Motorpoint trades well despite vehicle shortage

Multi-channel vehicle retailer Motorpoint Group said in a trading update on Thursday that group revenues in its first half grew 57% year-on-year, following continued strong consumer demand for used vehicles.

The London-listed firm said online retail sales increased 53% over the six-month period ended 30 September, reflecting continued progress in its transformation to a “digitally-led” business.

As seen across the market, sales growth slowed from June due to a reduced supply of vehicles, following record trading in April and May.

The company noted that the Society of Motor Manufacturers and Traders (SMMT) reported second quarter market growth of 109% year-on-year, with Motorpoint “significantly” outperforming that, with growth of 242%.

Due to a reduced supply of vehicles in the market, it expanded our offering from its core market of vehicles under three years old, to include three-to-four-year-old vehicles.

Motorpoint said it quickly gained a 1.4% share of that market, which the board said evidenced its agility to successfully adapt to changing market conditions.

Revenue from its Auction4Cars brand increased 38% against the first half of 2021, despite the group selling more vehicles through the retail sales channel, instead of feeding those vehicles onto the Auction4Cars platform.

Throughout the first half, Motorpoint said its gross profit margins remained “strong” due to appreciation of vehicle values.

Against the first half of 2021, gross profit increased by 58%, as the company invested in its customer proposition, sharing its scale advantages and by expanding its home delivery fleet.

Its APR finance rates were reduced further to 8.9% from 1 October, as it looked to maintain its 'best value' offering.

As planned, strategic costs increased in the half-year as the firm invested in future growth, with technology and marketing investment rising by more than 150% against the first half of 2021.

In particular, the firm invested “heavily” in its infrastructure and talent capability as part of its digital transformation.

Despite the upweighted investment, profit before tax grew over 30% against the first half of 2021, to more than £13m.

On the strategic front, it said “good progress” was made on its medium-term strategic targets:

The Motorpoint car buying service, purchasing cars directly from consumers, was successfully launched on 6 July, and was already described as an “important enabler” to increase the supply of retail vehicles and the volume of transactions through Auction4Cars, the board said.

During the first half, 12.5% of retail vehicles sold were sourced from consumers, compared to 7.6% at the same time in the prior year.

The company’s new branch in Manchester opened successfully on 1 October, which followed the new preparation centre in Motherwell in August.

In addition to the recently-announced Maidstone branch, it had also secured a new site in Milton Keynes, with further branches under negotiation.

The board said it was important to note that uncertainty in the market was persisting, given the “well-documented” vehicle supply shortage, the potential for further disruption from Covid-19, and downward pressure on used vehicle margins as supply shortage gradually eased.

Trading was still in line with the company’s expectations for the full-year, and the group was “well-placed” to deal with the uncertain potential headwinds, and to invest further in growth.

“Since fully reopening in April our omnichannel proposition has excelled, providing the whole used vehicle market with our renowned choice, value, service and quality,” said chief executive officer Mark Carpenter.

“With record revenues, employee engagement and customer service across the group, Motorpoint continues to be the leading independent used vehicle retailer in the UK.”

Carpenter said the business was acting “agile and agnostic”, qualities that allowed it to take advantage of strategic opportunities, with its transition to e-commerce one example of that.

“We are firmly fixed on significant growth targets and the investments made to date in technology and marketing will continue to grow to realise our goal of doubling revenues in the medium term.”

Motorpoint said it would announce its interim results for the six months ended 30 September on 25 November.

At 1004 BST, shares in Motorpoint Group were up 7.71% at 382.9p.