.

https://bit.ly/2tA35Mk

STOCKWATCH

Rise for Caffyns, Inchcape continues climb

Closing prices at 22 February and weekly movement

BCA 207.0p (-6.0p)

Cambria 65.0p (+3.0p)

Caffyns 410.0p (+35.0p)

Inchcape 608.5p (+2.5p)

Lookers 105.0p (+1.0p)

Marshall Motor Holdings 165.0p (+2.5p)

Motorpoint 193.0p (-3.8p)

Pendragon 26.6p (-0.4p)

Vertu 38.9 (-0.1p)

COMING UP

Tuesday. February 26. Auto Retail Live Profit Briefing: How to Drive More Sales Using Facebook. Practical tips and advice on Facebook and Instagram advertising. More details here

March 7. CBI Insight, digital connectivity policy briefing. Latest regulatory issues, future opportunities with 5G. (Leicester). Click here

March 21. Bank of England Monetary Policy Committee meeting on interest rates.

LAUNCH DIARY

Range Rover Evoque. Cap hpi forecasts sector leading RVs with average of 63% at three years/36,000 miles. Order books open now, deliveries begin end of spring. From £31,600/£245 pcm on PCP.

Mazda 3. High-spec hatchback with every car getting head-up display with traffic sign recognition, radar cruise control, LED headlights, sat-nav, Apple Carplay and Android Auto connectivity. From £20,595.

2019 MY Jeep Wrangler.  FCA 2.2-litre MultiJet II turbo diesel and 2.0-litre turbo petrol with new eight-speed automatic transmission. Much improved safety and interior with large touchscreen control centre.  From £44,865.

MONEY MATTERS

Pay on time campaign launched

The Federation of Small Businesses has launched a `Fair Pay, Fair Play’ campaign to ramp up pressure on the Chancellor before his Spring Statement next month following his promise to tackle the issue of late payments a year ago. FSB research shows that 84% of small firms report being paid late.

Mike Cherry, FSB national chairman, said: “Poor payments is a problem that so many of our small businesses can relate to. As a country, we are behind almost every other industrialised nation in our ability to pay small businesses on time.”

For more click here.

Make Tax Digital deadline causing problems, says KPMG

Tax advisors say the Make Tax Digital deadline on April 1 may not be enforceable amid reports that many businesses are struggling to implement the systems and calling for more time.

Around 1 million businesses will have to keep digital records, maintain a digital audit trail of all business transactions and implement new software to submit their VAT returns digitally. Corporation and Income tax are likely to be added later.

However, KPMG said its surveys revealed that around two-thirds of firms say they need more support and are still working out how to implement it. Adding to the confusion is the Brexit deadline just four days before MTD is due.

Chris Downing, tax partner at KPMG said: “With just over a month to go until the deadline, it’s worrying to see that almost two thirds of businesses say that they need more support and are still working out what they need to do. This could potentially be both costly and time-consuming, depending on the changes that need to be made.”

John Swift

Editor

Auto Retail Agenda

Tags: Auto Protect, FCA, Lookers, Rybrook, Stratstone, ULEZ