Friday, June 26, 2009
Jobs warning at Jaguar Land Rover
More job cuts may be made at Jaguar Land Rover, after the carmaker reported a £280m 10-month loss, owner Tata Motors has warned.
Tata also said that further shutdowns were likely at Jaguar Land Rover's factories in Castle Bromwich, Coventry, Solihull and Halewood, Merseyside.
Jaguar Land Rover currently employs 14,500 people, having made 450 redundancies at the start of the year.
Sales of Jaguar and Land Rover cars fell 32% in the 10 months to 31 March.
The number of vehicles sold fell to 167,000 from 246,000 a year earlier, as worldwide demand fell sharply due to the recession.
Tata said that while Jaguar Land Rover sales slumped "considerably" last year, one highlight had been "a very strong consumer response" to the Jaguar XF model.
The £280m loss was for the same period to 31 March, which was Jaguar Land Rover's first 10 months under the ownership of India's Tata.
Tata's own losses
A spokesman for Jaguar Land Rover said the firm was continuing talks with the UK government about the possibility of some form of financial assistance.
Tata bought Jaguar Land Rover for £1.7bn in June 2008 from Ford.
The warning about possible further job cuts at Jaguar Land Rover came as Tata reported its own losses.
Tata made a net loss of $520m (£315m) in the year to 31 March, which includes the 10 month impact of Jaguar Land Rover.
It was the firm's first annual loss for eight years.
French strike halts Mini producer
Staff at BMW's Mini plant in Oxford have been sent home until Monday after production was halted for a second day by a strike involving French suppliers.
BMW said a French firm which provides bearings for the cars' steering units is being hit by an industrial dispute.
Close to 4,000 workers are employed at Mini's Cowley plant and managers are monitoring the situation.
Mini said the circumstances were beyond its control and it was not the only manufacturer affected by the walk-out.
Receivers appointed at Brooklyn Motors
Brooklyn Motors, ranked 64 in the AM100, has gone into receivership.
Nigel Ruddock and Neil Tombs of Grant Thornton have been appointed administrative receivers today.
Vertu Motors has bought part of the £150m turnover group saving 160 jobs.
Two other Ford sites, at Malvern and Kidderminster, have been sold separately to MTCR Marketing, another company owned by Brooklyn's managing director Tim Hill. That deal has saved 50 jobs.
Four Toyota dealerships and one Skoda operation are understood to have been closed, with the loss of 100 jobs.
We understand that the group had been offered for sale for several months.
Grant Thornton said: "The group had incurred heavy losses over a number of years and was affected by the general downturn in the sector during 2008, as well as the wider economic slowdown."
Toyota has this afternoon confirmed that its centres operated bt Brooklyn at Hereford, Worcester, Cheltenham and Gloucester have ceased trading.
"Future Toyota representation in these areas is currently under review," said a spokesman.
DATED: 26.06.09
FEED: AM
Vertu bags Brooklyn sites
Vertu Motors has bought part of Brooklyn Motor group out of administration.
The purchase includes Worcester Ford, Redditch Ford, Redditch Mazda and an authorised repair franchise for Iveco in Redditch. All include freehold properties.
Vertu has also bought Cheltenham Mazda.
Chief executive Robert Forrester said deal will cost Vertu around £7.9 million and the business acquired complements Vertu's existing Ford operations in Birmingham, Cheltenham and Gloucester.
Vertu Motors will now operate 45 franchised operations, four non-franchised and two standalone service operations.
Forrester added: “There is considerable scope to integrate these dealerships onto Vertu’s scalable platform, and these are excellent volume franchises that strengthen the group’s portfolio balance.”
Vertu's Annual General Meeting will be on July 23.
DATED: 26.06.09
FEED: AM
Thursday, June 25, 2009
Hyundai cashes in on scrappage scheme
This is more than the 11,209 cars the company sold in the first four months of the year, according to SMMT figures.
