Auto Retail Agenda: 4 October 2021
03 October 2021
- MORE RETAILERS REPORT BOOMING 2020
- RETAILERS KEEP SCHTUM TO AVOID TECHNICIAN POACHING
- CAZOO IN US ‘BECAUSE THEY ACCEPT LOSSES’
- AUTO TRADER COMMITS TO CARBON LITERACY TRAINING
- NFDA TAKES RETAILER’S GREEN SUCCESS TO GOVERNMENT
- US RETAILER CONSOLIDATION CONTINUES
- NISSAN TV ADS FOR JOBS NOT CARS
- STOCKWATCH
- COMING UP – September SMMT registrations
- BUSINESS CONFIDENCE IN ‘DRAMATIC’ DECLINE
- RISING PENSION CHARGES ‘RISK PEOPLE RUNNING OUT OF CASH’
More retailers report booming 2020
Glyn Hopkin saw turnover fall 18.8% to £368m in the year ended 31 December 2020, but profit before tax swelled £1m to £4.2m. An interim directors’ dividend of £2m was declared (2019’s total was nil) and £3.9m in government grants were received. 2020 saw the first full year from its four additional MG retailers, and its first Kia franchise, “one of the most sought after franchises in the UK”. It will receive financial compensation from Mitsubishi’s European withdrawal and the group’s strategic withdrawal from the Honda franchise will continue.
Turnover at BMW Mini specialist William Morgan was down 10.1% but £2.2m in furlough grants helped turn a £752k 2019 loss into £1.69m profit before tax.
Peter Vardy profit before tax grew from £4.3m to £4.5m despite revenue declining 12.1%. The business used furlough “on a limited basis, however, this revenue is offset by the cost of salaries”. The profitability boost was delivered by the strategic purchase of stock during the pandemic and a review of its cost base.
Last week we reported on profit for Perrys Motor Sales: parent company Perrys Group has performed even better, with profit before tax growing from £1.6m to £3.1m. “Prompt and effective management action” helped mitigate the impact of the pandemic, meaning that despite a 19.3% fall in revenue, return on sales was up from 0.5% to 1.1%.
Retailers keep schtum to avoid technician poaching
Retailers are choosing not to publicise details about technicians and their qualifications, due to fierce competition for skilled labour and the likelihood of employees being poached by rivals.
Speaking on condition of anonymity, a senior figure working with a large garage network in the fleet sector said: “Because there’s such a shortage of technicians – and this has been going on for at least the last 12 months – garages are quite shy about publishing the qualifications their staff has. Other people can see this, so they actually try and poach each other’s staff.
“It’s so competitive at the moment, and if you were a garage owner, the last thing you’d want to do is publish your list of technicians, really. It’s my personal view, but I wouldn’t be publicising all of my staff now.”
Auto Retail Network understands that there have been cases of technicians applying for and accepting higher-paid positions at competing retailers, then using such offers as leverage for pay rises and remaining with their existing employers.
We have also received anecdotal reports that some older technicians are leaving dealers because they do not wish to retrain to work on electric vehicles. Some are said to be establishing their own businesses to focus on older cars.
Cazoo in US ‘because they accept losses’
Cazoo listed in the US because American investors are more comfortable with losses, CEO Alex Chesterman has explained. “Because we’re early in the story… where our plan is to lose money, for a period of time, some people struggle to get their head around that.” Such a business approach is better understood in America, he said.
2021 half-year losses have grown from £31m to £102m. Cazoo is now worth $6bn (£4.5bn), a fifth less than when it floated. “We will be a £50bn business in five years’ time,” insisted Mr Chesterman.
Auto Trader commits to carbon literacy training
Auto Trader aims to have all its staff carbon literate within two years. Seen by some as a contradiction, people and culture head Christos Tsaprounis thinks “it’s even more important… the automotive industry needs to change and we are in an excellent position when it comes to supporting the sale of electric vehicles”. Auto Trader is working with Manchester’s Carbon Literacy Project.
NFDA takes retailer’s green success to government
The NDFA has met with DfT and BEIS officials to promote the role of retailers in creating and promoting green jobs. Government officials were receptive “and indicated a level of synergy between the NFDA and OZEV [Office for Zero Emission Vehicles] going forward”. The NFDA has promised members engagement with the government will continue.
WORLD NEWS
US retailer consolidation continues
Asbury Automotive Group is to buy Larry H. Miller retailers for $3.2bn. It will expand Asbury’s nearly-new retailers by two thirds and grow annual revenues by 70%. The deal will take Asbury from America’s sixth-largest new vehicle retailer to the fourth.
AutoNation, America’s largest auto retailer, has bought 11 Peacock Automotive sites – its first purchase since 2018.
Chapman Automotive, Summit Automotive and World Auto also purchased retailers during Q3 and former Lithia Motors group vice president Michael Speigl has bought his first retailers, Dunning Subaru and Toyota.
Nissan TV ads for jobs not cars
Nissan North America is advertising on TV, radio and social media to promote jobs at its US manufacturing plants, rather than new cars. It used its national brand agency, Nissan United, to create the campaigns. “There’s a new competitiveness in the job market now,” said a spokesman. “Our traditional recruitment methods weren’t having the results we wanted.”
Also read how UK retailers are keeping schtum to avoid technician poaching
STOCKWATCH
Closing prices on 1 October 2021 and weekly change
A week of stock price decline for major auto retailers
Auto Trader Group 583.8p (-27.4p / -4.5%)
Cambria 82.5p (n/c)
Caffyns 500.0p (n/c)
Halfords 299.4p (-4.2p / -1.3%)
Inchcape 808.5p (-34.5p / -4.1%)
Lookers 64.4p (-3.1p / -4.7%)
Marshall Motor Holdings 224.0p (-4.0p / -1.7%)
Motorpoint 367.0p (-18.0p / -4.7%)
Pendragon 18.3p (-0.2p / -1.0%)
Vertu 50.2p (-1.8p / -3.5%)
COMING UP
Tuesday, SMMT September new car registrations
Tuesday, PMI services
Thursday, Halifax House Price Index
12 October, Auto Retail Live – The Future of Auto Retailing: register now
MONEY MATTERS
Business confidence in ‘dramatic’ decline
The Institute of Directors says its members’ confidence about the economy has “fell off a cliff” to a level last seen during the third lockdown in February. 3 in 4 directors expect business costs to be higher in the next 12 months – and, following tax rises and the end of furlough, the IoD’s chief economist said the business environment has deteriorated “dramatically” in recent weeks.
Rising pension charges ‘risk people running out of cash’
People swapping guaranteed income final salary pensions for cash sums are facing higher fees. Defined contribution pensions can convert a £10k a year final salary pension into £300k or more – but the financial managers who manage them have been upping their fees in the past year. High charges can wipe years of income from a pension pot, warn experts.
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