Auto Retail Agenda: 25 June 2018
24 June 2018
- RETAILER FACING £1M TAX BILL OVER FREE FUEL
- MB VANS BOSS CALLS FOR DEALER MINDSET CHANGE
- WLTP CHANGES TO HIT SEPTEMBER SALES
- WILLIAMS BLAMES BRAND PUSH FOR FALLING PROFITS
- TESLA STAGES TEST EVENTS
- 2018 WHO’S WHERE REPORT LAUNCHED
- SMALL SUV MARKET ‘TO SKYROCKET’
- STOCKWATCH – Inchcape, Lookers up
- MONEY MATTERS – BoE vote 6-3 to keep base rate
- LAUNCH DIARY – Dacia Duster, Mitsubishi Shogun Sport, Kia Cee’d, Audi A1
- COMING UP – CBI conference on government’s low carbon transport strategy
- OUR BLOG – Stock supply a growing issue
Retailer facing £1m tax bill over free fuel
Retailers and staff are facing a crackdown on ‘free fuel’ in demonstrators by HMRC, according to accountancy giant, UHY Hacker Young.
UHY claims one, unnamed, group now faces a £1 million-plus assessment.
Under company car tax rules, even the use of a single litre of fuel paid for by a business for an employee’s private use attracts a taxable benefit of £23,400 per car. The figure paid by the business and employee is then calculated based on CO2 emissions and the employee’s tax band. HMRC can also apply charges retrospectively going back a number of years.
In a new report UHY said: “Common problem areas include misuse of the single company fuel card within a sales department as well as excess fuel put in vehicles for demonstration purposes and the excess enjoyed for private use by members of the sales team. There have also been cases of ‘static’ demonstrators being taken home by employees and HMRC have techniques to detect this type of issue.”
MB Vans boss calls for dealer mindset change
Mercedes-Benz Vans͛ dealer network will have to change mindset and put greater focus on selling the services and operating systems of the brand’s vehicles rather than concentrate on the physical van, according to UK boss Steve Bridge.
Mr Bridge cited a company in Germany that has been a Mercedes customer for more than 40 years, saying: “What I know is the value of that customer annually not just from the sale of the vehicle but the value of everything else. It might be a case of saying ͚actually I am not bothered if I make any money on the van at all, because the services I sell are different͛.”
Speaking to exclusively to Auto Retail Agenda Mr Bridge said this might require a shift in mentality for some of his dealers, saying: “While some are on board, others are proving more reluctant and use more old-fashioned techniques. At the other end of the spectrum we’ve got things where you can go online and request a test drive through Amazon Prime. Somewhere in the middle there is something that will work. As well as learning from the car market, the van sector can learn from the world of trucks.”
WLTP changes to hit September sales
New research by Auto Retail Bulletin magazine has found retailers expect stock and delivery disruption running into the key September plate-change month because of the introduction of WLTP regulations.
Auto Retail Bulletin’s six-monthly Barometer research, sponsored by Total, asked franchised retailers what impact the WLTP emissions and mpg testing changes would have on their business. Most of responses cited stock shortages and customer confusion particularly in August and September, but some claimed this could take until the end of the year to solve.
* To read the full results of the Barometer survey subscribe to sister title Auto Retail Bulletin. [link https://www.auto-retail.co.uk/why-subscribe/ ]
Williams blames manufacturer push for falling profits
Manufacturers chasing volume were said to be a factor in driving down profitability at a BMW, Jaguar and Land Rover retailer Williams which saw pre-tax profits fall by more than two thirds last year.
North West centred Williams Motor Co reported PBT of £2.6 million in 2017 against £8.1m in 2016, a drop of 68%.
Williams managing director Nick Cook said: “BMW and Mini registrations were down with margins coming under pressure as volume targets were pursued. Used volume increased although effect of margin pressure, in particular the negative influence of ex-demonstrators, saw overall used contribution decline by 39%.”
Tesla stages test events
Tesla’s sales network has been hosting a series of events before the end of the month to introduce interested and potential customers to the cars. The last of June’s Tesla on Tour events is being hosted this Friday by Tesla Birmingham at Lichfield.