The company is placing orders with the parent in Korea for further consignments of i10 and i20 models. The top seller is the i10, which costs from £4,995 including the scrappage allowance.
Weak won
Hyundai is benefiting from the weakness of the Korean won.
This week, Glass's Guide warned that some car makers may limit supplies of small cars to the UK and give greater support to scrappage schemes in mainland Europe because of the weak pound.
Glass's Guide managing editor Adrian Rushmore said some small cars, already in demand before the introduction of the scrappage scheme, were in short supply.
Glass's warning
"It is possible that certain models simply won't be available within the scheme's stipulated 16-week timeframe for delivery.
"This situation will be aggravated if manufacturers limit supply to the UK because of the low value of sterling against the euro, recognising that it may be more profitable for them to support scrappage schemes elsewhere in Europe," said Rushmore.
DATED: 25.06.09
FEED: MT
Santander to offer service plans
It ruled that Sandicliffe misleadingly implied it was approved by an official trade body in the ad.
BBC Watchdog
The ad used background music similar to the BBC Watchdog programme and used the claim:
"Say no to dodgy dealers and save twice with your MPS approved dealers Sandicliffe.
The ASA upheld a complaint from a listener who challenged the claim ‘MPS approved dealers' because he said it implied the dealer was approved by an official body.
Sandicliffe said MPS stood for Midlands Price Squad which, it said, was a "tongue-in-cheek creation", intended to help draw people's attention to what to expect when purchasing a used car from a dealer during the credit crunch.
Educating customers
It said it wanted to emphasise to customers that price was not the only consideration; quality of service was also important and they should be aware of "corner-cutting" by other less scrupulous dealers.
It was in this context that they created the fictitious body, 'MPS', which included a website and checklist for buyers.
Sandicliffe said it did not intend to undermine the work of Trading Standards or other regulatory bodies and actually sought to support it.
But the ASA said that at no point did Sandicliffe explain that MPS was a ficticious body and ruled against it in its current form.
DATED: 25.06.09
FEED: MT
ASA tells dealer group to pull ad.
It ruled that Sandicliffe misleadingly implied it was approved by an official trade body in the ad.
BBC Watchdog
The ad used background music similar to the BBC Watchdog programme and used the claim:
"Say no to dodgy dealers and save twice with your MPS approved dealers Sandicliffe.
The ASA upheld a complaint from a listener who challenged the claim ‘MPS approved dealers' because he said it implied the dealer was approved by an official body.
Sandicliffe said MPS stood for Midlands Price Squad which, it said, was a "tongue-in-cheek creation", intended to help draw people's attention to what to expect when purchasing a used car from a dealer during the credit crunch.
Educating customers
It said it wanted to emphasise to customers that price was not the only consideration; quality of service was also important and they should be aware of "corner-cutting" by other less scrupulous dealers.
It was in this context that they created the fictitious body, 'MPS', which included a website and checklist for buyers.
Sandicliffe said it did not intend to undermine the work of Trading Standards or other regulatory bodies and actually sought to support it.
But the ASA said that at no point did Sandicliffe explain that MPS was a ficticious body and ruled against it in its current form.
DATED: 25.06.09
FEED: MT
Inchcape cuts costs amid flat sales
The dealer group said however that its aftersales business, which represents more than half of its gross profit, remains strong.
The company said in a pre-close trading statement that total sales in the five months to May were down 16.3 per cent in sterling terms and 22 per cent in constant currency.
Pre-tax profits in the second quarter are expected to be significantly ahead of the £20m reported in the first quarter but well adrift of the same period last year.
UK performance
In the UK, the company continues to outperform the new car market with like-for-like sales down 21 per cent in a market down 27.9 per cent.
Inchcape has reduced debt to £100m by then end of May compared to the £404m at the end of March by paying off £234m from a rights issue. It also improved cash flow.
As a result of this it expects its year-end debt to be below its previous expectations.
Inchcape group chief executive André Lacroix said the scrappage scheme in the UK had helped boost traffic through its dealerships. The company is set to deliver a solid performance, he said.
