Motor 150 Report 2018
22 November 2018
After eight years of growth in the sector with profits reaching a record high, the results for the Motor 150 ‘group’ have fallen for the first time since 2009. It is not all doom and gloom as the profits for the year of £840m is still the third highest the 150 group has posted since our first report in 2008. However, the motor retail sector faces both short and long term challenges and not many of these are in the dealers’ control.
Key findings from the report include:
- More than half of the top 150 motor dealers in the UK posted a worse result than in 2016 with the average return on sales dropping to just 1.24%
- New car registrations fall by 7.5% to the end of September 2018
- By 2030, 15% of all vehicles sold could be fully autonomous and by 2035 all vehicles sold in Europe will be fully electric
- Over the past five years, the Motor 150 group has spent a staggering £2.059bn on freehold and leasehold additions. This includes the acquisition of new sites
- 22 M&A deals were completed in the motor sector in 2017 with activity amongst overseas buyers increasing.
In addition to our analysis of the ‘group’ performance, we look ahead to a number of obstacles facing the sector. These challenges include:
- The reduction in supply of cars from manufacturers
- The rising cost of employment due to the Governments “high pay, low tax” agenda
- The lack of supply from manufacturers Mobility as a Service (MaaS) and autonomous vehicles are a potential driver of change in traditional car ownership
- Millennials are now a significant part of the population and by 2025 will make up more than 65% of a dealer’s workforce. They are impacting how dealerships recruit and retain staff and also interact with their customers
- It could be argued that the impact of the ‘green agenda’ is a long-term issue but retailers should consider the impact of this on their business
- Brexit could mean a short-term downside risk for both supply and demand following the UK’s exit and any significant downturn in the UK economy will dent consumer car buying confidence.
If you would like to discuss the report further or any wider sector issues, please contact Malcolm Thixton, Head of Motor Retail or Steve Le Bas, Partner, Motor Retail team.
The Motor 150 Report is published by BDO annually and aims to provide a considered insight into recent economic events and sector activity, the current and future dynamics of motor retailing, and to offer our professional view and advice for the future. Visit our Motor Retail (add link) page for more information.