Motorpoint revenues accelerate but dealership group issues profit warning as used electric car prices crash
- Revenues rose 17% to over £1bn in the nine months to the end of 2022
- Gross profit per unit to be lower than expected due to falling electric car values
- Plunge in EV values to keep impacting profitability ‘for the foreseeable future’
Motorpoint has flagged weaker demand for used cars and a hit to profits from a fall in the value of electric cars.
The second-hand and nearly-new car retailer said revenues rose 17 per cent to over £1billion in the nine months to the end of 2022, as it witnessed a return to year-on-year retail volume growth in December and into January.
However, the company also warned that gross profit per car would be lower than expected due to the plummeting value of used electric cars, adding this would likely keep impacting profitability ‘for the foreseeable future’.
Warning: Motorpoint said falling EV values will keep impacting profitability in the near future
‘Macroeconomic conditions continue to promote consumer uncertainty, thereby reducing used car demand,’ Motorpoint told investors.
‘Although the Company does not provide specific profit guidance, recent reductions in finance commissions and lower gross margin, largely due to the well documented fall in electric vehicle values will negatively impact profitability and the Board believes these macro factors will continue to impact sales and profitability for the foreseeable future.’
Motorpoint shares were down 2.8 per cent to 141p in morning trading on Friday. They have lost around 50 per cent of their value over the past year.
Expensive second-hand electric cars are falling in value, with dealerships having to slash prices to sell lingering stock as demand for second-hand battery cars cools.
Earlier this month, industry figures revealed that the value of used Tesla electric cars nosedived by a fifth in the last 12 months.
Used versions of the popular Tesla Model 3 – Britain’s second-most-bought new electric car – have crashed in value more than any other in the last 12 months, with one-year old examples down a massive 21 per cent on average, translating to a financial drop-off of almost £10,000.
Chief executive Mark Carpenter insisted the group would ’emerge from the current depressed consumer market’ and take advantage of struggling rivals to grow market share.
Motorpoint said it was on track to meet its medium-term growth target of over £1billion in online sales and over £2billion in total sales this year.
It has also so far invested an extra £5million to grow market share and roll-out more stores in new catchment areas.
The group plans to open two more stores in Ipswich and Milton Keynes in the first half of the next financial year.
This would take the total of stores opened to seven since the strategy was announced in July 2021.
‘Motorpoint will emerge from the current depressed consumer market a more efficient business, having made progress on multiple key strategic initiatives,’ Carpenter said.
And added: ‘In a period when some of the Group’s competitors are retreating or lacking financial capability and when current macro headwinds are forecast to continue, the Board believes that there is significant opportunity to continue making targeted strategic investment to grow market share and become a highly profitable market leader.’