Motorpoint has been cutting jobs, reducing stock purchase costs and halting its expansion plans because it fights to stem financial losses which the national automotive supermarket chain blames on difficult macroeconomic conditions.
Within the spring its underlying pre-tax losses mounted to £3.1 million, but its “swift and decisive motion” meant it had reduced this to a £600,000 pre-tax loss by the top of the summer.
It’ll announce Motorpoint’s half-year financial results next month but in a trading statement it said it has incurred a one-off charge of around £1 million referring to redundancy costs, and excluding a £5.3m interest expense it recorded an underlying operating profit of £1.6m.
Mark Carpenter, CEO of Motorpoint, said: “The impacts of high inflation, rates of interest, and consumer uncertainty proceed to affect demand for used cars. Now we have responded by reducing our cost base and expanding our retail criteria to assist customers find the automotive of their alternative at a price they’ll afford.
“Now we have successfully preserved money while making progress on selective strategic initiatives, and are well positioned to emerge from this difficult macroeconomic cycle a leaner and more agile business, able to seize the numerous opportunity as market conditions improve.”
Motorpoint has traditionally focused on retailing nearly-new and young-used cars, that are in brief supply following three years of a depressed recent automotive market and high vehicle costs.
Its update reveals Motorpoint has broadened its selling criteria to incorporate vehicles as much as five years old and 50,000 miles “to assist our customers find the best vehicle in accordance with more constrained household budgets”.
It suggests that is a brief tactic, because it adds: “We anticipate used values will progressively align to historic levels as recent automotive supply continues to enhance which is able to further enhance affordability for our customers.”
Having opened its twentieth automotive dealership, in Ipswich, during May, the automotive supermarket group has paused further openings for now.
“Despite the present market challenges, we remain committed to our long run growth aspirations, while focusing within the short term on margin improvement, cost base management, and money generation,” said the corporate. It ended H1 with net money at £11m (up from £2.2m in H1 last yr) and said it has an additional £35m funding facility available so it stays resiliient within the difficult conditions.
This Article First Appeared At www.am-online.com
