Auto Retail Agenda: 23 March 2020
22 March 2020
- FCA URGES FINANCIAL REPORTS DELAY
- AUDITORS WARN OF ‘ACCOUNTING CHAOS’
- INCHCAPE SUSPENDS £150m SHARE BUYBACK
- CORONAVIRUS: AUTO INDUSTRY ROUND-UP
- GET YOUR AUTO RETAIL AT HOME
- EU AUTOMAKERS CALL CORONAVIRUS ‘UNPRECEDENTED CRISIS’
- US RETAILERS REQUEST ‘ESSENTIAL OPERATIONS’ STATUS
- LAUNCH DIARY – Apex AP-0, Kia Sorento
- COMING UP – CPI and RPI figures
- CBIL SCHEME EXPECTED THIS WEEK
- INTERNET FRAUD CHECK DELAYED
- BLOG: Positive retailing during the Coronavirus outbreak
FCA urges financial reports delay
The Financial Conduct Authority has said it “strongly requests” all listed companies due to publish financial statements in the next few days to delay them for at least two weeks. Letters will be sent to all companies it is aware were intending to publish statements.
It said the unprecedented events of the past few weeks mean the basis on which companies report and plan is changing rapidly. Investors “rely on trustworthy information” and companies need time to consider events when preparing disclosures. “Observing timetables set before this crisis arose may not give companies the necessary time to do this.”
Both companies and auditors are also facing “unprecedented practical challenges” and preparing preliminary financial statements would add unnecessary pressure.
While issuing such financial statements is common for UK-listed companies, it is not officially required either by Listed Rules or the Transparency Directive. Companies are, however, obliged to publish full audited financial statements within four months of the financial year end.
The FCA, Financial Reporting Council and the Prudential Regulation Authority are in talks about measures to give companies time to prepare appropriate disclosures despite current practical challenges. “The three bodies intend to announce details shortly.”
The Sunday Telegraph has suggested deadlines for private company accounts may also be loosened by 30 or 60 days, and audits could potentially be revisited at a later date.
Pointedly, the FCA has reminded companies the Market Abuse Regulation remains in full force. “Listed companies are still required to announce inside information… as soon as possible.”
Auditors warn of ‘accounting chaos’
Deloitte, PwC, EY and KPMG have warned the FRC, FCA and Department for Business, Energy and Industrial Strategy of potential accounting chaos as Coronavirus hurts their ability to diagnose the financial health of businesses. The issue is urgent due to the timing of the crisis, just before the 31 March financial year end of many companies.
Auditors are said to be considering a consistent ‘anchor’ set of assumptions on the Covid-19 impact to apply to company accounts. “Everyone knows they would be wrong,” said a Sunday Telegraph source, “but they would be consistently wrong.”
Inchcape suspends £150m share buyback
Inchcape has suspended its share buyback programme, announced in February, blaming the Covid-19 situation. The “prudent” decision is temporary and comes after around £25m was spent on shares in the programme.
The board will also not issue any forward guidance until the severity and impact of Covid-19 on supply and demand becomes clearer. A further market update will come “as and when appropriate”. The retailer still plans to publish its trading update on 21 May 2020.
Coronavirus: auto industry round-up
ASE Global has launched a Covid-19 Response information resource curated on its LinkedIn page… Auto Trader retailer packages are free in April 2020 and March costs deferred for 30 days… eBay Motors Group classified advertising packages are free in April 2020 and March invoices extended to 90 days… the What Car? New Car Buying platform is now free from April to June… CarWow, Cazoo and BuyACar are pushing remote buying and ‘zero contact’ delivery… FCA investigation into motor finance commission on hold until at least October… BCA sales are online-only from Thursday 26 March… Manheim sites are closed to the public from today (Monday 23 March)… Motorpoint is giving free home deliveries… Many auto brands in the US have relaxed retailer performance targets and introduced financial incentives… The NFDA has asked the Government for clarity that auto repair and maintenance facilities will not be forced to close.
Get your Auto Retail at home
EU automakers call coronavirus ‘unprecedented crisis’
ACEA has said coronavirus is the worst crisis ever to impact the automobile industry and it will have “grave consequences” for manufacturers. All production is at a standstill and retailers across Europe are effectively closed, putting 14 million jobs at stake.
“We call for strong and coordinated actions at national and EU level to provide immediate liquidity support for automobile companies, their suppliers and dealers,” said ACEA director general Eric-Mark Huitema. Europe should also start preparing now to stimulate the recovery of the sector for when the crisis has abated, he added.
US retailers request ‘essential operations’ status
US retailers are requesting exemption from government-ordered shutdowns. The National Automobile Dealers Association wants dealers to be excluded from any restrictions on US residents’ movements.
“Motor vehicles… are critical to ensure that the public can get food and other necessities,” wrote NADA president Peter Welch in a joint statement with the Alliance for Automotive Innovation. “We have an obligation to ensure that motor vehicles remain safe and are properly maintained.”
J.D. Power last week warned that US vehicle sales could fall by up to 18% in 2020, despite strong activity in January and February. The deterioration in demand is described as “startling”.
Closing prices on 20 March 2020 and weekly change
Lookers leads big losses throughout UK auto retail
Auto Trader Group 377.2p (-70.4p / -15.7%)
Cambria 39.0p (-15.0p / -27.7%)
Caffyns 290.0p (-45.0p / -13.4%)
Halfords 65.95p (-37.05p / -35.9%)
Inchcape 456.2p (-79.8p / -14.8%)
Lookers 11.0p (-9.15p / -45.4%)
Marshall Motor Holdings 97.5p (-35.0p / -26.4%)
Motorpoint 205.0p (-46.0p / -18.3%)
Pendragon 5.2p (-2.24p / -30.1%)
Vertu 18.3p (-5.6p / -23.4%)
Apex AP-0, UK-designed electric sports car with 320-mile range, 0-62mph in 2.3 seconds, on sale Q4 2022 from £180k
Kia Sorento, new model on sale Q3 2020, will have hybrid and plug-in hybrid options alongside regular 2.2-litre turbodiesel
Volkswagen e-BULLI, electric conversion of a classic VW T1: eClassics division to offer T1 conversions and complete vehicles
Wednesday, CPI and RPI figures
Thursday, retail sales
Thursday, Bank of England MPC meeting
CBIL scheme expected this week
The Coronavirus Business Interruption Loan Scheme, announced in the 2020 Budget, has been brought forward and will become available this week. It promises more attractive terms for applicants, including government-financed interest payments for the first 12 months of loans. The government will provide lenders with loan guarantees to help them make positive credit decisions. The maximum value of a loan has been increased from £1.2m to £5m – however, to be eligible, it is indicated businesses must have a turnover no more than £45m. Full eligibility criteria will be published when the scheme goes live.
Internet fraud check delayed
Banks have delayed a fix to an online fraud security flaw due to coronavirus. ‘Faster payments’ currently require only the sort code and account number of the person receiving it – not their correct name. This allows scammers to carry out ‘push-payment’ fraud, where victims transfer money into illegitimate accounts. Action Fraud reports 105 scams in the past seven weeks alone, costing victims £1m. The Payment Systems Regulator has pushed back a deadline for fixing the flaw by three months from March 31.