Stronger balance sheet
"The group balance sheet has been strengthened considerably due to the successful completion of our rights issue and the positive impact of our operational initiatives on cash flow.
"Given the challenging trading conditions in our markets, we remain focused on executing our five operational priorities of growing market share and aftersales, while reducing costs, working capital and capital expenditure to improve our competitive position and maximise our cash flow.
"Our actions in the first five months provide a platform for us to deliver a solid performance for the full year against the background of what is expected to be a lengthy global industry downturn."
DATED: 25.06.09
FEED: MT
Why was LDV so badly served?
LDV's collapse serves as a bad omen for dealers, buyers and suppliers. LDV had carved out a valuable niche as a specialist vanmaker for fleet and small business buyers. With investment in R&D, facilities and marketing it could have weathered the current downturn and been ideally placed for business buyers once the economy pulls out of recession. However, it has been poorly served on three counts. Where was the government? The government provided a bridging loan but was, of course, embroiled in a crisis of its own making. It took its eye off the ball whilst it tried to limit the damage done by the expenses furore and its dismal performance in local and European elections. The business secretary, Lord Mandelson, who did a commendable job in pushing through the scrappage scheme should have been fighting LDV's corner. When you wish upon Weststar Running out of Gaz What is particularly worrying now is that Gaz is part of the Magna consortium behind the acquisition of GM Europe. If the LDV experience is anything to go by then Vauxhall may find itself out of the frying pan but into the mire. DATED: 25.06.09 FEED: MT |
GM looks for improved offer for European operations
General Motors has invited several investors to hand in improved offers for its European operations, which include Vauxhall based in the UK.
The aim is to tighten the screws on Magna International, which earlier this month became the front-runner in the race for GM Europe when it secured preferred bidder status.
Beijing Automotive Industry Corporation, the Chinese carmaker aims to hand in an improved offer for the GM business by the middle of next month.
Belgium-based investor RHJ International could also make a second offer for the business.
It has emerged that both BAIC and RHJ have been able to look at the books of GM Europe to increase the pressure on Magna amid tough negotiations with the Canadian car parts supplier.
Fiat, an early favourite in the bidding, has said that its offer for GM Europe remained on the table.
Road pricing 'killed off' by new Transport Secretary
Plans to introduce pay-as-you-drive charges on all motorists have been killed off by recently appointed Transport Secretary Lord Adonis.
Road charging has been on the Government's agenda for many years, but it will not be included in the Labour Party's manifesto in the run-up to the general election, which must be held in the next 12 months.
The plans were suspended after 1.8 million people signed a petition on the 10 Downing Street website calling for road pricing to be scrapped.
Lord Adonis has now said: "We definitely are not proceeding with national road charging in the next Parliament. I don't believe as Britain comes out of recession and motorists are feeling under pressure, that it is the time to put road charging on the agenda."
Wednesday, June 24, 2009
AM 100: Listed Companies
Jack Petchey, the 84-year-old former car dealer turned share trader and philanthropist, does not believe the UK’s listed car sector will be on its uppers for long.
He has spent many millions buying 11% of Pendragon, which makes him the biggest single shareholder. He is also the owner of 21% of Lookers, having bought a stake in January.
He has already made profit from investment in H R Owen and European Motor Holdings.
Petchey has made the most of very depressed share prices. Pendragon, which was trading at 2p around Christmas, is now 20p. Lookers bottomed out at 60p, having fallen from 90p.
The reason for the very severe fall in Pendragon was the news that it had breached its banking covenants, would have to pay a ‘fine’ for doing so, and would be forced to renegotiate the loans on worse terms.
So long did the talks go on that investors feared agreement would never be reached. It did happen, but the properties in the company had to be written- down in value by £58 million and shareholders’ funds in the company reduced to £80 million.
Loss-making companies
Pendragon has worked hard to take out the loss-making companies, and the number of dealers in the group now is down from 341 to 280. Volvo, Ford, Renault and Kia are the franchises that have been most reduced.
