Saturday, June 12, 2010
Dealers' point-of-sale share is down
Point-of-sale finance on new cars continues to run well below the 50%-plus penetration previously achieved, Finance & Leasing Association data shows.
The penetration average for the year to March of 46% compares with 53.9% in the previous 12 months. Dealers’ share was 45.8% in 2009 and 57.2% in 2008.
But POS finance grew sharply in March alongside the rise in sales of new cars, boosted by scrappage.
FLA data shows dealers’ advances totalled £1.146 billion on 95,397 units (a 46% year-on-year increase) with first quarter POS loans of £1.721bn (36% higher) on 146,436 cars (38% up).
In the year to March POS loans on new cars were £6.248bn (11% up year on year) on 505,540 cars (10% up).
Used cars did less well.
Dealer advances in March totalled £607 million (up 12%) and those for the first quarter were £1.510bn (6% better), but POS loans on used stock in the year to March were 8% lower at £5.568bn.
DATED: 12.06.10
FEED: AM
Dealer profitability in the red
The analysis of dealer profitability has shown a small loss nationally in February, putting year-to-date figures into the red.
Net profit as a percentage of sales was -0.5% year-to-date compared to -1.1% last year. ASE’s benchmark is 3%. Overhead absorption fell to 61.8% from 63.7% and used vehicle stockturn increased from 32 to 55 days (see table below).
ASE partner Mike Jones said: “February is traditionally a poor month as a result of the small number of working days and a concentration on March plate-change. 2010 proved no different with the average dealer losing just under £5,000 in the month. Following on from the poor performance in January this left the average retailer with a year-to-date loss of £7,000.”
Despite 2009 being a record year, dealers are significantly ahead of this at the end of February, he said, acknowledging though the results reflect a pre-scrappage scheme market and some dealers were working through over-valued used stock from the previous year.
The average motor retail outlet made more than £130,000 in 2009 – a return of 1.3% on sales and a turnaround in fortunes.
2008 proved to be the most difficult year since ASE began collating average dealer performance figures in 2001.
Net profit as a percentage of sales in 2009 was an average 1.3%, compared to -0.2% in 2008. And sales per salesperson was 176 units compared to 144. Year-to-date 2010 the figure is 134.
Jones said dealers now need to concentrate now on used vehicles and aftersales to bridge the profit gap.
“Dealers need to do everything possible to drive forwards service retail sales and get back to concentrating fully on used vehicles.”
Cambria goes on the acquisition trail
AM100 dealer group Cambria Automobiles hopes to complete two further acquisitions this summer.
The acquisitions would take the number of takeovers completed in the group’s current financial year, which closes at the end of August, to a total of five. Both targets are multiple site businesses.
In April the group floated on the Alternative Investment Market and has attracted shareholders with its ‘buy and build’ strategy, which entails taking over franchised dealerships which Cambria can improve exponentially by introducing its processes and management systems.
It has already proven the strategy works – the £175.9m revenue made in the six months to the end of February was a 60% improvement on the corresponding period last year, while net profit margin was 1.41%. Total new car sales rose 59% from 2,697 units to 4,290 units, including 1,297 scrappage scheme sales.
Chief executive Mark Lavery told AM: “We’re very pleased about the first half of our financial year and are optimistic about the second half.”
Lavery is proud that Cambria remained in the black even during the pre-scrappage period of late 2008/early 2009, when the UK’s new car market collapsed and used car prices plunged. He describes that period as “automotive Armageddon”.
He added: “We’ve demonstrated that we still make a profit in the most difficult of times. The next six months for the industry will be challenging but from our point of view we’re confident that our model is robust.”
DATED: 12.06.10
FEED: AM
Friday, June 11, 2010
Time running out on Geely deal for Volvo
Muller, chief executive of Dutch supercar-maker Spyker, which acquired Saab from General Motors earlier this year, said he believes that the Volvo deal is still a long way from being finalised.
He also fears that a weakened Volvo will have a negative impact on the supply chain in Scandinavia. "My opinion is that there is only a 50-50 chance of the deal with Geely going through and time is running out. If the deal is done what will happen to Volvo in the future?
"We need two strong carmakers in Sweden to support big suppliers such as Autoliv. Saab and Volvo sit well together, they do not compete with each other."
Muller said there were likely to be many issues to resolve between Ford and Geely before the Volvo deal can be concluded, including such things as technology transfer.
There is also opposition in Sweden to Volvo becoming Chinese-owned. Muller added: "One of the reasons Koenigsegg Automotive's bid to buy Saab from GM fell through was because they wanted to bring Beijing Auto into the deal."
Ford and Geely said that the deal will not be finalised until later this year.
Muller is also sceptical about full electric cars, although he said Saab will run an electric test fleet when it launches the new 9-3.
"I lose sleep over electric cars - they are a contradiction in terms. They are only as good as the grid they get their electricity from.
"In Stockholm EVs are truly zero emission because the country has nuclear and hydro-electric power stations. You can't say the same for New York because the car might have an electric motor but 500 miles away someone is shovelling coal into the generating station.
"We have to look at where the electricity comes from. There is a long way to go before EVs can be truly classed as zero emission. I see the future for now in hybrids, smaller, high performance internal combustion engines aided by electric solutions."
Germany rejects request for Opel aid
German Economy Minister Rainer Bruederle has rejected a request for state aid by carmaker General Motors for its European division Opel.
