Marshall Motor Group has pledged to repay furlough cash and retail grants for 2021 – the first car dealer in the sector to make the move.
Despite the motor industry enjoying a record return to business after lockdown three and releasing a series of stellar results for the pandemic-hit year, bosses have so far been reluctant to repay any government support.
In an update to the Stock Market today ahead of its AGM, Marshall Motor Group said it is continuing to ‘outperform the market’.
Because of this strong performance boss Daksh Gupta pledged to repay £2.6m of furlough cash received so far in 2021 and committed to repaying all £1.4m of retail rate relief received.
The group also said it is targeting a figure of ‘not less than 2019’2 result’ of £22.1m of underlying profit before tax – after the government cash has been repaid.
Gupta said: ‘Our trading performance, strong financial position and commitment to our corporate responsibilities has led to our decision to repay all CJRS and non-essential retail sector grants received in this financial year.
‘Given the market tailwinds from which both the group and the sector as whole has benefitted, we believe repayment to be the appropriate and responsible action to take.
‘We remain extremely grateful for the support provided by the government to the retail sector throughout the ongoing pandemic and we are very proud that we are able to repay this support.’
Vertu Motors boss Robert Forrester last week ruled out repaying any of the support his firm had received, even if others in the sector decided to do so.
He told Car Dealer Live: ‘The government closed down our businesses by diktat with very little warning, causing considerable disruption and dislocation and they provided financial support to offset that.
‘That was what the support was there for – to make sure we didn’t come out of it in a much weaker position than we went in.
‘We are doing exactly what the government want us to do and that’s to use that money to reinvest and create jobs and be powerful as the economy grows.’
Other car dealer bosses have taken a similar position to Vertu.
Marshall’s update also gave details of strong new and used car sales in the four month to the end of April.
Revenue was up 33 per cent on a like for like basis with the group continuing to deliver cars via click and collect during three months of lockdown.
Gupta added: ‘Trading during the first fourth months of the year was clearly impacted by the closure of our physical showrooms during the third national lockdown.
‘Despite this, we continued to operate effectively on a click and collect’ basis as a result of our investment and focus on our online retailing strategy.
‘We are pleased to have continued to significantly outperform both the new retail and used car markets and to deliver a strong financial result for the period.’
Gupta did note that there is ‘ongoing impact’ from Covid-19 and that the semiconductor supply issue could impact new car sales.
He said: ‘There are a range of possible outcomes for this financial year. However, the business is currently targeting an underlying profit before tax for 2021 of not less than 2019’s result of £22.1m, having fully repaid all CJRS and non-essential retail sector grants received in this financial year.’
The update impressed analysts Zeus Capital.
The firm’s Mike Allen said: ‘In our view, Marshall remains a highly reliable platform that is positioned to emerge as a sector winner, as the effects of Covid-19 accelerate consolidation across the industry.
‘Marshall has announced it will reconsider the payment of dividends when releasing interim results on August 10. Overall, we view this as a very strong outcome and creditable for the group.’
The update also strongly hinted at further growth for Marshall as it said it had a ‘longstanding track record’ of being one of the sector’s ‘leading consolidators’.
The group added: ‘[Marshall’s] strong balance sheet means it remains well positioned to take advantage of further growth opportunities as they arise.
‘The group continues to review a pipeline of potential acquisition opportunities to deliver accretive shareholder value growth.
‘However, the group will only pursue acquisitive growth where it makes strategic and financial sense for its shareholders and in conjunction with its brand partners.’
Interim results for the six months to the end of June will be revealed on August 10.
Car Dealer will be speaking to Gupta this morning for a Car Dealer Live interview which will be added to this story later today.