Auto Retail Agenda: 9 July 2018
08 July 2018
- TURNOVER AND PROFIT STABLE AT FORD RETAILER
- JARDINE SAYS RETAIL CENTRE INVESTMENT BEHIND PROFIT DROP
- MORE MARGIN ON DEMOS HELP GROUP RESULTS
- OVERSIGHT ERROR BLAMED FOR VAUXHALL GROUP NAMED ON GOVT `LOW PAY’ LIST’
- INCHCAPE F.D. ON THE MOVE?
- SEVEN CAR RETAILERS IN SUNDAY TIMES TOP 100
- SUPPOSTING PUBLIC EVENTS FOR EVs WORK – SANDICLIFFE
- JLR RETAILER TO HOLD RECRUITMENT DAY
- WORLD NEWS – EV rules threaten profits, says VW insider
- STOCKWATCH – BCA up
- LAUNCH DIARY – Hyundai Kona and Santa Fe, VW T-Cross
- MONEY MATTERS – UK companies at record debt levels, fuel duty to rise?
- COMING UP – UK consumer price inflation, bank liabilities
- OUR BLOG – Will we see a registration surge in August?
Turnover and profit stable at Ford retailer
Ford car and commercial retailer T.C. Harrison said that turnover and profit stayed broadly in line with 2016 last year despite the post-Brexit climate.
The Derbyshire based business said turnover in its Midlands division was £90.1 million last year against £89.9m in 2016 while for the South the figures were £91.8m and £94.0m respectively. Pre-tax profit came out at £2.9 million against £3.0 the year before.
In its year end accounts, the directors noted: “The Brexit vote has introduced a degree of uncertainty into the minds of some of our customers and has resulted in the deferment of major spending decisions for some. The squeeze on living standards resulting from the inflationary effect of the fall in sterling following the vote has affected our customers. Exchange rate-driven inflation has also pushed up the costs to our business.”
Jardine says retail centre investment behind profit drop
Jardine Motor says investing in the `Dual Arch’ concept of JLR centres, buying two BMW/MINI franchises and opening a new Audi dealership in Oldham are partly behind a drop of Group Operating Profit dropping to £14.7 million in 2107 from £20.2m the year before.
During the year registrations at all its brands were up 5% on a like-for-like basis, turnover rose by 6.9%, due in large part to better sales of used car and workshop hours although margins on both fell. In contrast, mark up for its new cars increased.
Jardine disposed of its southern Toyota/Lexus division, its solus Volvo dealership and its loss-making Mazda franchise.
More margin on demonstrators help group’s results
Better margins on demonstrators helped the contribution from its used car operations to the company grow by almost £950,000 last year.
Filing its 2017 accounts, the Cambridgeshire-based Vindis Group which retails VAG products including Bentley and Ducati, showed a profit before tax of £3.4 million against £1.8m in 2016.
The directors said: “We achieved the manufacturer targets and retail new car gross margins were stable while the corporate sector saw a 12% growth. Retail new turnover grew by a modest 3.1%, corporate by a stronger 12%. Overall contribution from new cars grew by £455,000. Used car turnover grew by 8% with overall contribution increasing by a healthy £947,000, helped by significantly stronger demonstrator margins. Volume and margin growth enabled income growth from finance products to grow by £280,000.”
Oversight error blamed for Vauxhall group being in government `low pay list’
Drive Vauxhall says an administrative error in its apprentice system led to it being in a government report this week naming some 240 companies underpaying the National Living and Minimum Wage.
The report, published by government departments including the Low Pay Commission, said: “Drive Motor Retail Limited, trading as Drive Vauxhall, Leicester LE2, failed to pay £14,988.21 to 18 workers, with average arrears of £832.68 per worker.”
Drive Vauxhall employs more than 900 staff in 12 dealerships and has a turnover of around £250 million. Chris Roberts, group managing director, said: “It was an oversight by a couple of our sites around apprentices qualification/age.”
Inchcape finance director on the move?
Auto Retail Agenda understands that Inchcape’s UK finance director Claire Catlin has left the firm to rejoin the Home Retail Group. HRG was taken over by supermarket J. Sainsbury plc in 2016 in a £1.4 billion deal.
Inchcape declined to comment. A spokeswoman said: “They have no comment to make on the matter at this time.”
Seven car retailers in Sunday Times Top Track 100
Car retailers took seven places in the Sunday Times’ Top Track 100 which looks at the UK biggest privately-owned companies based on sales.
Arnold Clark is ranked 7th with sales of £3.93 billion up to the end of December 2017, annual growth of 7.3% and profits of £276 million.
JCT600 is up two places from last year, sitting in 45th with figures of £1.25bn, 2.0% and £31m respectively. One spot behind is Listers with £1.23bn, 0.4% and £20m. Car and van retailer, Greenhous, is in 56th with sales of £1.05bn, growth of 3.8% and profits of £5m.
There is a new entrant at 82 with Parks Motor Group with £777m, 41% and £29m, John Clark Motor Group is at 90th on £742mn, 5.5% and £11m and at number 100 is Stoneacre Motor Group, at no. 100, on £708m, 26% and £14m. Its sales and profit are annualised figures.
