The car market is a tough place at the moment. Falling sales, falling production and uncertainty over Brexit. Everything is piling up to put pressure on retailers. The City, however, was still shocked by Pendragon’s news this week. News that losses of £25 million had built up in Car Store and that the group expected an overall trading loss this year was certainly worse than the city had expected.
And their share price, which not so long ago was trading at 48p, plummeted by a fifth to just over 17p this week. Still, compared to historically low levels of just over 1.5p, these must seem like heady times. Those times, however, were exceptional, at the height of the 2008 crisis where news about a motor retailer wasn’t really news at all. With turnover of nearly £4.5 billion, Pendragon is a big operator. The departure earlier this year of Trevor Finn signalled something was amiss, the arrival of Mark Herbert will undoubtedly focus the group on financial return, reporting and fiscal prudence.
In the wake of the failed Fiat Chrysler and Renault merger, there are strong reports this week that the PSA group is poised to buy JLR from Tata. Such a move almost certainly makes sense, as there is a fantastic fit between the brands, and would relieve the Indian group of a significant loss maker. JLR’s fortunes have plummeted along with sales in China. And while Chinese volumes are down, their performance is significantly worse. It has also been reported that since acquiring Opel, including our own Vauxhall, PSA has performed exceptionally well. The addition of a genuine premium group would significantly enhance their standing, and give them access to markets they currently do not perform well in.
Talking about China, sales there have continued to fall, and early June figures suggest that this has accelerated ahead of changes to vehicle emissions regulations at the end of this month. Consumers and businesses, it seems, are waiting for new model variants to kick in. When you consider how big their market is, potential falls of 20% year on year are significant and all manufacturers are feeling the pinch.
Have a great weekend, we can tell from the weather that it is not long before Wimbledon starts.
If two men agree on everything, you may be sure that one of them is doing the thinking.
Lyndon B. Johnson (1908 – 1973)
Honest criticism is hard to take, particularly from a relative, a friend, an acquaintance, or a stranger.
Franklin P. Jones
Humility is no substitute for a good personality.
Fran Lebowitz (1950 – ), Metropolitan Life, 1978
One never knows what each day is going to bring. The important thing is to be open and ready for it.
Henry Moore (1898 – 1986)
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