Auto Retail Agenda: 4 May 2020
03 May 2020
- LOOKERS REJECTS PENDRAGON MERGER BID
- GOVERNMENT CONSULTS RETAILERS OVER REOPENING PLANS
- ECO PROTEST WARNING FOR DEALERS
- NEW LOOKERS ONLINE SHOP
- CORONAVIRUS: AUTO INDUSTRY ROUND-UP
- LOWER PRICES FUEL DEMAND AFTER LOCKDOWN
- SONIC CUTS HEADCOUNT BY A THIRD
- CHINA FIRST WITH NEW PORSCHE SHOWROOM DESIGN
- STOCKWATCH – share price recovery starts
- COMING UP – April 2020 new car registrations
- NEW INSOLVENCY RULES EXPECTED THIS WEEK
- FLEXIBLE FURLOUGH SCHEME CALL
- BLOG: When will we see the first UK £10bn supergroup?
Lookers rejects Pendragon merger bid
Pendragon has confirmed it approached Lookers about a merger in the last fortnight. Lookers rejected the approach because of the ongoing FCA investigation and the coronavirus crisis, according to a report by Sky News.
The financial statement by Pendragon said: “The company confirms that it held outline discussions with Lookers suggesting they might explore the potential benefits of a combination of the two businesses and how this could be attractive to both sets of shareholders.
“While Pendragon believed that such an exploration would have proved beneficial, these early discussions have now ceased.
“Pendragon remains well-positioned having already taken significant steps to reshape the business and to cut costs both in advance, and as a result, of the recent events which have temporarily curtailed business activity. And, as previously announced, Pendragon continues to benefit from the support of its stakeholders during the current disruption.”
A Pendragon shareholder has indicated the company may consider an alternative merger partner.
Pendragon launched a hostile takeover bid of Lookers in 2006, which was ultimately rejected.
Government consults retailers over reopening plans
Leading franchised retailers are thought to be among businesses consulted by the Department for Business over the Government’s lockdown exit strategy which is expected to be revealed later this week.
Auto Retail Agenda understands the Institute of Directors as well as business leaders were given until this evening (Sunday, 3 May) to deliver feedback on the plans back to the department, as predicted by the British Chambers of Commerce.
National newspapers reported the BEIS plans were detailed and divided into modules by working environment. One source claimed the Government plans were sensible and in line with expectations.
Included in the plans for businesses reopening are points such as avoiding sharing desks and equipment, staggering working times, having good access to hand washing facilities and to avoid where possible having more than one person in a car.
The plans follow a meeting on Friday between Government officials and both the SMMT and NFDA, according to a report in Autocar.
Eco protest warning for dealers
Franchised retailers have been warned of a new Extinction Rebellion campaign targeting car showrooms, manufacturers, banks and filling stations.
The NFDA issued the warning to members this week after the ‘No going back’ campaign was launched by the environmental activist group. One Jaguar Land Rover franchise is known to have been graffitied by protestors and the images shared on social media.
Extinction Rebellion wants to stop the re-opening of car dealerships and other businesses it sees as contributing to the use of fossil fuels.
New Lookers online shop
Lookers has introduced a new online shop. Customers browse as normal from Lookers’ 12,000-car stock, and can then click ‘build your deal’ to customise finance, get a part-exchange valuation and, for a small fee, reserve online. Home delivery is then arranged; when retailers open, customers will also be able to book showroom delivery slots.
Coronavirus: auto industry round-up
Crown Honda Bushey has donated 3,000 latex gloves to a local disabled charity seeking PPE… Bristol Street Motors is running a nationwide ‘Haircuts for Heroes’ challenge where staff donate the cost of a haircut to the NHS… eBay has extended its free advertising package and says measures will be applied to any further extension of the lockdown… An Auto Trader survey suggests 76% of customers are concerned about visiting a dealership in person when restrictions lift… CarGurus has extended a 50% rate reduction throughout June… Many companies in China are encouraging and even mandating the use of cars for commuting rather than public transport… Public appetite for lifting lockdown is “minuscule” reveals a new Opinium survey… MotoNovo has extended the validity of finance acceptances from 30 to 60 days… Audi and VW extend new car warranties by three months.
WORLD NEWS
Lower prices fuel demand after lockdown
Retailers in EU countries with easing lockdown restrictions are fuelling used car demand through lower pricing, according to the latest Indicata Market Watch report.
Sonic cuts headcount by a third
Sonic Automotive, North America’s sixth-largest new car retailer, has used terminations and furloughs to reduce its headcount by a third. It is believed to have around 9,300 employees. The cuts will save $14 million a month.
China first with new Porsche showroom design
The first Destination Porsche Centre has opened in China. The new corporate identity will be rolled out to all 850 Porsche retailers globally over the next decade. Porsche intends retailers to become “a central gathering place for the Porsche community”. Due to coronavirus, the opening took place online.
STOCKWATCH
Closing prices on 1 May 2020 and weekly change
Auto Trader Group 459.2p (+45.2p / +10.9%)
Cambria 37.0p (-1.0p / -2.6%)
Caffyns 280.0p (n/c)
Halfords 102.0p (+10.9p / +11.9%)
Inchcape 494.0p (-5.2p / -1.0%)
Lookers 23.75p (+3.65p / +18.1%)
Marshall Motor Holdings 105.0p (+19.0p / +22.0%)
Motorpoint 190.0p (-17.0p / -8.2%)
Pendragon 8.18p (+1.06p / +14.8%)
Vertu 22.9p (+0.9p / +4.0%)
COMING UP
Tuesday, SMMT April 2020 new car registrations
Wednesday, Cambria half-year results
Thursday, Auto Retail Live: Finding a way forward with Ken Savage from Perrys, Rawdon Glover from JLR and Karolina Edwards-Smajda from Auto Trader
Thursday, Bank of England interest rate decision
MONEY MATTERS
New insolvency rules expected this week
Emergency legislation is expected this week to make insolvency rules ‘fit for purpose’. Measures may include ‘light touch’ insolvencies. Wrongful trading rules have already been suspended for three months. Insolvency Service figures suggest the vehicle wholesale, retail and repair trade has the second-highest number of insolvencies in the year ending Q1 2020, behind only construction.
Flexible furlough scheme call
Furlough rules need to be more flexible to help staff return to work, according to the IGA. A phased scheme operates in France, allowing employees to return when needed; employers claim back a percentage of their salary for hours not worked.
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