Auto Retail Agenda: 29 March 2021
28 March 2021
- CAZOO AND CINCH MEGA-DEALS
- PENDRAGON WARNS OF SHORTAGES
- DVLA STRIKE ACTION CONFIRMED
- RETAILERS TO REOPEN WITH EXTENDED HOURS
- GERMAN SHOWROOMS SHOULD REOPEN ‘IMMEDIATELY’
- ILLINOISE RETAILERS SUE CAR FIRMS
- STOCKWATCH – Cambria rallies on news of MBO
- COMING UP – UK GDP and consumer credit
- FALL IN PLANNED REDUNDANCIES
- SUEZ TO PUSH UP SHIPPING COSTS
Cazoo and Cinch mega-deals
Cazoo is finalising a merger with a New York-listed ‘blank cheque’ Spac called Ajax I to take the used car platform public in a £5 billion ($7bn) deal – $1bn below earlier expectations, but still valuing Alex Chesterman’s 30% stake at £1.5bn. The merger could happen today (Monday) suggests Sky News.
The company is also expected to raise around $800m (£580m) through a ‘PIPE’, or ‘private investment in public equity’. This is where shares of publicly traded stock are bought at a price below the current market value. It allows the issuer of the stock to raise capital for the public company.
BCA Marketplace’s Cinch is also reportedly in talks with investors to raise £500m. The fundraising would value the company at more than £5bn (and parent group Constellation, owned by private equity form TDR Capital, at close to £10bn). Cinch already raised £300m from blue-chip investors in 2020.
Cinch says sales have risen by 200% so far in 2021 and that it boasts the biggest supply of cars of any online UK marketplace. The unique annual visitor run rate is already 30 million revealed sources.
Last week, Cinch launched CinchCare, a monthly subscription service including servicing, warranty and premium breakdown cover. It costs £34.99 a month based on 12k miles a year.
The used car market across Europe is worth €400bn (£343bn) in annual sales, according to analysits . Industry data suggests just 1% of sales are currently digital but strong growth is anticipated.
Over the weekend, Vertu’s Robert Forrester revealed the company had sold almost 500 more cars than last year, despite no customer visits. Tom Lyons and the Vertu Volkswagen Hereford team led the daily rankings with 12 deals.
Pendragon warns of shortages
Pendragon, which last week announced it had cut losses during the pandemic, has warned of short-term vehicle supply issues due to both Covid-19 and the global chip shortage. “There is going to be some turmoil in the business over the next 6-18 months when it comes to the supply of new and used vehicles,” said CEO Bill Berman. “We are actively working with OEMs to make sure we have the proper supply of vehicles, but often times we are kind of at their mercy when it comes to that.”
However, the resultant increase in demand could lead to better margins, he added.
DVLA strike action confirmed
DVLA PCS union members have voted to go on strike from April 6-9 after the organisation suffered Britain’s worst workplace Covid outbreak. More than 600 workers tested positive. Talks will begin this week to avert the strike with the union calling for reduced occupancy levels in the building.
Retailers to reopen with extended hours
Non-essential shops will be able to stay open until 10pm from Monday to Saturday when restrictions ease on April 12 said communities secretary Robert Jenrick. The measures, which are temporary, are to give customers greater flexibility to avoid peak times and ease transport pressures.
German showrooms should reopen ‘immediately’
German retailer trade body the ZDK says the country’s extended lockdown threatens the survival of dealers. It is calling for the immediate reopening of showrooms, citing their large, open spaces and limited number of customers in a store at any one time. New car registrations have plunged since the latest lockdown began on December 16th and it has recently been extended to April 18th. New car orders are down 60%.
Illinois retailers sue car firms
Illinois retailers have filed a lawsuit against start-up direct sales car firms Rivian and Lucid Motors, which are both opening showrooms in the state. It is the latest conflict in a standoff that’s been brewing since the early days of Tesla, another manufacturer that sells direct to customers. The retailers say they are acting after the Illinois Secretary of State “turned a blind eye” to complaints over several years.
Closing prices on 26 March 2021 and weekly change
Cambria rallies on news of MBO
Auto Trader Group 565.4p (-8.0p / -1.4%)
Cambria 75.0p (+9.0p / +12.7%)
Caffyns 350.0p (n/c)
Halfords 366.0p (+38.5p / +11.1%)
Inchcape 748.5p (-12.5p / -1.6%)
Lookers 52.2p (+0.2p / +0.3%)
Marshall Motor Holdings 165.0p (+10.0p / +6.2%)
Motorpoint 256.5p (-11.5p / -4.3%)
Pendragon 16.96p (-1.46p / -8.2%)
Vertu 39.2p (+1.3p / +3.3%)
Tuesday, UK consumer credit
Wednesday, UK GDP
Friday, Good Friday
Fall in planned redundancies
20% fewer companies planned job cuts in February compared to January. The Insolvency Service figures obtained by the BBC were also lower than February 2020. They suggest government support schemes have helped prevent mass redundancies. Companies planning 20 or more redundancies have to notify the Insolvency Service through an HR1 form.
Suez to push up shipping costs
Shipping rates for freight, already “sky-high”, are likely to rise further due to the blocking of the Suez Canal. Oil prices have already surged. A third of the world’s container shipping volume passes through the canal. An expert at Moody’s also warned of shortages with automotive and automotive suppliers most affected due to just-in-time supply chains.