Auto Retail Agenda: 8 March 2021
06 March 2021
- CAZOO EYES £6bn SPAC
- HALFORDS HANDS BACK FURLOUGH CASH
- HOUSING ASSOCIATION BUYS RETAILER SITE
- MATT HARRISON TAKES TOYOTA EUROPE TOP JOB
- US RETAILER PROFITS SURGE
- FACEBOOK: SALES PEOPLE STILL IMPORTANT ONLINE
- STOCKWATCH – Caffyns falls 15.5%
- COMING UP – Marshall full year
- WHAT IS A SPAC?
- RETAILERS ‘FACE A RECKONING’
Cazoo eyes £6bn Spac
Alex Chesterman is in discussions with a US Spac (see below) about a merger that could value it at as much as £6bn. Ajax I floated in new York last year and is seeking acquisition targets. Talks with Cazoo have been taking place for several weeks. If it goes through, the deal would represent the largest British company by valuation to go public via a Spac.
Cazoo is also understood to be weighing a London Stock Exchange listing alongside merging with a US-listed Spac. Some London fund managers say the firm would struggle to attract investors given how it only went live in December 2019. However, “sources close to Cazoo continue to believe that a London IPO is the most likely outcome,” reports Sky News.
Last week, the Evening Standard reported a Goldman Sachs banker personally invested in Cazoo before his bank won the IPO contract. His shares “could be worth a small fortune” if the IPO reaches the billions mooted. Founder Alex Chesterman owns the bulk of shares – around 30% – while the Daily Mail and General Trust also owns 20% of Cazoo.
A £6bn valuation would make Mr Chesterman £1.5bn.
Cazoo has already privately raised £450m – more than two times the entire stock market value of Pendragon and over three times that of Vertu. The company has sold 20k cars and made £200m in revenue since launch.
Halfords hands back furlough cash
Halfords will pay back £10.7m in furlough income – but is still on track for a full year profit of £90m to £100m. This would see profits double in a year and is a turnaround from its July 2020 worst case scenario of a £10m loss. Cycle sales are driving the growth but Halfords Autocentres are also growing market share.
Housing association buys retailer site
A Bristol housing association has paid £9.1m to buy the land occupied by City Motors St Phillips Causeway, Bristol, which operates Citroen, Dacia, Renault and Volvo franchises. Local reporters say the retailer’s lease expires in 2023 and understand it won’t be renewed. It is speculated hundreds of new homes could be built on the land instead.
In other Bristol retailer news, Robins & Day Peugeot Temple Meads closed last week. The prominent site’s closure is part of Robins & Day’s “constantly evolving business strategy” and operations have been consolidated to the branch at Cribbs Causeway.
Matt Harrison takes Toyota Europe top job
Matt Harrison will succeed Johan van Zyl as head of Toyota Europe on 1 April. The 52-year-old Brit, formerly president and MD of Toyota GB, is currently vice president of sales and marketing. He joined Toyota in 2000 after beginning his career in sales and marketing at Ford in 1989.
US retailer profits surge
The average US retailer posted their highest profits ever in 2020 despite the pandemic shuttering showrooms in the spring. NADA reports average net pre-tax profits of $2.1m (£1.5m), up 48% on 2019. The previous record was $1.5m in 2015.
NADA chief economist Patrick Manzi said the improved returns were “due to the unique market conditions that increased scarcity for both new and used vehicles”. Per-vehicle profits grew 22% for new and 13% for used.
Facebook: sales people still important online
A Facebook-commissioned study reports that despite the move online, the role of the salesperson is still very important to car buyers: 83% said they had some sort of help making a decision, and more than 2 in 5 said they got help choosing the make and model.
“Increasingly, these conversations happen remotely” and customers prefer this, suggests the survey – while more than 1 in 3 customers would prefer not to negotiate over price at all.
Closing prices on 5 March 2021 and weekly change
Caffyns falls 15.5%
Auto Trader Group 553.2p (+3.0p / +0.5%)
Cambria 60.0p (-2.5p / -4.0%)
Caffyns 355.0p (-60.0p / -15.5%)
Halfords 315.0p (+25.5p / +8.4%)
Inchcape 725.0p (+16.0p / +2.2%)
Lookers 43.5p (+2.4p / +5.6%)
Marshall Motor Holdings 145.0p (-0.5p / -0.3%)
Motorpoint 275.0p (+7.0p / +2.5%)
Pendragon 15.9p (+1.78p / +11.8%)
Vertu 37.9p (-1.4p / -3.6%)
Monday, schools and colleges reopen
Tuesday, Marshall 2020 full year results
Tuesday, UK retail sales
What is a Spac?
Special purpose acquisition companies, or Spacs, are a new trend in finance on which UK restrictions, suggested a review of London Stock Exchange rules last week, should be loosened.
They work by Spac sponsors raising money for a ‘blank cheque’ company that lists on a stock market. This cash shell then seeks assets to buy. Deals are quick, easy, and less likely to fall through. A “flood’ of US Spacs raised £63.5bn in 2020 and the UK review suggests requirements for trading in Spac shares to be suspended for scrutiny during a takeover be dropped.
Final UK Spac rules will be set out in late 2021 after consultation by the FCA.
Retailers ‘face a reckoning’
In a punchy editorial, the FT says Volvo’s decision to only sell EVs by 2030 – and sell all of them online – is “a turning point” and traditional auto retailers “face a reckoning”. Brands are going direct to customer, with fixed prices, while more reliable electric cars will make owners less reliant on dealers. However, the FT warns it will allow carmakers to amass more customer data and whether power transfers to the customer depends on “who controls the data… [retailers] might be missed if they disappear”.