Nevertheless, the company fell into a loss of £30 million at the pre-tax level, compared with a positive £42 million the previous year.
Lookers has done better than expected over the last year. In April it was able to announce a profit of £14 million (compared with £23 million last year) which became a loss of £15 million after write-downs on the value of the business and goodwill. It paid no dividend in order to con-serve cash.
After lengthy negotiations with bankers it managed to secure fresh borrowings of £210 million which will not fall due for repayment until 2010. The arrangement fees also contributed to the bottom line losses caused by the write-downs. It is possible the company will want to copy Inchcape and raise money from the stock market in a rights issue if conditions allow.
DATED: 24.06.09
FEED: AM
Chinese bidder likely for Volvo
Beijing Automotive Industry Holding Co may place a bid to take Volvo out of Ford's hands.
The Chinese car manufacturer failed in a bid last month for General Motors’ business in Europe and is now expected to send executives to Volvo’s Gothenburg headquarters in Sweden.
The Chinese delegation will tour the factories and review the company’s books according to reports from Bloomberg.
Ford, which remains the only major US car manufacturer not in bankruptcy, is believed to be shedding its international luxury marquees in a bid to focus on rebuilding its name-sake brand and to raise the cash needed to avoid a Government bailout.
Beijing Auto will face a challenge from Geely Holding Group Corporation as it bids to build more profitable vehicles.
DATED: 24.06.09
FEED: AM
Confidence slow to return, says Bank of England
There have been recent signs that the pace of decline in the economy is levelling off but it is too soon to draw strong conclusions from that, Bank of England Governor Mervyn King was quoted as saying on Friday.
In an interview published on the Southern Daily Echo newspaper's website, King was quoted as saying: "We are seeing now some signs that the rate at which outlook was falling is beginning to flatten off but I don't think anyone should draw strong conclusions."
The newspaper said he went on to note that confidence had dropped markedly as the economy had fallen into recession.
"You can't regain it quickly, so it's bound to take a lot longer to recover than it was to fall into recession, which was a very sharp fall in activity over the last six months," he was quoted as saying.
"I don't think it would be sensible to expect activity to pick (up) as quickly."
King's comments in the regional newspaper are in line with the cautious tone on the economy he employed in a major speech he made on Wednesday.
DATED: 24.06.09
FEED: AM
Ford raises prices for third time
Ford is to raise its UK prices by an average of 4%, blaming the move on the weakness of the pound against the euro.
It is the third time this year that Ford has raised prices. They rose by 4.7% in February and by 3.75% in April.
The list price of Ka, Fiesta, Focus and Mondeo models will rise by between £600 and £650 while an S-Max will cost £700 more and a Galaxy will go up by £800.
Ford conceded that raising prices, in a recession with a scrappage scheme in place, "may seem counter-intuitive".
The price rises will apply to orders received after 30 June.
"With so many of our costs priced in euros, there is no choice if we are to maintain a viable business," said Nigel Sharp, managing director of Ford in the UK.
Many of the Ford cars sold in the UK are assembled in Germany and Spain.
'Huge impact'
Mr Sharp said that sterling had been stable at about 1.43 euros for about 10 years up until the end of 2007, but that the pound had recently fallen to about 1.16 euros.
"The cost impact of this drop, on a car priced at £15,000, is close to £3,500, which has to be absorbed by the business," he said.
"The total revenue impact has been huge - well into nine figures - on Ford's UK business."
The three price rises will cancel out most of the savings from the government's scrappage scheme, which gives customers £2,000 off a new car if they trade in a vehicle that is more than 10 years old.
Weak demand
Separately, car dealership firm Inchcape said the scrappage scheme appeared to be having a positive impact so far.
"When the scrappage scheme was introduced, we saw an increase in traffic," Inchcape chief executive Andre Lacroix told the Reuters news agency.
"It is looking promising."
But the company said that customer demand for new vehicles was still weak.
