Auto Retail Agenda: 10 August 2020
09 August 2020
- PENDRAGON CLOSURES DETAILED
- BREXIT HALVES JOHN GROSE PROFIT
- PSA RETAIL TURNS AROUND LOSS
- BURGUNDY TAKES STAKE IN VERTU
- WORLD NEWS – TrueCar sells RV division, PSA blasts US retailers
- STOCKWATCH – Inchcape recovers after July dip
- COMING UP – UK GDP, unemployment, retail sales
- MONEY MATTERS – UK to enter recession, post-lockdown holiday headaches
Pendragon closures detailed
Evans Halshaw retailer closures will include Citroen, Ford, Hyundai, Peugeot, Seat and Vauxhall sites as part of Pendragon’s operational review to shutter loss-making sites, Auto Retail Agenda has learnt.
These include Citroen Bradford and Stockton, Ford Edinburgh (a used car retailer) and Treforest, Hyundai Newcastle and a joint Hyundai/Seat retailer in Harrogate.
Peugeot Blackpool and Stourbridge are to close, along with four Vauxhall sites, in Beverley, Blaydon, Hull and St Albans. A used car site in York will also close.
A total of 15 retailers are to be shuttered, which operated at a loss of around £1m, said Pendragon. This will result in the loss of 400 jobs.
Brexit halves John Grose profits
Suffolk multi-franchise John Grose Group has reported a 49.1% fall in profit before tax for the year ended 31 December 2019, to £830,000 on turnover of £174m (up 4%). The Group blamed preparations for Brexit but added the performance is still ahead of the Ford composite average.
The group also experienced some exceptional costs as it closed its parts wholesale operation after PSA and Ford restructured its parts distribution model and “made it less attractive for the franchised dealer”, according to the firm’s results statement.
Ford’s February 2020 announcement of retailer network rationalisation was welcomed by the board and “is not seen as a risk to the business”. Family-owned John Grose has won the Ford Chairman’s award more times than any other retailer in the UK.
PSA Retail turns around loss
PSA Retail turned an £888,000 loss before tax into a £342,000 profit for the year ended 31 December 2019, thanks to reinforcing a strategy of reducing operating costs. The wholly-owned subsidiary of PSA, soon to be renamed Stellantis, reported static new vehicles sales of 52,000 but used vehicle sales grew almost 10% to over 29,000.
Meanwhile, Vertu has bought PSA Retail’s Derby Peugeot operation. Robert Forrester confirmed to Auto Retail Agenda that the business was integrated into Vertu’s former Volvo showroom on Sir Frank Whittle Road. The deal takes Vertu’s Peugeot retailer total to six.
Burgundy passed 5% share with Vertu
Canada’s Burgundy Asset Management has passed the 5% mark for its holding in Vertu. Burgundy said its approach is based on “investing in good companies when we can buy them for less than they are worth and holding them for the long term”.
TrueCar sells RV company to JD Power
Loss-making US classifieds business TrueCar has sold its RV forecasting division ALG to JD Power for $135m. TrueCar’s desire to strengthen its balance sheet due to the coronavirus downturn is behind the sale. TrueCar revenue fell 29% in Q2 to $62.7m, although its net loss was smaller at $11.2m compared to a Q2 2019 loss of $24.1m.
PSA boss blasts US retailers
Peugeot is still on track to re-enter North America in 2023 insisted the head of PSA North America – who blasted the region’s retailer network for sticking with outdated capital-intensive practices and failing to digitise quickly enough. “Our retail structure defaults to spending money on fountains and Taj Mahals – a good example of disconnect or lack of reality,” said Larry Dominique.
Closing prices on 7 August 2020 and weekly change
Inchcape recovers after July dip
Auto Trader Group 557.6p (+21.0p / +3.8%)
Cambria 46.0p (+0.1p / +0.2%)
Caffyns 270.0p (+20.0p / +7.6%)
Halfords 157.8p (+11.8p / +7.7%)
Inchcape 493.2p (+64.0p / +13.8%)
Lookers Shares suspended at 21.0p
Marshall Motor Holdings 122.5p (-2.5p / -2.0%)
Motorpoint 260.0p (+12.0p / +4.7%)
Pendragon 8.00p (-0.32p / -3.9%)
Vertu 22.0p (-0.35p / -1.5%)
Tuesday, UK retail sales
Tuesday, UK unemployment
Tuesday, SMMT Q2 used car sales
Wednesday, Auto Retail Live: The Future of Motor Finance webinar – sign up https://bit.ly/3gxRnst
Wednesday, UK GDP
UK to enter recession this week
The UK economy will officially enter recession this week after a record Q2 fall of 20%. Q1 was down 2.2%. However, economists are focusing on growth figures for June, expected to be around 8%, which will help gauge the speed of upturn. The economy stopped contracting in May, meaning the ‘recession’ was actually in March and April.
How to manage post-lockdown holiday entitlement
Retailers are being reminded holiday entitlement continued to accrue during furlough and lockdown. For those finding it difficult to grant employees their full leave within the holiday year, MILS Legal suggests two options.
Employees could either ‘buy’ some of the leave back from employees – but only if both parties are willing – or, under new regulations, carry over untaken holiday into the next two leave years. The latter only applies to the 20 days’ Working Time Directive ‘EU’ leave, not the additional eight days of ‘UK’ leave. However, “the situation is somewhat complicated,” said MILS Legal, advising retailers seek specific advice before acting.