Supporting public awareness events on EVs works, says Sandicliffe
EV retailer, Sandicliffe, says dealers should get behind public events promoting electric vehicles and their benefits to people.
Sandicliffe Nissan Nottingham supported organisers of a recent city centre event highlighting their cost and environmental benefits and says it has eight solid leads from it.
Annie Cooper, sales manager at the dealership, said: “I think these events can work for the trade if they support them. It was the first one we have done but we got some good leads and are now working with eight probables for the LEAF.
“With so many people there in the city centre for the event or even casual passers-by it is an effective shop window for the product.”
JLR retailer to hold recruitment day
JLR retailer Lloyd Motor Group is holding a recruitment open day on Thursday 12 July at its Jaguar Land Rover Retail Centre in Carlisle. It is a drop-in format, visitors do not need to make an appointment or bring a C.V.
A spokesman said: “We have various roles across the group but will be primarily focusing on meeting experienced vehicle technicians looking for a new opportunity within Jaguar Land Rover.”
Anyone who cannot attend on the day can register their interest by email at recruitment@lloydgroup.co.uk or by text on 07393 235929.
WORLD NEWS
EV rules threaten profits, says VW insider
VW’s need to sell one million EVs by 2025 under proposed legislation could wipe out its profits. It would have seven years to hit the target set under proposed EU clean-air standards to cut CO2 emissions by at least 40% below 1990 levels by 2030. European bloc legislators vote on the move later this month.
Bernd Osterloh, Volkswagen Group’s Head of Works Council, said car makers will struggle to justify the investment needed if consumer demand for EVs lags behind the pace required by law. They would face the choice of paying fines for breaking CO2 limits or selling EVs at unprofitable prices. He said: “Once prices are ruined, we will never get them back up.”
He called on government help to develop the recharging infrastructure, adding: “Of course, the auto industry has some homework to do but if the infrastructure is not there, then it is difficult to convince a person to buy an electric car.”
STOCKWATCH
Closing prices at Friday July 6 and weekly movement.
BCA 225.0p (+5.0p)
Cambria 61.5p (-1.5p)
Caffyns 425.0p (no change)
Inchcape 780.5p (no change)
Lookers 106.0 (-3.0)
Marshall Motor Holdings 161.0p (-5.0)
Motorpoint 236.0p (+4.0p)
Pendragon 23.9p (-0.9p)
Vertu 50.0p (+0.1p)
LAUNCH DIARY
July. Hyundai Kona diesel SUVs. From £19,750
September 1. Latest gen Hyundai Santa Fe SUV. From £33,425
Autumn: VW T-Cross, small SUV.
MONEY MATTERS
UK companies at record debt levels
UK listed companies are sitting on record debt as pressure to keep shareholders happy and low interest rates has seen them borrow more. The amount owed is now £391 billion with £123bn taken on in the last three years. In this time shareholders have been paid £263bn in dividends, despite a squeeze on profits. Oil companies have the biggest imbalance, with just two companies – BP and Shell – accounting for £1 in every £7 of all UK listed companies’ net debts.
Fuel duty to rise?
Fuel costs could rise as the government looks at raising pump duty to fund its promise to get an extra £20 billion into the NHS by 2023. Duty has been frozen for eight years but is estimated to have cost the government around £46bn since with a further £26bn loss by 2020/21 if it is not changed.
Carl Emmerson, deputy director of the Institute for Fiscal Studies, told The Guardian: “The challenge of finding the money for the NHS, keeping the public finances on the track the chancellor might want, would all be harder if you continued freezing it.”
Fuel duty was cut by 1p in 2011 to 57.95 pence per litre, its current rate. VAT is also paid on fuel at 20%.
COMING UP
July 18: ONS, UK Consumer price inflation (June)
July 12: Bank of England, Bank Liabilities Survey – 2018 Q2. Quarterly survey of banks and building societies’ liabilities and capital in driving credit and monetary conditions.
OUR BLOG
Will we see a registration surge in August?
Much has been said about the change to WLTP CO2 and mpg testing, but could one of the side effects be a surge in registrations this August? We know that all cars built from 1 September will have to qualify for WLTP, however, until then manufacturers can (if they want) still build cars that qualify under the old NEDC regulations. Cars built under the NEDC rules before the end of May have a year to be registered; no problem there. However, those NEDC qualifying cars built in June, July and August must be registered before September. As we know this has meant some manufacturers have just stopped producing NEDC qualifying vehicles and that has left a shortfall because the WLTP equivalents haven’t arrived yet. The flip-side to this is that some car makers are gambling and still building NEDC cars – mainly because there’s fleet demand for these lower CO2 figured vehicles. But if a manufacturer misjudges the demand there could be a glut of cars, all of which will need to have been registered by 31 August. Obviously, there’s a few ways they can do this; push them to retailers, send them to daily rental, self-register the cars or do a very attractive fleet deal or two. So, will the national sales companies have got it right, or will we see a surge at the end of August? And if there is, will these pre-registered cars impact September new car sales? Time will tell.
Tristan Young
Editorial Director, Auto Retail Network
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