Auto Retail Agenda: 27 January 2020
25 January 2020
- NEW CO2-BASED BONUS SYSTEM FOR PSA RETAILERS
- STONEACRE PROFITS UP, TURNOVER NUDGES £1BN
- ELECTRIC CARS WILL ALLOW RETAILERS TO UPSELL SAYS VW
- BEIS’ LEADSOM SEEKS VIEWS FROM MORE BUSINESSES
- TESLA CLEARED TO BYPASS DEALERS IN MICHIGAN
- 9 IN 10 US CONSUMERS SAY RETAILERS MUST CHANGE TO SURVIVE
- STOCKWATCH – Auto Trader leads FTSE 100
- LAUNCH DIARY – Fiat 500 and Panda Mild Hybrid, Smart EQ
- COMING UP – Bank of England interest rate, IMDA AGM
- HMRC ‘INCREASED INTEREST’ IN AUTO RETAILERS
- AMAZON WINS MEZZANINE FLOOR RATE REBATE
- BLOG: The unintended consequences of EV uptake
New CO2-based bonus system for PSA retailers
Retailers with PSA Group franchises have had their volume bonus linked to CO2 to ensure the manufacturer meets new, tougher emissions standards. Each site has been set a personal goal calculated on sales history.
“Our plan is to be compliant each month,” said Peugeot UK managing director David Peel. “We are targeting our network with a CO2 target each month.”
Speaking exclusively to Auto Retail Agenda he said: “To be fair, we allocate them stock with the right mix of CO2 so if they sell what they have got they will achieve their targets, which ensures we achieve ours.”
Retailers have told Auto Retail Agenda the targeting system has been rolled out across all PSA brands including Peugeot, Citroen, DS and Vauxhall.
Mr Peel pointed out Peugeot would have to remain flexible: “If 3008 PHEV gets really popular we will have to sell more 108s to compensate.”
Peugeot is launching seven plug-in vehicles this year, both pure electric and plug-in hybrids, and retailers have been urged to place these models front and centre.
“We have trained our network so that we are trying to encourage the customer, that if they want a test drive, their first test drive is in an LEV [Low Emission Vehicle],” said Mr Peel. “Even if you want to drive an ICE your first touchpoint is in a PHEV and hopefully it will open people’s eyes to LEVs.”
However, he said that there would be ICE vehicles on the courtesy car fleets, so customers would still have the ability to sample the other engines in the range if needs be.
Stoneacre profits grow, turnover nudges £1bn
Stoneacre Motor Group saw revenue grow to almost £1 billion in the year ending April 2019, a 25% increase on 2018. Profits also grew 31% to £13.8 million.
New vehicle sales were up 9.8%, used sales grew 14.5% – and fleet and business sales spiked 24%. Stock levels grew from £149m to £190m. Its Newark-based vehicle auction business increased turnover by 29% with 25,236 vehicles sold. Profit there grew 20.7%.
Stoneacre now operates 52 locations with 100 franchise sales points, representing 24 manufacturers. During the year, it added five Volvo franchises, four MG franchises and a Renault/Dacia franchise.
Investment in aftersales continued, with service revenues up 15.5% and profitability improving 9.7%. Group parts revenue was up 6.6% and stock holding levels down 12%. Stoneacre also has 37,600 live service plans in operation.
Mill Garages North East, which continued to trade as a subsidiary following acquisition in September 2018, contributed £75m to turnover and £442k to profit. It will be hived up into parent company Decidebloom Ltd once the current financial year ends.
Electric cars will allow retailers to upsell says VW
Electric cars will give retailers lucrative new opportunities to upsell, believes Volkswagen head of product line communications Christian Buhlmann. “There are lots more selling points with EVs: can retailers sell a wall box? Can they offer a green electricity contract? When it arrives, wireless charging?”
Mr Buhlmann also believes customers will be eager to change their electric cars more often, due to the fast pace of technological improvements, particularly in battery range and charging convenience. “Most EV customers will lease the car or buy on PCP, and we believe many will want to go back and get the latest model so they can continue to be a pioneer.”
BEIS’ Leadsom seeks views from more businesses
Secretary of state for business, energy and industrial strategy Andrea Leadsom is doubling the number of business lobby groups invited to regular meetings – but weekly meetings will be cut to one a month. Mrs Leadsom says the time saved will be spent “meeting businesses, particularly small businesses, face-to-face”. The first revamped meeting will be held today (Monday 27 January).
Tesla cleared to bypass dealers in Michigan
Tesla has been cleared to sell vehicles in Michigan state directly to customers, bypassing retailers. A 2014 law prohibited direct sales from vehicle manufacturers. Tesla filed a lawsuit against this in 2016, which it has now won. Other car makers without an established dealer network (such as start-up electric truck maker Rivian) are now expected to follow.https://cnn.it/2U1dorh
9 in 10 US consumers say retailers must change to survive
Only 1 in 3 North American customers are ‘very satisfied’ with the current retailer model, according to a report from Cox Automotive. 9 in 10 say retailers must find alternative sales and service models if they are to survive. As cars have improved, the retail experience has become the differentiator, and customers want it to be faster and more convenient. 7 in 10 want to see ‘brand experience centres’, separate to a traditional showroom, where they can interact with the car company without the help of a salesperson.
Closing prices on 24 January 2020 and weekly change
Auto Trader tops FTSE on Friday after positive rating from Morgan Stanley
Auto Trader Group 595.6p (+22.2p)
Cambria 70.0p (+2.0p)
Caffyns 400.0p (n/c)
Halfords 164.6p (+12.6pp)
Inchcape 688.0p (-12.0p)
Lookers 62.0p (+2.5p)
Marshall Motor Holdings 157.5p (n/c)
Motorpoint 308.0p (+4.0p)
Pendragon 11.4p (-1.3p)
Vertu 36.6p (-1.55p)
Fiat 500 Mild Hybrid, 3-cylinder 1.0-litre engine with lithium ion hybrid battery, 88g/km CO2, from £12,665. Panda Mild Hybrid from £13,855
Smart EQ range, new all-electric models priced from £16,850 for the fortwo coupe (including Plug-in Car Grant). EV range is around 70 miles
Janarelly Design-1, UK Edition models mark Dubai-based brand’s launch to the market, prices from £115,549
Thursday, Bank of England interest rate decision, IMDA AGM (Stoke on Trent)
Friday, GFK consumer confidence
6 February, Auto Retail Live Quarterly Briefing
HMRC ‘increased interest’ in auto retailers
The NFDA has warned retailers of increased interest by HRMC in National Minimum Wage (NMW) compliance within the auto retail sector. There are two key areas of interest: the definition of salaried hours workers, and the treatment of commission payments. Retailers are advised to be aware of HMRC’s interpretation of NMW compliance in these areas to mitigate the risk of significant liabilities and administrative burdens.
Amazon wins mezzanine floor rate rebate
Amazon is to receive a £3.2m rebate from Cannock Chase District Council after successfully arguing mezzanine floors do not count as floor space. The annual liability reduces by around £450k and the refund is back-dated to 2011. The Rugeley facility also pays lower business rates because it is a fulfilment warehouse, supplying goods direct to customers, rather than a retail one.https://bbc.in/36oJ4cQ