Friday, July 31, 2009
MG Rover inquiry report may stay secret
The Government commissioned report into the 2005 collapse of MG Rover may never be published, it has been claimed.
The news comes amid speculation that its conclusions could be damaging to Prime Minister Gordon Brown, who was Chancellor when the company collapsed, and other senior ministers. MG Rover collapsed with the loss of 6,000 jobs.
The Serious Fraud Office is currently examining the report and will decide within the next few weeks whether to launch a full investigation into the collapse of the business.
In a letter sent earlier this month, an official at the Companies Investigation Branch of the Insolvency Service, suggested that Business Secretary Lord Mandelson might not publish the report.
The suggestion is said to have inflamed political tensions over the report and is counter to ministers' claims that it would be made public.
The Daily Telegraph says its understands that political damage is likely to centre on whether ministers helped to keep the car company solvent until the taxpayer-funded Pension Protection Fund was set up, ensuring that the business's pensioners only lose a fraction of their savings.
However, a spokesman for the Department for Business insisted the report would be published.
Government business rate too little too late, says RMIF
'Motor retailers will gain little from the Government's three per cent business rate deferment scheme, when many are facing real-terms increases of up to 30 per cent on their rates, ' according to Sue Robinson, Director of the Retail Motor Industry Federation (RMIF), commenting on a new Government support scheme for business.
The scheme, going live from today (Friday 31 July 2009), enables all business ratepayers to apply to their local council to put off three per cent of their whole year's 2009/2010 business rates bill. Also, those who accrued a rise in their bill because transitional relief has come to an end can now defer 60 per cent of the increase.
Robinson continues: 'The deferment is too small to soften the blow for businesses struggling in the face of prevailing economic conditions.
'Many are actually facing large increases in their rate bills. Following the 2005 rate revaluation many businesses benefited from four years of transitional relief, but this has now to come to an end. For some it means a business rate increase of up to 30 per cent.
Robinson adds: 'Additionally, the new deferment scheme is only for two years, and although the new regulations are due to take effect from today, local authorities are still not clear how they will work.
Information for this scheme including a one page application form has been sent to every ratepayer in England by their local council.
Motor auctions still a good source for used cars
Motor dealers are reporting increasing difficulty in sourcing good quality used cars, but are still able to rely on motor auctions, according to the RMI's Society of Motor Auctions (SMA).
'2009 has seen a booming used car market, but this is at risk of becoming a victim of its own success,' according to Louise Wallis, Head of the SMA.
She continues: 'Not only is used car demand high, but the supply of used cars is increasingly tight due to an increasing fleet cycle, reduced de-fleeting of self drive hire fleets, as well as manufacturers reducing their own registrations. This situation is unlikely to change in the foreseeable future. We have experienced a period of lower new car registrations, which in turn has translated into a smaller pool of available good quality used cars, which will continue.'
In view of the changing used car landscape, dealers need to look at all options for acquiring used car stock. A particularly good route to obtain vehicles is through motor auctions.
'Despite the tightening of supply, motor auctions remain the most reliable source for used stock,' said Wallis
However, Wallis believes that the introduction of September's new 59 plate could lead to a rush for used stock by the trade at the end of August: 'Dealers who wish to replenish used vehicle supplies prior to September should make sure they acquire stock as soon as possible, as the end of the month is expected to be very busy in many auction houses. '
Weak results from VW and Renault
Volkswagen (VW) and Renault have become the latest carmakers to report poor results as the industry struggles with a sharp drop in sales.
Germany's VW said its group-wide net profit for the six months to 30 June declined 81% from a year earlier to 494m euros ($697m; £422m).
Meanwhile, Renault made a 2.71bn euros loss for the same period, compared with a profit of 1.58bn euros last year.
PSA Peugeot Citroen, Daimler and Nissan all reported losses on Wednesday.
'Hit severely'
VW said its group-wide sales - which includes its Audi, Seat and Skoda brands - fell 9% from a year earlier to 51.2bn euros.
VW said it had been "significantly affected by the global financial and economic crisis".
Renault's half-year sales were down 24% to 15.99bn euros. The French firm's managing director, Patrick Pelata, said it had been "hit severely" by the global recession.
Both firms said they expected though trading conditions to continue for the remainder of the year.
Car issues head list of consumer complaints
Second hand cars bought from independent dealers remained at the top of the list of complaints received by Government-funded advice service Consumer Direct in the first half of this year.
In total, the Office of Fair Trading-managed service took more than 414,000 consumer complaints in the six month period to the end of June 2009, down 3% on the same period last year.
In May, in response to the high volumes of complaints about second hand cars, the OFT launched a study into the market to understand the reasons for the high levels of dissatisfaction and to consider whether existing consumer protection legislation is sufficient and effective.
Consumer Direct recorded a total of 24,672 complaints from purchasers of used car cars in the first half of 2009, 1.22% up on the same period last year. The figure was more than double the second placed complaint, which was 11,530 complaints about mobile phone service agreements.
Meanwhile, a further 8,047 complaints, down 4.16% year-on-year, were received by Consumer Direct in relation to car repairs and servicing issues at independent garages.
Finally, in seventh spot in the top 10 list of complaints were issues around second hand car purchases from franchise dealers, which totalled 7,431 but down 6.43% year-on-year.
Inchcape delivers 'solid' result
A 'solid' set of financial results for the first six months of 2009 has been delivered by UK-based international automotive retailer Inchcape.
Despite what the company called 'extremely challenging trading conditions', chief executive André Lacroix said the company "delivered a resilient financial performance" for the six months ending June 30.
