12:33 pm, July 26, 2023
Troubled used car supermarket group Motorpoint has axed some 60 jobs in a shock move.
Those affected by the decision comprise home delivery drivers, customer service advisers and site-to-site drivers, Car Dealer has been told.
We were contacted by a driver who wishes to remain anonymous and told us that CEO Mark Carpenter sent an email about restructuring to all employees last week – and within an hour the redundancies were made, with the jobs either gone or in the process of being axed.
Initially, it was feared that up to 150 jobs may have been culled but Motorpoint told Car Dealer today that the figure was in the region of 60.
However, in a trading update released today, the company said it would be looking to shed approximately 10 per cent of its workforce to make yearly savings of some £3m.
The driver told Car Dealer that people were called into managers’ offices, ordered to hand over all company equipment plus fuel cards and passwords, and told to leave immediately.
‘This isn’t the way to treat decent, hard-working, devoted employees. I personally felt like I was a criminal and others expressed similar,’ said the driver.
In emails seen by Car Dealer, Motorpoint says it understands ‘that this must be an unsettling time for you’.
Redundancy payments are being included in the July payroll rather than August’s, except for bonuses earned in July, which will be paid in August.
Motorpoint axed free home deliveries last May, with charges now on a sliding scale up to £450, depending on the location of purchase and delivery address.
The driver told Car Dealer the introduction of the charge ‘had a massive overnight impact on our home delivery jobs’.
A spokesperson for Motorpoint told Car Dealer today: ‘Consistent with our communications at our final results in June and in response to the difficult macroeconomic conditions, the group has been forced to reduce headcount in the business.
‘The redundancy process is always a difficult and sensitive matter, and whilst this process has been conducted in line with our redundancy procedures and guidelines, we regret any distress or inconvenience caused to those affected.’
The news comes as the Car Dealer Top 100 firm held its annual meeting today, during which chairman John Walden said it had been reducing costs as first-quarter growth and profitability had been hampered during the second half of its 2023 financial year because of ‘the UK’s difficult macroeconomic conditions’.
Last month, Motorpoint revealed a £300,000 loss for its 2022/23 financial year.
Giving an update on trading for the first quarter of Motorpoint’s financial year ending March 31, 2024 during today’s AGM, Walden said: ‘In the face of these challenges, we reinforced our commitment to our long-term growth ambitions but noted [in the full-year results] that, in the short term, we intended to focus on increasing margins and reducing our cost base.’
He told the meeting its strategy ‘should improve cash generation and profits, and provide an opportunity for selective strategic investment’.
Walden added that the difficult macroeconomic conditions had carried on into the first quarter.
However, the group as a whole had a net cash position of £2.2m at June 30, with headroom of £35m at its disposal, ‘driven by our continued focus on working capital management and reduced capital spend’.
Trading performance improved throughout the first quarter, said Walden, and Motorpoint expects the trend to continue during the second quarter, which he said would reflect ‘further improvements in margin and cost base reductions’.
He added that action carried out in the first quarter had included securing more stock via direct supply channels rather than auction.
But it also involved ‘streamlining our organisational structure, which will result in a headcount reduction of c.10%, delivering annualised savings of c.£3m’.
In addition, the troubled company has paused rolling out new stores – it currently has 20 in England, Scotland and Wales, according to its website.
Looking ahead, Walden said the effects of high inflation, rising interest rates, as well as consumer uncertainty would continue to affect used car demand.
‘However, like others in the industry, we are encouraged by the growing number of vehicle supply options which, coupled with our increased use of data to determine optimum selling prices, has resulted in an improvement in retail margin.’
But Walden added: ‘The group has also focused on the costs of the business to ensure they are aligned with current market activity and, utilising the investment in technology to date, we are able to maintain a lower headcount as we conserve cash and return to profitability, whilst ensuring we are ready to invest for growth as more favourable market conditions return.
‘The group continues to be confident it will emerge in a normalised market as a leaner and more valuable business ready to seize a significant opportunity.’
Story originally published at 12.33pm on July 26 and updated at 1.25pm the same day with the total job losses provided by Motorpoint
