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Marshall and Vertu CEOs on whether to repay government cash, pent-up demand and more

Time 5 months ago

Marshall Motor Group boss Daksh Gupta and Vertu Motors chief Robert Forrester have given their opinions on repaying furlough cash, pent-up demand when showrooms reopen and more.

In a special Car Dealer Live interview today, the chief executives of the listed car dealer groups also answered questions on the agency model and how it will affect their businesses and why one will be rolling out multi-franchising sites even further.

In the wide-ranging hour-long interview, the pair, who have never appeared before in a panel discussion like this, gave their frank opinions on each others’ businesses.


Asked if they could ever work together, Forrester answered adamantly ‘absolutely not’ while Gupta joked his Vertu counterpart would ‘make a great CFO’.

Both listed dealer groups have benefited greatly from government support in the last year – including business rates relief and furlough cash – but neither is planning on repaying the money.

Asked if he had considered repaying the government cash, Forrester said: ‘No, because the government closed me down.

‘[Our business] didn’t operate in lockdown one to any great sense. We kept the service departments open and we did some sales but it was pretty minor and pretty low level. 

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‘I am not a big fan of government spending but the bottom line is they closed us down and we have a high fixed cost base. 

‘Operators who have made a profit in 2020 in the motor retail business have done well, there are some operators who have not made a profit and I don’t feel it would be right to pay that furlough money back.’

Forrester said he had ‘pretty well everyone back now’ from furlough, apart from those who were shielding, and said he didn’t want to be using the furlough scheme going forward.

Gupta added that many operators had posted losses for 2020 despite the government support.

The Marshall boss said: ‘We have considered that [repaying the money]. We have done the right things at the appropriate time for example we did take advantage of the VAT deferral scheme because at that stage none of us knew what we’d be dealing with.

‘But as soon as we came through and saw the benefit of the bounce back, for us it was £10.9m, we took a decision to pay that in September, 18 months early.

‘These are conversations we do have and it’s about being a good corporate citizen.’

Pent-up demand

Both dealer bosses agreed there will be some pent-up demand when showrooms are allowed to reopen on April 12.

‘There has to be,’ said Gupta.

‘The bounce we saw post lockdown one was huge, but if you have your showrooms shut for the busiest week in the busiest month and you have 97 per cent sales down in April and then 89 per cent in May, our customers are in event-driven finance agreements, ie PCPs, so they will be coming back into the marketplace.

‘All of that resulted in huge tailwinds last year. This year you will get some sort of bounce back, but will it be anything like we saw in 2020, no it’s not.

‘You have to mathematically say there will be one.’

Forrester said he thinks dealers ‘will be busy’, but warned it won’t be the same as after the first lockdown.

‘This has gone on a long time this lockdown and anyone looking to change brands or powertrain are really waiting for a test drive,’ said Forrester.

‘I think that will power pent-up demand.’

Forrester also said a lot of people have saved a lot of cash and are ‘desperate to spend it’ and while the industry saw some of that last year, he thinks ‘it will be here in spades’. 

‘I am pretty optimistic about new and used demand post April 12 and we will certainly be gearing up for a riotously royal time,’ he added.

Vertu Motors is the sixth most profitable dealer group according to our Car Dealer Top 100, with EBITDA of £40.7m.

Vertu has 147 sales and aftersales outlets across the UK, operating under the Bristol Street, Farnell and Macklin Motors brands. 

It represents 32 manufacturers including brands such as Audi, Mazda, Nissan, Vauxahll, Vollkswagen and Volvo.

Asked just how big the group can get, Forrester remembers a chat he had with a dealer group boss who concluded there could be a £10bn turnover group in the UK at one point in the future.

He added: ‘I don’t think there ever will be, because I think turnover will be measured differently because of the agency model, but if you take that concept I sat there thinking I couldn’t see it happen.

‘But the way the market is moving, the investment that is required in digital and growth of brands, I think we are heading for more consolidation and for the growth of very large groups who have big brands and are very professional and utilise technology to the nth degree.

‘The strategic rationale for growth is there, whether Vertu is one of those big players, we’ll have to wait and see, but I certainly hope it is.’

Gupta said he wasn’t bothered about turnover as it was ‘academic’ and was more focussed on delivering a business that had ‘good culture and great returns’.

‘Scale is critical and will be even more critical as we go forward and I concur with Robert that there will be more consolidation,’ added Gupta.

Marshall Motor Group is the fifth most profitable dealer group in the UK, finishing fifth in the Car Dealer Top 100, with EBITDA of £43m for 2019. 

At last count, the dealer group had 113 dealerships and represented 22 manufacturers including brands like Audi, BMW, Ford, Land Rover and Mercedes.

Gupta added: ‘No one sends you to CEO school to be a CEO for a £3bn turnover business, you just sort of get dumped into it. I have been really fortunate in some ways that I have been able to grow and adapt and evolve with acquisitions along the way.’

Both admitted they admired each other’s businesses and they said they both chat regularly and were good friends.

‘Daksh and I speak quite often,’ said Forrester.

‘The thing about Daksh’s business is it’s run by an operator and with the best will in the world I could not be described as an operator and that different sort of mindset means our businesses are a little bit different.

‘I actually think he is the number one operator of scaled groups probably and his background you can’t fault – that comes though in the business. 

‘My business is different in that I employ good operational people and we run it as a bit of a collective.’


The pair also give their opinions on the online used car businesses of Cazoo and Carzam and the former’s rumoured £5bn flotation valuation.

‘Isn’t it great that capitalists will put so much money into a business that sells so few cars,’ said Forrester.

Both the bosses gave their thoughts on the ‘agency model’ which is slowly being brought in by manufacturers. This sees dealers become hand over and service centres with manufacturer responsible for selling the cars – dealers are paid a hand over fee and left to sell used cars.

‘I don’t see a problem with this,’ said Forrester. 

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‘It all depends where all the money is. No one will argue with a handling fee as long as the handling fee is sufficient to give you the right return on capital.’

Gupta added: ‘Agency is something that has been around at least 20 years as some of our partners introduced it for fleet back in 2001, so it’s around us already and nothing new. People are a little scared of it.’

You can watch the Car Dealer Live interview in full in the video at the top of this post.

James Baggott's avatar

James is the founder and editor-in-chief of Car Dealer Magazine, and CEO of parent company Baize Group. James has been a motoring journalist for more than 20 years writing about cars and the car industry.

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