- Motorpoint warned annual profits could be £5-6m lower than expected
- Its profits were also affected by the temporary closure of its Derby showroom.
Motorpoint Group expects its annual profits to be lower than previously forecast following a significant drop in used car prices.
Britain’s largest independent car retailer has warned that its profits could be £5m to £6m below expectations for the 2024 financial year.
Used vehicle prices have fallen significantly in the UK over the past year due to weaker economic conditions and reduced supply chain disruption.
Profit forecast: Britain’s largest independent car retailer has warned that profits could be £5m to £6m below expectations for the 2024 financial year.
The pent-up demand and semiconductor shortage that hit global auto production when governments began easing Covid-related lockdown restrictions has led to a price explosion in 2021.
Due to falling prices and pressures on the cost of living, Motorpoint seeks to sell cheaper vehicles and expanded the type of products it offers to include cars that are less than five years old and have driven 50,000 miles toward the end of their rated life.
The Nottingham-based company was selling used vehicles for an average of £19,750 at the start of the current financial year, but is now selling them for £14,750.
Its profits were also affected by the timing of the company’s seasonal stock expansion and the temporary closure of its Derby showroom due to Storm Babet in October.
However, Motorpoint noted that retail volumes began to improve in the last three months of 2023 and continued to increase in the new year.
The London-listed company, which operates 20 stores across England, Wales and Scotland, expects retail volumes in January to be at their highest level for 17 months.
At the same time, the UK inflation rate has more than halved since the end of 2022, from 11.1% to 4%, and analysts widely predict that the Bank of England will soon cut inflation rates. ‘interest.
Mark Carpenter, chief executive of Motorpoint, said: “Finally, there are signs that macroeconomic headwinds are easing, leading to renewed consumer confidence.
“As a result, the market size is expected to increase as demand increases, and supply is bolstered by new car registrations fueling the used car market.
“The steps already taken to right-size the business, protect cash flow and improve unit profitability mean Motorpoint is well placed to seize the opportunity for significant growth despite this correction in used car values.”
Motorpoint further announced a share buyback program worth up to £5m on Friday, which it said was an “attractive use of the company’s resources and beneficial for all shareholders”.
Motorpoint Group Shares were up 2.55 per cent at 100.5p in afternoon trading, but have plunged around 30 per cent over the past 12 months.