• RETAILERS WARN OF CHIP CRISIS ‘UNCHARTERED WATERS’
• JEMCA SALES EXEC FRAUDSTER JAILED
• McLAREN ADDS FREE SERVICING FOR NEW ARTURA
• BRINDLEY MAZDA ACCIDENTALLY BUYS LINE OF DUTY CAR
• LITHIA TARGETS LARGEST US RETAILER STATUS
• FRENCH GOVERNMENT EXTENDS AUTO SUPPORT
• STOCKWATCH
• COMING UP – Cambria interims
• BANK OF ENGLAND TO RAISE FORECASTS
• BREXIT HELPS FCA STRENGTHEN SPAC PROTECTION

Retailers warn of chip crisis ‘unchartered waters’

For the second week running, senior auto industry execs have stepped up warnings to partners about the impact of the semiconductor shortage. Ford global production may fall 50% in Q2 as the chip crisis will “get worse before it gets better”, warned CEO Jim Farley. The company expects to lose 1.1m units of production in 2021 – significantly greater than earlier estimates of 200k to 400k vehicles. It may cost the company $2.5bn.

“We and many in the industry now believe the global shortage may not be fully resolved until 2022,” warned CFO John Lawler.

The company currently has 33 days’ supply of retail vehicles and the number is expected to tighten further. Ford has put in place new processes to help customers and retailers find specific models that may be hard to come by, revealed Mr Lawler.

Ford is scaling back production in Europe too, at its Cologne and Saarlouis plants, which build the Fiesta and Focus. Short hours will run throughout the summer until after the summer break on 16 August. Vehicles already ordered by customers will be prioritised.

In another sign of the escalating chip crisis, GM has idled a factory in Canada for two months. The plant builds the Equinox, GM’s second best-selling vehicle in the US. Analyst Sam Fiorani warned the supply chain issues are entering “unchartered waters”. Germany’s Bundesbank has also warned of slower growth due to the chip shortage.

Penske Automotive Group CEO Roger Penske said inventory is “not in great shape” after declining 20% since December and Group 1 Automotive CEO Earl Hesterberg said “we’re getting to the point where inventory is a problem, if not at this moment, very soon”. Asbury Automotive CEO David Hult called the supply situation “fluid” and if inventory levels in May match those from April, “we would struggle to get to the new-unit sales that we need”.

Tighter inventories are, however, currently helping drive retailer profits higher, added Ford’s Mr Farley. “10 years ago, I saw this industry go from 30 days’ supply back to 100. We’re not going to let that happen. This is a better way to run our business.”

Are you seeing shortages in your retailer due to the semiconductor crisis? Let me know on richard@auto-retail.com

https://bit.ly/337KLfB

 

Jemca sales exec fraudster jailed

A corporate sales executive for Jemca Toyota Bracknell has been jailed for three years and 10 months after defrauding the company of more than £750k to fuel a gambling addiction. “Richard Zarifeh started by taking cash payments from customers and ended up giving them his own bank account details,” said prosecutor Lily Roberts-Phelps. “This was a sophisticated fraud.”

The defendant started the fraud in early 2017 and it continued for two years. It was only revealed when he confessed to a colleague. He has reportedly since met with Jemca staff to explain the faults in their financial systems so they can be improved.

https://bit.ly/3tkmxJK

 

McLaren adds free servicing for new Artura

McLaren will offer a five-year warranty on its new Artura PHEV supercar and include three-years’ free servicing. The luxury brand currently offers a three-year unlimited mileage warranty (and will continue to do so) on its existing range.

 

Brindley Mazda accidentally buys Line of Duty car

Brindley Mazda Wolverhampton has sold an MX-5 RF to a Line of Duty fan for an undisclosed price. The retailer didn’t realise the car, part of a fleet purchased from Mazda UK in April, featured in the show until they watched the episode. The MX-5 Owners Club and show fans subsequently visited the retailer to take pictures.

https://bit.ly/3nIQy4L

 

 

WORLD NEWS

Lithia targets largest US retailer status

Lithia Motors Inc aims to quadruple revenue, double its US footprint and become the largest new vehicle retailer in the country within five years. CEO Bryan DeBoer wants the firm to capture 5% of the auto retail market, become a £100bn retailer and the first truly nationwide auto retailer; it is currently the country’s second-largest dealer – moving up from third place in summer 2020. Lithia is also the highest-valued retailer on the stock market.

https://bit.ly/3ueiG25

 

French government extends auto support

The French government has expanded an €8bn support package for the automotive industry first announced in May 2020. New measures include extra incentives for electric LCVs and an expansion of the charging network – with more than half of France’s 368 motorway services to be equipped with fast-charging stations by the end of the year.

https://bit.ly/3b0in3j

 

 

STOCKWATCH

Closing prices on 30 April 2021 and weekly change

Auto Trader Group 570.2p (-4.4p / -0.7%)

Cambria 79.0p (+4.0p / +5.1%)

Caffyns 400.0p (+20.0p / +5.1%)

Halfords 377.0p (-16.4p / -4.2%)

Inchcape 781.5p (-18.0p / -2.2%)

Lookers 66.0p (-3.1p / -4.5%)

Marshall Motor Holdings 173.0p (-2.5p / -1.4%)

Motorpoint 260.0p (+4.0p / +1.5%)

Pendragon 18.1p (-1.5p / -7.9%)

Vertu 45.4p (-0.6p / -1.3%)

 

 

COMING UP

Tuesday, UK consumer credit

Tuesday, Genesis UK launch

Wednesday, Cambria interims

Thursday, Bank of England interest rate decision

 

MONEY MATTERS

Bank of England to raise forecasts

The Bank of England will this week upgrade its growth forecasts amid optimism about the vaccine roll-out. In March, governor Andrew Bailey forecast 5% GDP growth; a Deutsche Bank economist expects this to be raised closer to 7% and a return to pre-Covid levels to be bought forward to the end of 2021 rather than Q1 2022.

Covid support measures are also expected to be curbed (the MPC is currently buying £4.4bn of government debt a week to help lower borrowing costs) amid bullishness about a summer “lift-off” for the economy. Barclays boss Jes Staley has predicted a “spectacular” recovery and the CBI says private firms are at their most bullish since 2015.

 

Brexit helps FCA strengthen Spac protection

The FCA is consulting for four weeks on proposals to strengthen investor protections in Spacs. It is proposing that Spacs which comply with higher levels of investor protection should not be suspended at the point they identify an acquisition target – which locks in investors sometimes for many months. The changes would encourage issuers willing to provide transparency and strong protections to investors.

The FCA added the UK’s position outside the EU allows it to have a “new, more nimble approach to domestic policymaking”.