Auto Retail Agenda: 5 December 2022
03 December 2022
- CAZOO FORMER CFO CASHES OUT
- USED CAR MARKET ‘RECESSION-PROOF’
- AGENCY AND USED CARS: ‘FEW BENEFITS, HIGH RISKS’
- VOLKSWAGEN CREATES NEW SALES ROLES AS AGENCY ACCELERATES
- AUTO RETAIL PROFIT SCOOPS TOP BUSINESS MEDIA AWARD
- UK RETAILERS DOMINATE EU TOP 10 RANKINGS
- LAWMAKERS DEMAND FORD EV MANDATE CHANGES
- STOCKWATCH
- COMING UP: SMMT November new car registrations
- INFLATION TO PEAK BEFORE THE END OF THE YEAR
- STATE PENSION AGE ‘MAY NEVER REACH 70’
Cazoo former CFO cashes out
Former Cazoo CFO Stephen Morana is offering for sale 4.7m of the 4.9m shares granted to him in an options plan. If he sells at Cazoo’s current price of 0.281p, they’ll net him around £1.3m.
The 52-week high of Cazoo shares is £7.69, which would have earned Morana around £36m. They peaked at around £13.60.
Used car market ‘recession-proof’
The UK’s used car market is “recession-proof” despite official figures indicating volumes and prices are in decline. Finance broker CarFinance247 says its Q3 volumes were up 10%. Going into a downturn, people who would have paid cash, said co-founder Louis Rix, are deciding to finance to “keep a little bit of a wall around me”.
Rising base rates mean even prime customers are paying 9.9% and 10.9%. “Gone are the days of 6s and 7.9%.” Lenders have also tightened up affordability checks but Rix said acceptance rates remain around 60%.
Open banking is also helping improve affordability checks. “Within two clicks from a text that [a customer] receives from us, we can gather two years of bank history and lenders are taking that on board.”
Agency and used cars: ‘few benefits, high risks’
Extending the agency model to used cars may appear to be the next logical step “but this might not necessarily be the case,” said Autovista chief economist Dr Christof Engelskirchen.
The agency model for new cars is already a “high-risk and reward journey” for OEMs. It could potentially deliver many benefits but requires a massive expansion of the OEMs’ balance sheets and additional asset risks.
Extending agency to used cars has several sizeable pain points: indeed, Dr Engelskirchen argues there are actually too few benefits and too many risks for it to be considered an attractive strategy.
Instead, he advises OEMs concentrate on the ‘enhanced’ model, bypassing the retailer by selling direct to consumers – Spoticar and heycar are two such examples.
Volkswagen creates new roles as agency accelerates
Volkswagen Group head of fleet roles across its five brands – VW, Audi, Skoda, Seat and Cupra – have been renamed head of direct sales as its move to agency accelerates.
Businesses have already had a direct, central relationship with the brands for several years. Volkswagen Group’s agency model is now incorporating sales of EVs to private customers – hence the focus on the direct sales roles, which will eventually take over all sales responsibilities.
The franchise model will be retained for ICE sales.
Auto Retail Profit scoops top business media award
Auto Retail Agenda sister title Auto Retail Profit has been named the inaugural Business Publication of the Year in the 2022 Guild of Motoring Writers Awards. Editor Richard Aucock accepted the award at a gala event also attended by Guild president and Pink Floyd drummer Nick Mason, Sky F1 commentator Martin Brundle, Prodrive CEO David Richards and BTCC star Jason Plato.
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WORLD NEWS
UK retailers dominate EU top 10 rankings
UK retailers have taken six out of the top 10 places in a rundown of Europe’s top 50 retail groups by ICDP. Arnold Clark is third, with 2021 revenue of €5.5bn, with Inchcape fourth on €5.6bn. Lookers is fifth (€4.7bn), Vertu is sixth (€4.19bn – rising to this position from 11th last year) and Pendragon is seventh (€4.0bn).
Marshall rounds out the top 10 with 2021 revenue of €3.77bn. Overall, Switzerland’s Emil Frey is the clear leader, with revenue of €15bn, with Penske Europe second (€7.76bn).
“It was difficult not to make money last year,” said ICDP MD Steve Young, but he warned the financial windfall is likely to end in 2023 as new car supply improves.
Lawmakers demand Ford EV mandate changes
Ford’s controversial EV certification programme could face an FTC investigation as a US senator and Connecticut lawmakers call for changes to the company’s “egregious treatment” of dealers. “I just think Ford is making a terrible mistake here if it persists in this approach,” said Senator Richard Blumenthal.
A Connecticut state representative said Ford needs to “roll back this contract language” and warned of “repercussions at both the state and federal level”.
In a statement, Ford said it would not extend a 2 December deadline for retailers to opt in to the certification programme. It requires them to invest up to $1.2m on EV chargers and staff training. Those who don’t opt in will be limited to only selling ICE and hybrid vehicles.
STOCKWATCH
Closing prices on 2 December 2022 and weekly change
Auto Trader Group 575.2p (-2.2p / -0.3%)
Caffyns 500.0p (n/c)
Halfords 198.4p (-14.2p / -6.9%)
Inchcape 836.5p (-42.5p / -4.9%)
Lookers 80.8p (+4.5p / +5.7%)
Motorpoint 157.0p (n/c)
Pendragon 27.9p (-0.4p / -1.4%)
Vertu 48.2p (+0.2p / +0.2%)
COMING UP
Monday, SMMT November new car registrations
Wednesday, Halifax house price index
Thursday, RICS housing market survey
MONEY MATTERS
Inflation to peak before the end of the year
Soaraway inflation is likely to peak before the end of the year due to falling commodity and fuel prices, and easing pressure on supply chains. Inflation data will be released on 14 December and, the following day, the Bank of England will make its latest interest rate decision.
State pension age ‘may never reach 70’
The pension burden on public finances is “really concerning” says one expert – but while the government may be able to raise the state pension age to 68, increasing it to 69 or 70 would be more likely to face a backlash. Improvements in life expectancy have also stopped – and actually gone backwards for men.
Not paying the state pension for a year saves £10bn annually. It is a twin benefit too, as people who would otherwise have retired pay in-work taxes.
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