Opel, which owns the UK Vauxhall unit, wanted loan guarantees of more than 1bn euros (£900m) from Germany.
GM asked for the guarantees to help it raise money to restructure Opel.
Some German politicians were unhappy that GM was asking for aid, despite having paid off loans it received from the US government.
'Very disappointed'
A German committee that considers requests for aid from companies hit during the recession met to consider Opel on Wednesday, but failed to reach a decision.
This put the matter back into the hands of Mr Bruederle, who announced: "I am confident that Opel has a good future without credit guarantees."
Opel's chief executive Nick Reilly said that he did not "particularly understand the reasons why" the aid was rejected.
"GM is naturally very disappointed, as is Opel, with this decision after such a very long process, and we have spent a lot of time answering many, many hundreds of questions, being reviewed by many committees," he said.
GM emerged from bankruptcy protection last July, and in May this year reported its first quarterly profit in nearly three years.
The company also repaid $8.1bn in loans it had received from the US and Canadian governments.
'Review options'
Opel employs some 24,000 people in Germany, where it assembles Insignias, Astras and Corsas at four plants.
On Thursday, German Chancellor Angela Merkel was due to meet with the leaders of the states that host Opel plants, and there was speculation that the guarantees may yet be provided from other government departments.
GM has said it will spend about 1.9bn euros on restructuring Opel, but is seeking 1.8bn euros in loan guarantees from European governments, including the 1.1bn euros from Germany.
Thursday, June 10, 2010
Interest Rate Announcements
News Release - Bank of England Maintains Bank Rate at 0.5% and Maintains the Size of the Asset Purchase Programme at £200 Billion
DATED: 10.06.10
FEED: BoE
Tuesday, June 08, 2010
Cap accused of overvaluing used cars
Values dropping
Auction4Cars has called on Cap to further reduce its valuations to reflect continued falls in used car values. It claimed average used car values have fallen by eight per cent from January to May to £2,754.
Cap warned yesterday that an influx of nearly-new cars was pulling down used car values and reduced its values by 4 per cent in the June Black Book.
Lag
"Whilst there will always be an element of lag with Cap, prices are still as much as 10 per cent adrift, and we believe this really needs to be addressed at the earliest opportunity," said Neil Prescott for Auction4Cars.
"This isn't in anyway a criticism of Cap; more a frustration with the obsession with the Black Book and the effect this is having on the marketplace."
Bumper week
Meanwhile Auction4Cars said it recorded its highest ever number of weekly sales during May with 450 sales.
DATED: 08.06.10
FEED: MT
Deloitte warns of difficult months ahead
David Raistrick, automotive partner at Deloitte, welcomed Friday's 13.5 increase in car sales in May but warned of difficult times ahead with both fleet and private sales set to stall.
"Uncertainty in the public sector over spending cuts, combined with nervousness in the corporate sector will most likely lead to a further slowdown in fleet sales.
"From a private market perspective, the effects of the end of the scrappage boost are definitely being felt.
"Next month's budget will determine whether the VAT rate will be increased, which could have a further negative impact on sales as buyers could face increased purchase prices.
A VAT rate increase combined with potential price rises on imported vehicles due to the ongoing weakness of sterling, could lead to further difficult trading conditions in the short term.
"On a more positive note, the budget may generate a rise in the strength of sterling and consumer confidence, thereby leading to a positive trading environment in time for the all important September new plate registrations."
DATED: 08.06.10
FEED: MT
Marshall boosts operating profits in 2009
Operating profits in 2009 were £6.6m compared to operating losses of £7.5m in 2008.
Sales growth
Like-for-like sales grew 1.6 per cent to £431m, according to the just-published annual report.
The Cambridge-based group, rated 13 in the Motor Trader Top 200, outperformed the new car market with sales up 20.5 per cent in a market down 6.4 per cent.
In used cars it increased total sales by 17 per cent in a UK market down 5.7 per cent.
On the aftersales side, Marshall's service net profit increased by 40 per cent, parts net profit by the same percentage and bodyshop net profit by 19 per cent.
Investment
Marshall Motor Group chief executive Daksh Gupta said the firm had invested significant amounts in the corporate and local business sector.
During 2009 it said firms extended leases on existing leases and there was now pent up demand for which the firm was well placed to satisfy.
Leasing
For Marshall Leasing, the first half of 2009 "remained difficult" but the second half saw improvements as customers began to make purchasing decisions deferred in the earlier part of the year.
During 2009 the company invested in 18 showrooms and it expects to invest in an additional 17 during 2010.
DATED: 08.06.10
FEED: MT
New boss for Nidd Vale
Marshall background
A former professional golfer, Crossley joins the group from Marshall Motor Group where he was a regional general manager. He replaces Paul Stokes, who led a management buyout of the group in September 2007, and has now left the company.
"It's a privilege and also a great responsibility to join a company that has such a fantastic heritage. It's my belief that great customer service is at the core of Nidd Vale's success and that's an area I'll be looking to further develop," said Crossley.
Multi-franchise
Nidd Vale, rated 157 in the Motor Trader Top 200, celebrates its 90th anniversary this year, and represents Vauxhall, Mazda and Seat, and is an approved repairer for Saab and Peugeot.
Group chief executive, Nigel Pullan, said: "We're delighted to have such a talented and experienced managign director come on board. The past few years have been difficult times for the motor trade but our customers have continued to value what our great brand has to offer. Neil is the right person to take our business to the next stage of its development."
DATED: 08.06.10
FEED: MT
