8:15 am, May 29, 2024
Falling used electric car prices have led one of Europe’s largest dealer groups to book a loss in Q1 this year.
Hedin Mobility finished the first three months of 2024 with a loss of SEK231m (£17m) on sales of SEK23bn £1.7bn – up 32% on the same period last year.
The accounts for the first quarter also show operational earnings fell from SEK383m (£28.3m) in Q1 2023 to SEK95m (£7m) in the same period this year, while operating profit plummeted from SEK591m (£43.7m) in Q1 2023 to SEK7m (£518,794). Operating margin dropped from SEK3.3m (£244,515) in Q1 2023 to a flat SEK0.0m.
CEO Anders Hedin described the first quarter of 2024 as ‘challenging’ due to widespread price cuts on new electric cars by carmakers, and falling demand across Europe due to the removal of subsidies.
‘The market has been characterised by caution during the first quarter,’ he said in the company report.
‘The considerable and relatively rapid increase in the interest rates has resulted in a decline in the order intake over the past year.
‘At the same time, several European countries have reduced or completely removed the subsidies for electric vehicles. This has resulted in a decrease in the demand for electric vehicles, and several manufacturers have sharply reduced the prices to stimulate demand.
‘This has in turn affected the market value of used electric vehicles and sold vehicles with a repurchase commitment, such as private leasing. This price pressure has affected the margins in the used vehicle market, which is the main reason for the decrease in operational earnings within retail.’
Despite the hit on earnings, Hedin remained positive for the future of the ‘service business in retail’, but did say the company was ‘reviewing the entire business to create a long-term efficient and competitive structure’.
He added: We are reviewing organisation and staffing and placing great focus on reducing indirect costs. As part of this strategy, we have appointed new CEOs in Switzerland and Finland.’
The news comes after the confirmation earlier this month that the firm would rebrand many of the its dealerships as ‘Hedin Automotive’. For the UK, it means Stephen James Group will switch names, as reported by Car Dealer.
Hedin concluded the Q1 report with a positive prediction over falling interest rates.
‘There are clear signals that the interest rates will be decreased during the year and we see positive development in sales compared to previous year for comparable units,’ he said.
‘With expectations of decreased interest rate combined with lower inflation forecasts, we are optimistic about a gradual improvement in economic activity and demand during the second half of the year.’
