Auto Retail Agenda: 3 May 2022
29 April 2022
- NFDA UPDATE ON AGENCY MODEL
- ARNOLD CLARK AND LOOKERS TOP ONLINE AUTHORITY STUDY
- CAZOO INSPECTION COMPLAINTS
- CARVANA ‘HITS A SPEED BUMP’
- INVENTORY SHORTAGE TAX RELIEF PROPOSED
- STOCKWATCH: Inchcape beats forecasts with Q1 2022 revenues up 6% to £1.8bn; full year profit of £300m now predicted
- COMING UP: MPC interest rate decision
- ECONOMIC DOWNTURN ‘LIKELY’ – IoD
- WEAK POUND FUELLING INFLATION
- RISE IN FIRMS AT RISK OF GOING UNDER
NFDA update on agency model
The NFDA revealed last week it has undertaken a series of significant meetings as it continues to work on its response to the Competition and Markets Authority to outline franchised dealers’ views around agency models.
It is working with franchised retailers, specialist legal advisers TLT LLP and leading counsel to “address the possible scenarios affect the future relationship between franchised dealers and manufacturers”.
Chief executive Sue Robinson is keen to reassure members that although little can be said publically at this stage, the NFDA is working hard on the matter and is preparing to highlight a number of issues and ramifications that will potentially affect retailers and their customers.
Arnold Clark and Lookers top online authority study
Only four of 12 major UK auto retailers had an online organic visibility Domain Rating of ‘excellent’ in research by an internet marketing agency: Arnold Clark, Lookers, Jardine and Sytner. Even then, no retailer breached 70.
Five retailers were considered ‘average’, scoring between 40 and 50: Inchcape, Vertu, JCT600, Group 1 Automotive and Listers. ClickThrough, which works with Renault Retail Group and Carzam, said the Domain Rating score expresses how ‘authoritative’ websites are perceived to be by search engines.
Domains are scored from 1 to 100.
The company said it was surprised by Marshall, which scored a “very low” 28. “Though they may excel in other areas of digital and offline marketing, any weakness in digital performance can become a significant problem for the brand.”
However, ClickThrough actually analysed Marshall’s corporate site, Marshall Motor Holdings PLC. In independent research by Auto Retail Agenda, its main retailer site scored a much more acceptable Domain Rating of 52.
Bristol St Motors has a Domain Rating of 55, Halfords is 75 – and Auto Trader tops the auto retail rankings with a DR of 80.
Cazoo inspection complaints
Cazoo’s inspection standards have come under fire after a Times reader received two cars with numerous undocumented imperfections. A delivery driver also knocked down their dry stone wall. “I have not received a complaint about Cazoo before, but your experience more than made up for this,” said consumer champion Jill Insley.
Cazoo, which was praised for its efforts in sorting the matter out, pointed to the sale of more than 60,000 cars in the past two years with 95% of customers rating it ‘Excellent’ or ‘Great’ on Trustpilot. It also paid £1,000 compensation.
WORLD NEWS
Carvana ‘hits a speed bump’
Carvana shares have fallen 85% since summer 2021, when its market capitalisation peaked at $40bn. Last week, it sold $3.3bn of junk bonds, which required sweeteners including an interest rate of 10.3%. Its gross profit per vehicle has plunged in 2022 too. Critics and short sellers comprise 20% of its stock, adds the FT.
Inventory shortage tax relief proposed
Auto retailers low on inventory due to supply chain challenges may be given tax relief in a new bill proposed to the Senate. Those using the ‘last in, first out’ inventory accounting method (common in the US) may be able to wait until 2025 for their inventories to be replaced to determine the income attributable to sales during 2020 or 2021. This would give retailers time to restock. They would be allowed to file amended tax returns or offset tax liability on future returns to claim relief.
Some retailers have faced additional tax payments of $2m or more due to LIFO recapture.
STOCKWATCH
Closing prices on 29 April 2022 and weekly change
Inchcape beats forecasts with Q1 2022 revenues up 6% to £1.8bn; full year profit of £300m now predicted
Auto Trader Group 634.8p (+1.0p / +0.1%)
Caffyns 550.0p (n/c)
Halfords 226.4p (-16.4p / -6.9%)
Inchcape 714.5p (+46.0p / +6.6%)
Lookers 83.5p (+2.5p / +3.0%)
Marshall Motor Holdings 394.0p (n/c)
Motorpoint 242.0p (-18.0p / -7.1%)
Pendragon 22.2p (-0.2p / -0.8%)
Vertu 51.8p (-2.1p / -3.9%)
COMING UP
Wednesday, BRC shop price index
Wednesday, Auto Trader Retail Price Index
Thursday, Bank of England interest rate decision
Friday, Halifax house price index
MONEY MATTERS
Economic downturn ‘likely’ – IoD
The cost of living crisis and declining consumer confidence will cause greater economic harm than previously estimated – which an IoD survey says will increase the risk of an economic downturn in 2022. Optimism in the UK economy is very low and is “now the number one issue seen as having a negative impact on businesses”.
Weak pound fuelling inflation
Rise in firms at risk of going under
There has been a 19% rise in businesses in critical financial distress in the first three months of the year. CCJs are also up 157%. Without further help, a wave of business failures is predicted: help could include extended loan repayment schedules, said insolvency firm Begbies Traynor.
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