Motorpoint Group crashes to a loss as car sales fall

Motorpoint Group has fallen to a half-year loss as challenging economic conditions led to consumers making fewer used car purchases.

Britain’s largest independent vehicle retailer recorded a £3.5million loss for the six months ending September after making a £2.4million profit in the equivalent period last year.

Revenue declined by 22.8 per cent to £607.2million due to customers buying around 9,700 fewer vehicles and the nearly-new secondhand car market contracting heavily from its pandemic-era peak.

Motorpoint Group shares were 5.7 per cent, or 4.4p, down at 73p on Thursday morning, meaning they have slumped by around half this year.

Driving down: Motorpoint Group recorded a £3.5million loss for the six months ending September after making a £2.4million profit in the equivalent period last year

The Nottingham-based company is also prioritising selling less expensive cars in response to higher inflation and interest rates curtailing consumer affordability.

As a result, it has expanded the criteria of the vehicles it sells to include motors less than five years old and 50,000 miles towards the end of design life. 

It warned that used car prices have fallen since October, with wholesale values alone falling by about 6 per cent in the past six weeks.

Mark Carpenter, its chief executive, said the drop was ‘unquestionably a near-term challenge’.

He added: ‘However, it also provides reassuring signs of supply finally beginning to improve in the nearly new market that we have dominated in the past.

‘I believe next year will be a key turning point for the market, and I look to the future with confidence.’

The firm’s latest half-year performance marks a dramatic downturn from the previous 12 months when Motorpoint achieved record turnover for the second successive year thanks to a sustained expansion in vehicle prices.

Used vehicle prices started soaring in mid-2021 as semiconductor shortages forced many automobile manufacturers to reduce production of new cars.

Prices were further pushed up by the release of pent-up demand following the relaxation of Covid-related restrictions and Britons spending some of their excess savings on new motors.

Worsening cost-of-living problems and the weaker economic outlook have led to a subsequent slowdown in trade over the past year.

As a result, Motorpoint has implemented redundancies, cutting staff headcount by 12 per cent during the first half, reduced discretionary capital spending and halted new store openings.

Analysts at Shore Capital said: ‘Motorpoint has right sized for the current market, and we firmly believe it has a flexible and agile model supported by the capabilities to allow it to prosper as the UK used car market moves through the cycle.’

Founded 25 years ago, Motorpoint sells its vehicles, which are predominantly under four years old and have clocked less than 30,000 miles, via 20 outlets across the UK and the website Auction4cars.com.

This post first appeared on Dailymail.co.uk