Sales were down 15% at £2.8 billion (June 2008: £3.3bn) and pre-tax profit before exceptional items was £65.4 million, down 49.8% (June 2008: £130.3m). After exceptional items of £18.4m (June 2008: £nil), profit before tax was £47m (June 2008: £130.3m). Profit for the period was down almost 75% at £26.9m (June 2008: £98m).
The Group generated an operating profit before exceptional items in the first half year of £87.4m, a decrease of 42.2% from the first half of 2008. This resulted in a return on sales before exceptional items of 3.1%, down from 4.6% in 2008.
Mr Lacroix said the group's performance, although below last year, reflected the company's focus on executing its five key operational priorities - growing market share, growing aftersales, reducing costs, managing working capital and reducing capital expenditure.
During the six months under review Inchcape reduced its net debt from £408m to £28m and generated cash flow of £217m to strengthen its balance sheet.
Mr Lacroix said: "We are pleased with our first half results due to solid performances in Australia, Singapore and the UK, improved used car margins and good aftersales resilience. However, in light of the global downturn, we remain cautious for the second half.
"We will continue to focus on our five priorities as conditions in our markets remain challenging and we do not expect the global recovery to start until well into 2010. We are confident in our ability to deliver a solid performance for 2009 as a whole and the group is well positioned to benefit from the market recovery."
In the UK, Inchcape reported an operating profit after exceptionals of £16.6m for the six months under review (June 2008: £32.7m) and a trading profit of £19.6m (June 2008: £32.7m). Sales in the first six months of 2009 were 24.6% down at £1.06bn (June 2008: £1.33bn).
Inchcape said that the Government and motor industry-backed scrappage scheme had seen 'some positive impact'.
Inchcape predicted that the UK retail market would be stronger in the second half of 2009 as further scrappage scheme sales fed through and demand increased in the fourth quarter of the year ahead of the VAT rise back to 17.5% in 2010.
The company estimated that total new car sales in 2009 would be between 1.75m and 1.85m vehicles, but warned of a lower market in 2010 once the scrappage scheme and VAT cut to 15% had ceased.
Wednesday, July 29, 2009
Used car market analysis, July
"Prices have eroded very little since hitting a high point a few weeks ago" - Adrian Rushmore
While there are fewer buyers at auctions than was the case in April and May, the ever-diminishing number of cars available has continued to engender competition among the trade-buying fraternity.
It is difficult to think of anything that will not readily find a new home, almost irrespective of make, model or condition.
Both the auction centres and the trade buyers are living hand-to-mouth.
Conversion rates have been high, at around 80%, in contrast to the dire position 12 months ago when sales were achieving close to half that figure.
Dealer part-exchange sales are still yielding profits against stand-in values and, even though they are not at the levels seen in June, no-one is disappointed.
Most, if not all, manufacturers are carrying significantly less stock of late-plate used cars than at this time in 2008 and less than at the beginning of this year. Some are claiming that their inventories have reached an all-time low, though in reality there are nearly enough cars to satisfy dealers’ immediate needs.
Furthermore, the rental season peak is upon us, with hire firms keen to deploy all available cars, at the expense of trade supply.
It would appear that prices have eroded little since hitting a high point a few weeks ago – even for recent high flyers like 4x4s.
Prices for three-year-old cars rose by less than 0.5% during the second half of May and in the first half of June they were static.
Opinion is that the market will not offer an additional supply of used cars, from any source.
The likelihood is that there will be fewer cars in trade circulation in the coming weeks, but dealers’ buying enthusiasm may only diminish slightly during the remainder of the summer.
While few would doubt that there will be less business available, there are no immediate signs of a dramatic slowdown.
DATED: 29.07.09
FEED: AM
BSM replaces its Vauxhall fleet with Fiats
Britain's biggest driving school will be replacing its fleet of Vauxhal Corsas with Fiat 500s.
The move ends a 16 year relationship between BSM, formerly the British School of Motoring, and Vauxhall, reports the Times website.
Fiat will supply 14,000 cars to the drivng school over four years in a marketing deal that will attempt to inject some Italian style into the century-old British brand.
A spokesman for Vauxhall said: "We have made a commercial decision to step out of this agreement with BSM."
Within three weeks BSM dealers will begin taking delivery of the Fiat 500 cars to replace the existing Corsas.
The deal will enable BSM students who pass their test to buy a Fiat car at a discount of £500, on top of any dealer's discount.
The list price for a new Fiat 500 is £8,300 with a waiting list of between two and three months.
BSM says about 70 per cent of learners who pass the test buy the model of car in which they learnt.
Abu Shafi, BSM’s chief executive, said the Corsa no longer appealed to its core customers, who tended to be young and female and wanted to drive a fashionable car.
DATED: 29.07.09
FEED: AM
Best deal round-up
High fives from SsangYong
SsangYong has a third-quarter package topped by 0% finance over five years.
Free servicing is included, and the warranty covers five years with a maximum of 250,000 miles.
The interest-free loans start from £124.96 a month, and apply to versions of the Kyron 2.7 SPR, Rexton 2.7 SPR and Rodius 270 S models.
Buyers can opt for part-exchange or scrappage deals.
Vauxhall job-loss cover
Two-year redundancy cover for buyers who choose it is included in Vauxhall finance offers.
A number of products are geared to encourage scrappage-allowance customers.
Vauxhall provides 0% finance from two to four years, and there is free insurance for drivers aged over 19.
The deals are on selected derivatives of the Corsa, Meriva, Astra, Zafira and Insignia.
DATED: 29.07.09
FEED: AM
