Profit for the ultimate holding company of the Motability charity dropped substantially in 2023, new accounts reveal.
Documents for Motability Operations Group Plc, which cover the period up to September 2023, just posted at Companies House, show a 35% fall in profit before tax from £1.1bn in 2022 to £748m in 2023.
The accounts cover the ultimate holding company of the charity, which is owned by an affiliate of Barclays, HSBC, Lloyds and NatWest.
The banks have permanently waived their rights to dividends and any profit is invested back into the Motability Scheme.
Motability operates the largest fleet in the UK and accounts for a large proportion of business at franchised dealer groups that offer cars on the scheme.
At the end of September, Motability said it had 710,000 cars on its fleet – up 8.9% on the year before – and had added 110,551 customers to its books in 2023. There are currently 16m disabled people in the UK.
Revenue was up 17.8% from £4.7bn in 2022 to £5.5bn last year with Motability explaining this was driven not only by an increase in customers but a 10.1% uplift in the Motability allowance from the government.
Disposal revenue accounted for £3bn of that total, up from £2.4bn the year before, from the sale of 199,800 cars leaving the scheme. Used car dealers buy a huge number of vehicles from the charity’s remarketing arm.
However, profit from the sale of those cars fell to £678.1m from £723.4m the year before. In 2022, used car prices remained at record highs but they gradually dropped in 2023.
The Motability fleet is currently worth £10.2bn and the company warned that a 1% movement in used car prices would impact the business by £102m.
In the final quarter of last year, used car prices fell an unexpected 10% and the impact of this is likely to be presented in next year’s accounts.
Motability says it evaluates its fleet value every quarter to ‘reflect any movements in residual values’.
The firm said: ‘Whilst our outlook anticipates a relatively steep decline in values over the next 12 months as used car values begin to normalise, the estimated fleet remains above levels estimated in lease pricing over the last three years.
‘Consequently, the fleet revaluation continues to anticipate a net gain of £1.6bn after adjustments for selling costs and early termination leases.’
The account show CEO Andrew Miller received emoluments during the year of £689,000 while CFO Matthew Hamilton-James received £550,000. Hamilton-James also received a £142,000 bonus that related to the group’s performance in 2020.
The ‘strong financial performance’ has allowed Motability to enhance its new vehicle payment from £250 to £750 for all new renewing customers, said the firm. It is also investing £300m in helping its customers move to EVs.
The group says it also donated £250m to the Motability Foundation in 2023. The foundation helps keep the scheme affordable.
The charity says it recognises the challenges ahead and wants to ‘support its customers’ as it ‘transitions our fleet to EV’. It said this comes with higher costs and understanding the ‘practicalities of making the switch’.
The firm added: ‘We know, from our extensive insight, that a lot of our customers are wary of switching, and that the delay of phasing out the sale of new petrol and diesel cars to 2035 is making many of them choose to wait.
‘Our challenge is to help our customers understand that the industry is driving towards electric right now, to understand their concerns and barriers to electric so we can help solve them.
‘We are taking an active role to address this so that our customers are not left without affordable and accessible vehicles that suit their needs.’
It said it is using its relationships with manufacturers to offer ‘longer range vehicles all the time’. Motability is ploughing £300m into subsidising the cost of home chargers.
It added: ‘We’ve got one of the largest EV feets in the UK already, with over 35,000 customers making the switch and over 6,800 EVs in the pipeline, but we know there’s a lot more to do.’
Motability also explained lead times for new cars have dropped, down from 25-weeks on average the year before to 17 weeks in 2023. Pre-pandemic this was around 10 weeks.