Motor retail between a rock and a hard place as pressures mount
Return on sales at the UK’s top 150 motor retailers has fallen to its lowest level since the financial crisis and despite a 1.4% increase in turnover over the last year, profit before tax is at its lowest level since 2012.
These are the findings from accountancy and business advisory firm BDO LLP in its Motor 150 Report for 2019. The annual report, which analyses the financial health of the top 150 motor retail businesses found that motor retail is facing challenges from all directions. Brexit and economic uncertainty, rapid technological change and changing customer attitudes have all contributed to a 6.8% fall in new vehicle registrations and a fall of 2.1% in used car registrations. There is still profit to be made by those groups with best controls and processes delivering a first class experience to their customers. However, data shows that 1 in 5 companies in the group made a loss, that’s twice as many as the previous year.
Findings from previous editions of the report showed a contrast between the performance of the largest 75 groups compared to the next 75 groups when it came to increasing turnover and profitability. Those distinctions no longer exist - economies of scale are no longer a guarantee of success or a guard against the wider industry struggles.
Steve Le Bas, Head of Motor Retail comments, “In addition to the current challenges, the rapid growth of electric and alternative fuelled cars, the potential changing view of car ownership and move to ‘mobility as a service’ means that the industry is in the middle of a significant level of change. We see the industry however continuing to evolve in response to these many different market forces rather than there being an immediate revolution to the current trading model”.
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