Latest Who’s Where in Auto Retail published this week
The 2018 edition of Who’s Where in Auto Retail, the definitive guide to the location of every major car retailer in the UK, will be available this week. This year Who’s Where, published by Auto Retail Network that also publishes Auto Retail Agenda, includes for free the Market Trends 2018 report which analyses the data from Who’s Where over the past five years to discover the latest trends in auto retail.
For more information and to order a copy go here.
WORLD NEWS
Small SUV market `to skyrocket’, says trade.
Bigger profit margins for hatchback-based SUVs will put another 400,000 units on the 1.4 million sold in Europe last year as new models pour into the sector. The average list price for a small SUV such as VW T-Roc is around £20,500 against £15,250 for the hatch or supermini it is based on.
Felipe Munoz, global analyst for JATO Dynamics, said: “They’re mostly based on the regular subcompacts but selling for higher prices – that’s a crucial factor.”
STOCK WATCH
Closing prices at Friday June 29 and weekly movement.
BCA 220.0p (-3.0p)
Cambria 61.9p (-1.0p)
Caffyns 425.0p (no change)
Inchcape 763.5 (+4.0p)
Lookers 109.0p (+4.6p)
Marshall Motor Holdings 166.0p (-0.4p)
Motorpoint 253.4p (-0.6p)
Pendragon 26.2p (+0.8p)
Vertu 50.3p (-0.8p)
MONEY MATTERS
Base rates held at 0.5% again
The Bank of England’s Monetary Policy Committee voted by a majority of 6-3 to maintain Bank Rate at 0.5% this week. It said although both output and consumption show signs of recovery from Q1 a rise in base rate is not needed to curb inflation and any future monetary tightening will be slight.
Its next meeting is on August 2.
Domestic spending gathers strength
Household spending is showing signs of recovery with two reports painting a rosier picture of the consumer economy.
The Household Finance Index from data company IHS Markit, a survey watched by the Bank of England, showed household incomes increased this month at the sharpest rate since its survey began in 2009.
LAUNCH DIARY
June. New Dacia Duster starts from £9,995 – UK’s cheapest SUV.
July. Mitsubishi Shogun Sport seven seater turbo diesel SUV. From £37,775.
August 1. Third generation Kia Cee’d starting from £18,295
September: Audi A1 hatchback with hi-tech cockpit. Deliveries from November, prices tbc.
COMING UPFriday 29 June: Balance of Payments, UK: Quarter 1, 2018.
Tuesday 3 July: CBI Energy and Climate Change Network event discussing the government’s plans for road transport decarbonisation based on the department’s Road to Zero Strategy.
Under or over-supply an issue for retailersOne way or another the issue of supply has been very much at the forefront of the trade in this last couple of weeks and will only grow throughout the summer.
On one hand a set of financial reports filed by one retailer this week made an oblique reference to the effect the force-feeding of stock by manufacturers into retailers had on profit margin and one was reminded of that old business saying, turnover is vanity, profit is sanity.
On the other the gathering storm that is WLTP gained momentum with manufacturers saying there will be gaps in production as factories struggle to respond to the new standards they claim have been late in being set and having to manage the transition from NEDC emissions to the new ones. VW is one such manufacturer, saying it expects to lose up to 250,000 vehicles in the second half.
Looking to this autumn and beyond when one imagines the tax profile of the majority of cars measured under WLTP will be a lot less attractive than now as mpg figures go down and emissions go up, what is going to happen to the corporate market? Quite how the business customers will respond to this remains to be seen but it doesn’t bode well, does it.
There was something else buried away in those end of year financials; one line which said that the company fears for 2018 even after that rather artificial bounce this spring compared to April 2017 and that despite putting on a brave face in public, many others do as well.
With WLTP hanging over their heads, an uncertain economy as we get nearer to March 29, 2019 Brexit cut off with no clear industrial strategy and the possibility of Donald Trump slapping a 20 per cent tariff on European cars pushing manufacturers to pump more into markets this side of the Atlantic, you can see why.
Hold on tight, we are in for a very bumpy ride.
John Swift
Editor
Auto Retail Agenda
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