08 September 2019

• PENDRAGON TO RESTRUCTURE
• VINES SEES LOSSES DEEPEN
• MON MOTORS HIT HARD
• JARDINE DROPS HONDA
• VOLKSWAGEN AFTERSALES PLEDGE
• FRANKFURT SHOW GOING GREEN
• STOCKWATCH – Inchcape CFO buys shares; Motorpoint co-founder sells
• LAUNCH DIARY – Nissan Juke, Renault Zoe
• COMING UP – Frankfurt Motor Show
• PMI FORECASTS RECESSION
• BUSINESS FINANCE COUNCIL TO HELP SMEs
• BLOG – Next year EV supply will be very different

Pendragon to restructure

Pendragon is in discussions with restructuring advisers, three months after pausing the process following the departure of chief executive Mark Herbert. He had been in the role for three months after taking over from founder Trevor Finn.

A “couple of firms” are among the troubled retailer’s list of potential restructuring advisers, including Alvarez & Marsal, according to The Telegraph.

Mr Herbert announced the initial review days into his new role. A ‘preliminary action plan’ was completed in early June ahead of a more detailed plan in September. Mr Herbert resigned two weeks later, reportedly because of disagreements with the board about the scale of change required.

A Pendragon spokesman told The Telegraph that several firms were consulted about an “operational costs review of the business… following the departure of the previous chief executive, that process was put on hold”.

Last month, Pendragon, which has issued several profit warnings over the past two years, announced its H1 results will be announced on 18 September, rather than its traditional date in early August.

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Losses deepen at Vines Group

US-owned BMW and Mini retailer Vines Group has reported a £1.1 million increase in losses before tax to £1.77m for 2018. This is despite a marginal increase in turnover to £181m (2017: £174m).

The company blamed large numbers of pre-registrations eroding margins on nearly-new cars, something that was highlighted in BMW’s poor showing in the NFDA Dealer Attitude Survey last week. This led to a “significant reduction in gross margins across our business and the wider BMW network”.

The growth of manufacturer service packs was also putting “constant pressure” on the service business. While its returns were above average in 2019, it predicted this area will become increasingly competitive in 2019.

The directors admitted the performance was “below expectations”. Measures have already been taken to address it, including a streamlining of staff in Q4 2018 that will save £335k in payroll costs for 2019. Policies for used cars, finance sales and aftersales have also been revised.

Mon Motors hit hard by Audi, Ford woes

South West and West Country retailer Mon Motors has reported a significant fall in turnover and profit before tax after being impacted by sales declines from its key Ford and Audi brands.

The business, which has 10 franchises, said it had “suffered directly” due to the market share decline of the two brands, particularly with WLTP-related supply issues. RDE, it added, will have an impact on 2019 results. The directors do not expect a return to normalised supply levels until 2020.

The transition of Audi Corporate sales to an agency model also impacted Mon Motors’ 2018 results.

New car retail sales fell from 6,119 to 4,777 in 2018, with fleet and used sales also declining. Turnover fell from £333m to £285m and profit before tax plunged from £1.51 million to £46,502.

Jardine Motors ends Honda

Jardine Motors has stopped representing Honda in the UK after closing its two remaining dealerships, in Birmingham and Bracknell, following the sale of its facilities in Reading and Newbury to Marshall Motor Group.

In a statement, Jardine said the locations will be “redeveloped to support other Jardine operations to be announced at a later date”.

The move follows Honda’s decision to cut 30 franchises from its network, as exclusively revealed by Auto Retail Agenda earlier this year.

WORLD NEWS

Volkswagen aftersales pledge

Electric vehicles will cost 20-30% less than regular cars to maintain, according to Volkswagen Group. Despite this, it still plans to “considerably” boost profit from aftersales, through growth in the vehicle parc and revenue-generating digital services.

Frankfurt motorshow ‘going green’ to remain relevant

Organisers of the Frankfurt motor show are focusing on electric cars and digitisation in response to planned demonstrations from anti-car protestors. One retailer in Frankfurt has already seen more than 40 luxury cars vandalised by activists.

STOCKWATCH

Closing prices on 6 September 2019 and weekly movement

Inchcape CFO Gijsbert de Zoeten buys 17,500 shares, Motorpoint’s co-founder David Shelton sells 11 million shares

Auto Trader Group 519.2p (-12.4p)

BCA 242.0p (+0.4p)

Cambria 57.0p (+3.0p)

Caffyns 385.0p (+10.0p)

Inchcape 613.5p (+35.5p)

Lookers 47.15p (+0.55p)

Marshall Motor Holdings 147.5p (+2.5p)

Motorpoint 210.0p (-37.0p)

Pendragon 10.6p (+0.4p)

Vertu 34.9p (+1.3p)

LAUNCH DIARY

Renault Zoe, electric supermini with 245-mile range, deliveries start January 2020 from £25,670 (including Plug-in Car Grant)

Mazda CX-30, crossover SUV to rival Nissan Qashqai, priced from £22,895

Nissan Juke, all-new version of small SUV arrives from November 2019 from £17,395

COMING UP

Monday, GDP and Balance of Trade government announcements

Tuesday, Frankfurt Motor Show press day

17 September, Auto Retail Live Profit Briefing: How to drive more sales using Google & YouTube

MONEY MATTERS

UK ‘on edge of recession’

Business confidence has fallen to a three-year low with the UK economy now teetering on the edge of recession, according to the influential IHS Markit/CIPS UK Services Purchasing Managers’ Index. Further shrinkage of the economy is forecast for Q3, which would officially signal a recession.

Government establishes Business Finance Council

The government will establish a new Business Finance Council to identify and address Brexit-related barriers to SME finance. Business Secretary Andrea Leadsom says it will ensure “finance continues to flow to our brilliant British businesses”.

BLOG – Next year EV supply will be very different

Tags: BMW, Honda, Jardine, Mon Motors, Pendragon, Vines Group, Volkswagen Group