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Car retailers bounce back

by LLB Editor
14th Jul 20 12:08 pm

The car could be set for a comeback. Fear of infection has seen use of public transport plummet and it doesn’t feel like a stretch to see this trend continuing as those who can afford it opt for the relative isolation of their own vehicle.

“This might not be good news for the environment, but it would be a positive development for car dealerships like Vertu Motors and Motorpoint,” according to AJ Bell.

“Remarkably Vertu actually posted a better profit in June 2020 than it did in June 2019 with pent-up demand and savings on things like un-booked holidays also seeming logical factors for the business to cite. What is particularly encouraging is that the momentum has continued into July.

“The job cuts announced by the company may have had a similar cost-saving motivation as lots of other businesses but also reflect an increasing comfort with a more automated sales process which was effectively on trial through lockdown.

“Second-hand car specialist Motorpoint’s decision to pull the dividend is understandable but again trading volumes are up year-on-year with margins proving surprisingly resilient. It has also made a move towards automation with fully contactless sales routes.

“The industry faces a bigger test down the road as the full economic fall-out from coronavirus hits consumers. It is telling that neither Vertu nor Motorpoint are prepared to map out earnings guidance at this stage.”

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