For the first five months of 2009, it reported like-for-like sales down 21%, compared with falls of 27.9% for the whole of the market.
Suspension failures top breakdown list
Suspension failures are the most common cause of breakdowns in the UK, according to a survey by automotive insurance specialist Warranty Direct.
According to analysis of mechanical failures on 50,000 vehicles over the past two years, springs and shocks, upper and lower arms, hubs and wheel bearings represent 8.2% of breakdowns - more than any other component failing.
The survey detailed the top 10 breakdown failures and although suspension failures topped the table in terms of frequency it did not represent the most costly average repair bill.
Suspension failures result in an average repair cost of £322.82, but radiators deliver the most expensive faults of the top ten at £497.84.
Alternators, electric window motors, injection system, driveshafts, ignitions and miscellaneous electrical faults make up the remainder of the top ten faults.
PSA issues cash-raising bonds
PSA Peugeot Citroen is to sell up to 575m euros of convertible bonds as it forecast an operating loss of up to 2 billion euros in 2009.
The group, which recorded a 343 million euros net loss in 2008, said the capital raised from the bond issue would go towards 'general financing needs', development projects, and the extension of the maturity of its existing debt.
In a statement Peugeot said it had no significant repayment dates until 2011, when a 2001 bond of around 1.6bn euros would fall due.
Peugeot, which is seen as one of Europe's most vulnerable automobile manufacturers, also forecast an operating loss of between 1bn euros and 2bn euros this year, citing uncertainties over whether government support will be continued in 2010, and the chance that the company would have to support its suppliers in the continuing market downturn.
The carmaker had previously declined to give guidance for its expected loss this year, saying only that it expected to remain in the red until 2010.
Peugeot received a 3bn euros long term loan from the French government in March, and a ?400m four year loan from the European Investment Bank in April.
On a more upbeat note, the group said it had revised upwards its estimate for a fall in European sales in 2009, now expecting a decline of around 12% compared to a previous forecast of 20%. Peugeot said the new estimate was thanks to the positive impact of scrappage schemes in Germany and other European countries.
Data provider pushes scrappage scheme angle
Data provider, The Trading Floor, is targeting dealers that want to locate customers that qualify for the UK scrappage scheme.
The Trading Floor says it has data about the motor insurance requirements of two million motorists that could potentially take advantage of the scheme.
A spokesman for The Trading Floor said: “We already supply transactional data to many leading car manufacturers, insurers and motor dealers.
“We hold details about people's preferred contact channels, whether it's post, telephone, email or SMS, which further maximises the chances of a marketing campaign being a success.”
The Trading Floor said dealers can use the information to define customers from postcodes, current vehicle type, length of time they’ve owned the vehicle, income, purchasing cycles and the number of family members.
DATED: 24.06.09
FEED: AM
Inchcape fights recession with forecast of better profits
Dealer group Inchcape has forecast a big improvement in quarterly profits, despite continued weak demand for new vehicles.
The group, which has more than 100 showrooms in the UK, said aftersales business remained strong while it has also benefited from ongoing cost reductions.
In the second quarter of the year, Inchcape said profits were expected to be significantly ahead of the first quarter, albeit well below a year ago.
Like-for-like sales in constant currency terms were down 23.8% in the five months ended to May 31, it added.
Inchcape said: "Customer demand for new vehicles is still weak but our aftersales business, which represents approximately half of our gross profit, remains strong."
In the UK, Inchcape said it continued to outperform the industry with like-for-like sales down 21% in a market that is down by 27.9%.
The group, which employs more than 15,000 people and has operations in Singapore, Australia, Hong Kong, Greece, Belgium and Russia, has responded to the industry slump by cutting 2,000 jobs and introducing a salary freeze.
And in May it raised £234 million from shareholders in order to strengthen its balance sheet.
Shares jumped 8% as investors welcomed the profits improvement and the bigger than expected drop in net debt to around £100 million.
DATED: 24.06.09
FEED: AM
