Auto Retail Agenda: 29 June 2020
28 June 2020
- NO AUSTERITY BUT NO VAT RATE CUT
- UK ‘CHAPTER 11’ BECOMES LAW
- DELAY HARMS SCOTTISH RETAILERS
- VW LOOKS TO BUY EUROPCAR
- AUTO TRADER TO WORK WITH EBBON-DACS
- FRENCH CAR SALES RECOVER
- INCHCAPE AUSTRALIA RESHUFFLE
- STOCKWATCH – Lookers, Caffyns, Pendragon down
- COMING UP – Lookers AGM, Scottish retailers reopen
- JLR IN GOVERNMENT LOAN TALKS
- LOAN STRUGGLES A RETAILER OPPORTUNITY
No austerity but no VAT rate cut
Prime Minister Boris Johnson will in a statement on Tuesday reject austerity and promise a ‘decade of investment’ to help the economy recover – but chancellor Rishi Sunak has indicated plans will not include a cut in VAT or other taxes.
Mr Sunak said this is not a typical economic crisis where incomes are impaired, because of the support from the furlough scheme. “Psychology is the challenge” in persuading consumers to spend, he said to Bloomberg TV.
VAT cuts and other stimulus are likely to be held in reserve until after businesses reopen on 4 July, so the government can assess how the economy recovers. It was believed the chancellor was planning an emergency Budget for later in July but there has not yet been any confirmation of this.
Instead, Mr Sunak will follow the PM’s Tuesday announcement with his own address next week. Measures will include initiatives to reskill the unemployed and help the Government meet net zero carbon goals.
There has been no indication whether the latter will include any electric car-focused scrappage incentives.
UK ‘Chapter 11’ becomes law
The Corporate Governance and Insolvency Bill has become law. Similar to US Chapter 11, it helps support struggling but viable companies by giving them a moratorium of 20 days (extendable to 40) to produce a rescue plan. Winding up petitions and statutory demands are delayed.
Companies qualify by being unable to pay their debuts but can demonstrate they would emerge from a rescue as a going concern qualify.
Directors can also trade through the emergency period without the threat of personal liability.
“The Bill will help companies that were trading successfully before the Covid-19 emergency to protect jobs and put them in the best possible position to bounce back,” said business secretary Alok Sharma.
Delay harms Scottish retailers
The unexpected delay in allowing Scottish auto retailers to reopen means businesses will have incurred further substantial losses, the NFDA claims. A lack of clear communication meant some retailers bought staff back from furlough early in anticipation of reopening in early June and are now facing a huge financial burden.As businesses finally reopen today (Monday, 29 June), the NFDA has urged the Scottish government for better engagement with the automotive sector going forward.
VW looks to buy Europcar
Volkswagen is in talks to buy French car rental firm Europcar, say sources. Talks are preliminary and a deal is “far from certain”. It would be a reversal for Volkswagen which sold Europcar for €3.32bn in 2006. A new deal would be at a significant discount: Europcar has a market capitalisation of €390m and net debt of over €1m.The car rental industry has been badly hit by the coronavirus crisis: US rival Hertz filed for bankruptcy in May.
Auto Trader to work with Ebbon-Dacs
French car sales recover
French new car sales are expected to have recovered to almost normal levels in a sign government incentives are working. These took effect from 1 June and include a scrappage-style scheme and extra incentives for electric car buyers. June figures will be announced on 1 July.
Inchcape Australia reshuffle
Inchcape Australia has appointed Subaru MD Colin Christie, a 24-year Inchcape veteran, as overall MD. He will oversee Subaru in Australia and New Zealand, PSA in Australia, plus Inchcape’s auto retail and AutoNexus businesses. Christian Dinsdale takes over as Subaru MD and Kate Gillis becomes general manager of Peugeot Citroen Australia.
Closing prices on 26 June 2020 and weekly change
Lookers, Caffyns, Pendragon fall
Auto Trader Group 533.0p 545.8p (-12.8p / -2.3%)
Cambria 52.5p (n/c)
Caffyns 260.0p (-39.2p / -14.0%)
Halfords 151.4p (-17.2p / -10.7%)
Inchcape 488.8p (-9.0p / -1.8%)
Lookers 19.8p (-3.1p / -14.5%)
Marshall Motor Holdings 122.5p (+3.75p / +3.1%)
Motorpoint 263.0p (+6.0p / +2.3%)
Pendragon 9.21p (-1.21p / -12.3%)
Vertu 27.0p (+0.1p / +0.3%)
Monday, Lookers AGM
Monday, Scottish retailers open
Monday, UK Q1 GDP and economic accounts
Tuesday, Nationwide house price index
Wednesday, VRA AGM
JLR in government loan talks
Jaguar Land Rover is understood to be one of six strategically important businesses in advanced talks with the Government for financial support. The ‘Project Birch’ scheme is for companies not eligible for other government loans because they lack investment-grade credit ratings.
Personal loan struggles a retailer opportunity
Consumers are finding it harder and more expensive to access unsecured personal loans due to economic uncertainty tightening credit, says MotoNovo deputy CEO Karl Werner. This is an opportunity for dealer finance which, although not immune, is more consistent and accessible, due to the nature of HP and PCP finance.