How Marshall Motor Holdings beat the UK car market in 2017
Group outperformed its own expectations in a challenging year for new car market
Marshall Motor Holdings outperformed its own expectations in 2017, despite it proving to be a challenging year for the new car market.
The automotive retail group said in the second half of 2017 it “continued to build on the record financial performance” reported during the first six months.
But the board remains “cautious about the UK car market in 2018”, following the forecast of a 5.4 per cent decline from the Society of Motor Manufacturers and Traders (SMMT) amid political and economic uncertainty.
The SMMT has reported that the new car market fell by 5.7 per cent in 2017, with retail sales declining by 6.8 per cent and fleet sales dropping 4.7 per cent.
One-off changes to vehicle excise duties in the first quarter of 2017 prompted some motorists to accelerate their decision to buy a new vehicle to avoid higher excise duties.
Even so, like-for-like vehicle sales across the UK fell 4.8 per cent in the first half of the year – but Marshall reported a decline of just 0.4 per cent in the period.
In the second half of the year, the number of new vehicle registrations to retail customers across the UK plummeted by 9.2 per cent but Marshall said it “maintained its outperformance of the market”.
As a result, in a pre-close statement ahead of the release of its full year results on March 14, the group said its financial performance would be ahead of its upgraded pre- and post-tax expectations.
The group greatly improved its balance sheet by disposing of its wholly-owned leasing segment, Marshall Leasing Limited (MLL) to NIIB Group, a Bank of Ireland subsidiary, for £42.5million last autumn, as the Cambridge Independent reported.
The deal, which went through on November 24, 2017, virtually eliminated the net debt of £101.1million on the balance sheet at June 30, 2017. The group has a £120million revolving credit facility, leaving it in a “very strong financial position and well-positioned to exploit future growth opportunities”.
Chief executive officer Daksh Gupta said: “I am delighted to report that the financial performance of the group during 2017 is expected to be ahead of our previously upgraded expectations despite the market backdrop. Following the disposal of MLL we are now focused exclusively on our motor retail business and our balance sheet has been further enhanced.
“We therefore approach 2018 from a position of increased financial strength and with the ongoing support of our brand partners.”
The group reported “some margin pressure” on sales of new vehicles to retail customers in the second half of the year.
Used vehicle sales grew 5.8 per cent in the first six months of 2017, and the group followed a “disciplined stocking policy”.
Its statement said: “The group has a strong brand mix, attractive geographic territories and excellent brand partner relationships.”