Motorpoint Group will cut staff numbers by another 10 per cent in response to continued challenging macroeconomic conditions, the car dealership said on Wednesday.
Nottingham-based Motorpoint expects to save approximately £3million annually from the redundancies, which follows a headcount reduction of 134 during the last fiscal year.
Curtailing employee numbers forms part of measures to boost the firm’s profitability and revenues amid a significant slowdown in the used vehicle market.
Departing: Motorpoint Group expects to save approximately £3million annually from the redundancies, which follows a headcount reduction of 134 during the last financial year
These include halting further store rollouts, cuts to discretionary capital spending, sourcing a larger share of stock through direct supply channels, and better utilising data to determine the best sales prices.
Used vehicle prices started soaring in mid-2021 as the production of new cars was hampered by a shortage of semiconductors amidst a surge in orders of other electrical devices such as laptops, mobile phones, and game consoles.
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.
Annual turnover rose to record levels over the past two successive financial years, increasing by 9 per cent to £1.4billion for the 12 months ending March 2023, having climbed by around £600million the previous year.
Demand began to slow significantly in the second half of last year as interest rate hikes caused many consumers to cut their spending on big-ticket items.
However, Motorpoint said trading had improved over the first quarter, supported by stronger retail margins, and is set to continue getting better over the current quarter, while net cash ended June at £2.2million.
The firm also said it ‘continues to be confident it will emerge in a normalised market as a leaner and more valuable business ready to seize a significant opportunity’.
Over the medium term, Motorpoint is targeting annual revenues of at least £2billion, which it plans to achieve by raising online sales to over £1billion, opening 12 more sales and collection branches, and developing the Auction4Cars.com website.
Analysts at Shore Capital said: ‘Current market conditions…are a notable barrier to such an outcome, and in such a scenario, we view management’s short-term focus on costs and cash conservation as clearly the correct and sensible actions to take.’
Motorpoint Group shares were 5.4 per cent higher at 107.5p on late Wednesday afternoon, making them one of the top ten risers on the FTSE All-Share Index.
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