Motorpoint warns of drop in car sales amid inflationary pressure

Automotive retailer Motorpoint warned on Wednesday that inflationary pressures would result in fewer consumers buying used vehicles in 2022 as supply chain disruptions continue to bite.

Motorpoint highlighted that consumers were under "increasing pressure" to reduce discretionary spending after inflation hit a 40-year high in the UK and cautioned that rising inflation and global vehicle supply chain issues were both likely to continue to impact both its markets and industry participants.

"The impacts of rising inflation and worldwide vehicle supply chain challenges are likely to continue to affect our markets and all industry participants. In general, rising inflation is putting increasing pressure on discretionary spending power and consumer sentiment, and this position has worsened since the start of our new financial year. This is very likely to reduce overall sales and transactions in our markets," said Motorpoint.

"Further, supply chain shortages will continue to limit new car production in the near term, which in turn constrains the supply of used cars that fit our nearly new criteria. The precise extent to which these factors will impact consumer behaviour and our markets is increasingly difficult to predict."

However, the London-listed group also reported a marked full-year profit increase on Wednesday, with pre-tax profits up 121.6% at £21.5m, gross profits 70.1% higher at £106.3m, and operating profits increasing 98.4% to £25.0m. Basic earnings per share shot up from 8.4p in the year ended 31 March 2021 to 18.7p at the same time a year later.

Revenues surged 83.3% to £1.32bn due to a combination of market share growth and vehicle price inflation.

As of 0840 BST, Motorpoint shares were down 9.16% at 204.85p.

Reporting by Iain Gilbert at Sharecast.com