More profitability means price rises

  04 October 2010

Could it be that the UK’s leading car brands will be asking dealers to raise prices in January in order to meet the 2.5% rise in VAT?

Mutterings from Ford and Peugeot bosses at the Paris Motor Show might give a clue. Stephen Odell, chairman and chief executive of Ford of Europe said his company was “not going to chase market share just for shares’ sake”. He conceded that “in the end we will have to remain competitive but it has to be profitable business for us".

Philippe Varin, chief executive of Peugeot, said his company had yet to finalise its strategy for the increase. "We want to develop our market share and our pricing policy together. We are not going to take market share too aggressively."

The remarks may be construed as sitting on the fence but if they are not chasing market share I’d say that maintaining profitability means they have no intention of absorbing the VAT rise.

Who is looking at Lookers?
Whispers that a cash-rich private equity firm is ready to table a £346m cash bid for Lookers caused investors to chase the Manchester retailers’ shares during last week. If such a bid materialises at that price it means the buyer will be paying 90p a share. Tracking the shares over the week I see they have enjoyed a 10.27% rise, finishing on Friday at 2.92% higher at 61.76p.

Existing shareholders, Jack Petchey with 17.3% and Tony Bramall with 22.3% are bound to have a significant say on any deal. Neither would be looking to sell on the cheap, especially as Lookers has decided to resume dividend payments.

Have a good week, both in and out of the showroom. If you have a story for us, email barry@auto-retail.com
Barry Hook

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