- Motorpoint warned that annual profits could be £5-6 million below expectations
- Profits were also hit by the temporary closure of the Derby showroom
Motorpoint Group expects annual profits to be lower than previously forecast due to a significant drop in used car prices.
Britain’s largest independent car retailer warned that profits for the 2024 financial year could be £5 million to £6 million below expectations.
Second-hand vehicle prices have fallen significantly in Britain over the past year due to a weaker economic backdrop and easing supply chain disruptions.
Profit forecast: Britain’s largest independent car retailer warned that profits for the 2024 financial year could be £5 million to £6 million below expectations
Pent-up demand and a shortage of semiconductors that undermined global motor production as governments began easing Covid-related lockdown restrictions sent prices soaring in 2021.
As a result of the price drop and cost of living pressure, Motorpoint is looking to sell cheaper vehicles and has expanded the types of products it offers to include cars that are less than five years old and have driven 50,000 miles by the end of their design 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.
Profits were also impacted by the timing of the company’s seasonal inventory expansion and the temporary closure of its Derby showroom due to Storm Babet in October.
However, Motorpoint noted that retail volumes started to improve in the last three months of 2023 and have continued to rise in the new year.
The London-listed company, which has 20 stores in England, Wales and Scotland, expects January store volumes to be at their highest level in 17 months.
At the same time, UK inflation has fallen by more than half since the end of 2022, from 11.1 percent to 4 percent, and analysts are broadly predicting that the Bank of England will soon cut rates.
Mark Carpenter, CEO 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 grows, and supply is strengthened as new car registrations fuel the used car market.
‘The actions already taken to right-scale the business, protect cash flow and improve unit economics ensure Motorpoint is well-placed to seize the significant growth opportunities despite this correction in the value of used cars.’
Motorpoint further announced on Friday a share buyback program worth up to £5m, which it claimed was an ‘attractive use of the company’s resources and beneficial to all shareholders’.
Motorpoint Group shares were 2.55 percent higher at 100.5 cents in the afternoon, but are down about 30 percent over the past 12 months.