Auto Retail Agenda: 22 February 2021

  21 February 2021

Auto Retail Agenda



Cazoo eyes £5bn IPO

Cazoo is investigating going public with an IPO valuation potentially more than £5bn. It is working with bankers on options, which could involve a London listing, or a merger with a New York-listed special purpose acquisition company, or SPAC. Sky News says any move would not take place until much later in the year.

Shares in the owner of the Daily Mail, which holds a 20% stake in Cazoo (and has invested £117m in the online retailer), leapt by a fifth amid hopes of a £1bn profit.

Cazoo says it does “not comment on speculation, and should we have an announcement to make… we shall do so at the appropriate time”.

Over the weekend, it emerged founder Alex Chesterman sold shares worth £100m in September, shortly before Cazoo announced it had raised £240m (valuing the firm at more than £2bn). The sale was not announced at the time. In total, Cazoo (which has a workforce of 2,000) has raised £450m.

Cazoo has sold around 20k cars since its 2019 launch and generated revenues of more than £200m. Mr Chesterman modelled the company on US firm Carvana, whose valuation has soared from £2bn when floated in 2017, to £52bn.



Auto retail in lockdown: Listers Toyota

“Business has been tough,” says Richard Burt, general manager at Listers Toyota in Stratford-upon-Avon. “Trying to balance people’s wellbeing is the most important thing. It has taught us to evolve and accelerated some of the changes that, perhaps, we could have made sooner.

“For example, working at home felt like a taboo thing before. Now, we hold most of our meetings via Teams, rather than driving to meet up in person.

“In the original lockdown, we stayed open as long as we could to maintain key workers’ cars. We used our city centre sites and directed people towards these. Today, we are open for servicing, but customers can only buy via click-and-collect at the moment – and we can’t offer test-drives.

“That’s less of an issue with Toyota, though. The brand inspires huge loyalty from customers, helped by extremely reliable cars and a five-year warranty. This is the time when it shows.

“We’re taking more forward orders than ever before – and the GR Yaris is proving to be a phenomenon. In all my years in the motor trade, I’ve never seen a car get such positive reviews.

“We’re also seeing a lot of conquest sales: one customer just traded in a Subaru Impreza WRX STI Final Edition. Some people want the GR Yaris as a daily-driver, others as an investment piece. But the waiting list is doubling every two weeks – and now stretches into December.”


Inchcape Retail publishes 2019 figures

Days before Inchcape PLC’s annual results for 2020, the group has published figures for its UK retail division for 2019 – pre-pandemic and before the BMW sell-off to Vertu. Inchcape Retail posted a £7.6m loss before tax for the year ended December 2019, down from a £42.1m loss in 2018. The 2018 figure included a £32.5m impairment expense. Turnover in 2019 was down 4.9% to £1.51bn due to the disposal of seven VW and Audi sites, and “reduced performance in the remaining Audi sites”.


Is ‘no jab, no job’ legal?

It would be “risky for employers to insist on vaccination in the majority of cases,” warns TLT Solicitors’ Stuart McBride, despite Pimlico Plumbers recently changing contracts so staff are required to have a Covid-19 vaccine. Employers should instead consider how to best achieve voluntary vaccination, and could introduce a Covid-19 policy requiring that all employees who can be immunised are immunised.


DVLA ballots for strike

A strike ballot is underway at the DVLA in Swansea after MP Geraint Davies said 25% of the workforce had caught coronavirus. The ballot ends on March 11 and, if sanctioned, the PCS union will be required to give two weeks’ notice.




Hopes for EU recovery stall

Auto sales across Europe continue to be weak but analysts are still forecasting a recovery of around 10% – although this would be well off 2019’s total due to a 24% decline in 2020. China, which is recovering strongly, will be 400k vehicles above 2019; Europe will be 2.3 million vehicles below.


Detroit retailers cashing out

Consolidation of Detroit retailers is accelerating as dealership values have increased due to consumers avoiding public transport. Rather than invest, smaller operations are taking the opportunity to sell as larger enterprises seek scale to compete with online retailers such as Carvana.



Closing prices on 19 February 2021 and weekly change

Lookers volatility continues

Auto Trader Group 607.6p (+15.2p / +2.5%)

Cambria 61.5p (-1.5p / -2.4%)

Caffyns 415.0p (+30.0p / +7.0%)

Halfords 268.5p (+1.0p / +0.3%)

Inchcape 711.5p (+22.0p / +3.1%)

Lookers 42.0p (+8.25p / +21.7%)

Marshall Motor Holdings 145.0p (-1.0p / -0.6%)

Motorpoint 275.0p (+15.0p / +5.3%)

Pendragon 14.6p (-0.4p / -2.7%)

Vertu 38.1p (-0.4p / -1.0%)




Monday, PM statement to Parliament on roadmap out of lockdown

Tuesday, UK unemployment rate

Wednesday, BRC shop price index

Thursday, Inchcape PLC annual results

Friday, Nationwide house price index



Furlough ‘should remain in place’

The furlough scheme, which has already been extended to April, should remain in place for several months after lockdown restrictions ease, according to the Resolution Foundation think-tank. The IFS has also warned of a rise in unemployment as ‘deferred’ company failures take place, and said both furlough and other government support should be unwound “gently”.


Gumtree purchase raises competition concerns

The Competition and Markets Authority has raised competition concerns about the anticipated £6.5bn acquisition of eBay Classified Group (which operates Gumtree) by Adevinta (which owns Shpock). The two companies have until 23 February to offer legally binding solution to the CMA’s concerns, which then has five days to either accept the deal or refer it to an in-depth investigation. Which? has welcomed the CMA’s “robust” approach.


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