Marshall Motor Holdings outperforms market again and records fifth year of revenue growth
Marshall Motor Holdings outperformed the market again in 2019, its newly-published results show.
In a challenging market, the company grew its like-for-like revenue for the fifth year since its IPO and delivered a profit of £33.1million, down 4.1 per cent on the previous year’s record result.
The company added 20 new businesses in 2019, becoming Volkswagen’s largest UK partner, and for the fifth year running was named one of the country’s best places to work.
CEO Daksh Gupta said: “We outperformed the total new, new retail, new fleet and used car markets - a clean sweep across the board, which was an excellent result.
“Our like-for-like total new unit sales grew by 0.3 per cent and this was a pleasing result when you consider market conditions.
“Our like-for-like new retail unit sales were down 2.2 per cent ahead of the UK market which was down 3.2 per cent, and our fleet performance was strong, up 4.5 per cent on a like-for-like sales.
“After-sales continue to enjoy growth, with like-for-like aftersales revenues up 3.2 per cent and we enjoyed a fantastic used car performance, which was a record for us.
“Our like-for-like unit sales were up 6.1 per cent, a significant outperformance of the market, which was down 1.7 per cent.
“This builds on consecutive years of record results.
“We invested £31.6million into 20 businesses, which we added through eight acquisitions or start-ups.”
These included Honda and Volvo, but Daksh added: “The most significant development in the year was our expansion with Volkswagen Group. Not only were we awarded an open point in Lincoln, we also completed multiple acquisitions - in total 14 Volkswagen Group franchises were added to the group.
“This really demonstrates our operational capabilities and the strength of our manufacturer relationships. A key part of our strategy is to partner with the right brands in the right markets and I’ve got absolutely no doubt whatsoever that these additions fall into that category, especially when you look at the market share and the scale of the investment these brands are making.
“The integration of all these businesses is progressing well, and the early signs are encouraging.”
Like-for-like revenues were up 2.2 per cent to £2.2billion.
The board has recommended a final dividend of 5.69p, giving a full year dividend of 8.54p per share.
Daksh added: "The board notes the latest forecast by the Society of Motor Manufacturers and Traders for a further decline in the UK new car market in 2020 of 2.6 per cent.
“It is also cognisant of the potential impact that uncertainty over the outcome of future trade agreement negotiations between the UK and the European Union may have on the automotive sector.
“Although we have not seen an impact to date, the board is monitoring the potential impact of Covid-19 and is considering contingency plans in the event it starts to impact our dealerships.
“The board therefore remains cautious but our order book for the important March plate-change period is encouraging and our outlook for the full year is unchanged.
“The UK motor retail landscape may change over the years and decades ahead. The group's long standing strategy of partnering with the right brands in the right locations has positioned it well to remain a relevant and important part of that future landscape.”
Richard Blumberger, chief financial officer, said a number of the acquisitions that are expected to add to earnings from 2022.
“In recent years the group has invested significantly in its property portfolio, spending over £100million,” he said. “This period of investment is nearing an end, and as a result, we expect to see capex reduce significantly and free cash flow increase from 2021 onwards.”
But he added that there remains “significant headroom” to grow through suitable acquisitions of the “right brands in the markets”.
Looking to the drive to reduce emissions, and the fines that will be levied on manufacturers who fail to do so, Daksh said the industry will witness significant investment in electric vehicles.
“Volkswagen are investing 66 billion euros in their future electrification strategy, so you can understand now why I am super excited to be their biggest partner.
“However, many brands will not be able to invest on this scale and will come under pressure to meet these requirements. Therefore, we will see OEMs form partnerships, alliances, consolidate or even leave markets, and we’ve witnessed this in recent years.”
He added that there will be “rationalisation of retailers to protect viability” of manufacturers, but this should in time “drive a higher throughput per site” and ultimately aid profitability.
Marshall has relationships with 18 brands out of 41 in the UK, but these represent 80 per cent of the market. Other brands, he predicted, will come under pressure.
“OEMs need and want groups such as Marshall to lead this journey,” he concluded. “I’m really excited about the next few years.”