Motorpoint Group PLC, the independent omnichannel vehicle retailer, has issued a profit warning following sharp downward used car price adjustments, and disruption caused by floods leading to the Derby store’s temporary closure.
It came in a trading update for the quarter ended 31 December 2023. During the period, macroeconomic conditions remained difficult and were further compounded by sharp falls in used car values and reduced selling prices.
Whilst these falls had a significant negative impact on profitability, along with a reduction in finance commission, Motorpoint said it is optimistic for FY25 as the used car market continues to normalise.
It added: “Encouragingly, retail volumes improved through Q3 and ended the calendar year roughly consistent with the previous year, reversing the trend of H1. This momentum has continued into Q4 and volumes are growing year on year. Costs remain closely controlled, with further savings achieved in people costs and efficiencies resulting from technology investment.”
As a result of the third quarter’s pricing corrections, exacerbated by the timing of the Group’s seasonal increase in stock, in addition to the disruption caused by the Derby store closure, profitability for FY24 is now likely to be £5m-£6m below expectations, even with an anticipated strong fourth quarter.
However, Motorpoint believes that corrective cost and efficiency actions taken in FY24, combined with the positive signs that economic headwinds will ease in FY25, will ensure it is well placed to deliver an improved financial performance in FY25 as the market returns to a more normal trading environment.
Mark Carpenter, Chief Executive Officer of Motorpoint Group PLC, said: “I have previously commented on Motorpoint’s agility and resilience in difficult times, and that I am confident the Group will emerge from this depressed consumer environment a much more efficient business.
“Now, at last, there are signs that the 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 bolstered by new car registrations feeding into the used car market.
“The actions already taken to right size the business, protect cash and improve unit economics, mean that Motorpoint is well placed to seize the significant growth opportunity despite this correction in used car values. I therefore look forward with renewed optimism and am excited as to what the business can achieve in FY25 and beyond.”
