2:24 pm, July 21, 2023
Motor Depot Limited has reported a £1.4m loss in the year ending September 30, 2022, due to stagnating consumer demand and increased costs.
The results are a drastic change from the previous 12 months bumper profit of £4.2m, in the period when Stellantis-owned Amaris Group took a majority stake.
The used car supermarket group, which has 12 locations now under the CarSupermarket.com name, described the financial year as ‘very much a tale of two halves’.
Turnover and units sold were up considerably but, in its strategic report, Motor Depot said it had been hit hard in the second half of the year by the cost of living crisis among other things.
In total, revenue was up 39.1 per cent to £366.7m (2021: £262.6m) and retail unit sales were up 21.8 per cent to 19,807 from 17,844.
Motor Depot explained: ‘Despite these price increases, consumer demand remained relatively strong, and it was only in the second half of the year from February onwards that consumer confidence demand stagnated as the numerous problems took hold.
‘Gross profit suffered in the year as the costs of spare parts increased dramatically in the second half of the year, and with significant increases in all costs linked to the refurbishment of the vehicles, and some increased transport costs due to higher fuel prices, the gross profit margin fell to 5.7 per cent from 9.3 per cent.
‘This resulted in a 13.9 per cent decline in the gross profit, and the cost of refurbishing vehicles is an area that will be heavily focused on during the following year.
‘Together with the opening of our new preparation centre in December 2022, this will hopefully lead to further costs savings and drive efficiencies in this area of the business.’
It added: ‘From April 2022 onwards, the cost-of living crisis really started to take hold, and with the higher food, energy. and fuel costs, consumer demand started to fall as people began to make cutbacks, and changing their car became less of a priority.
‘This was coupled with the ongoing supply chain issues, first caused by Covid, and now prolonged by the Ukraine war, driving costs up in all areas of the business.
‘Consequently, the second half of the year proved to be difficult, and whilst the company strived to still grow in this adverse economic climate, this growth took its toll on the short-term profitability, resulting in a small loss for the full year.’
However, in its annual results on Companies House it was positive about the work it had done during the year.
It said it had been ‘driving increased growth from the existing retail estate’ as well as ‘developing the online sales channel and increasing the number of home deliveries across the country’.
It also added that while it had not added any new retail sites during the year, this was still a potential growth area for the business.
Motor Depot added: ‘The company continued to advertise heavily, but sensibly, during the year, to continue to create greater customer awareness of the company and increase the location of its customer base.
‘A new marketing director joined the company in July 2022, and immediately made an impact on the effectiveness of the marketing spend, reducing the spend on inefficient and costly pay-per-click campaigns, and channelling the funds into more productive areas.
‘One of the major success stories in the year was the continued growth and development of our Best Car Buyer “BCB” brand (www.bestcarbuyer.co.uk) which serves as our purchasing arm to buy vehicles directly from the public.
‘In another year when the sourcing of vehicles was extremely difficult and competitive, and especially from the B2B marketplace, over 63 per cent of our retail used car sales were sourced from our BCB buying division.’
