• Car Dealer Plus
No Result
View All Result
  • Latest
  • Used Cars
  • Live
  • Forum
  • Power 2020
  • Used Car Awards
  • CDX
  • Knowledge
  • Suppliers Guide
  • About Us
  • Latest Issue
  • Top 100
  • CD Plus
  • Latest
  • Used Cars
  • Live
  • Forum
  • Power 2020
  • Used Car Awards
  • CDX
  • Knowledge
  • Suppliers Guide
  • About Us
  • Latest Issue
  • Top 100
  • CD Plus
No Result
View All Result

Share Watch: 2010 fears impact on shares

James Batchelor by James Batchelor
November 18, 2010
0
Home Features

12_News with shares.inddThe period since September has been an interesting time for the publicly listed motor retailers. While the trend has been overwhelmingly positive for 2009, there have been some significant falls recently.

All of the businesses have provided encouraging trading updates, however the current levels of profitability had already been built into the share prices over the summer months.

Looking in more detail at the reporting of the trading announcements, the majority of the reasons for the improvement in performance when compared to 2008 has been attributed to the government’s scrappage scheme. While this has undoubtedly had a positive effect, in profitability terms improvements in the used vehicle market and cost cutting measures taken in 2008 have provided at least as much of a boost to the bottom line.

Both the retailing sector and the stock market are aware that the scrappage scheme will come to an end and this is one of the significant reasons behind the recent share price reductions.

If the end of the scrappage scheme was the only factor impacting the sector then we would expect a comparative improvement in the market sentiment towards businesses concentrating on premium franchises, such as HR Owen.

But this is not the case and, in line with the market, we expect 2010 to be a challenging year with the end of scrappage combining with a slowly recovering economy, an increase in VAT, new taxes on vehicle purchases, a reduced service parc and an uncertain used vehicle market.

These factors appear to be being built into the share prices, with the educated commentators already noticing the recent softening in the used car market. We are therefore likely to see a continuing split in the sentiment of profit updates emanating from the listed motor retailers.

Current year profitability is likely to remain strong with delayed deliveries of scrappage vehicles and a rush in advance of the VAT increase and expected price rises boosting the results for the end of 2009. This will be matched, however, with a cautious outlook for performance in 2010 which may well keep stock values depressed.

Covenant compliance should be less of an issue for the current year with the majority of the listed retailers having boosted their equity through rights issues and their net worth through healthy profits in 2009 although increasing stock levels of both new and used vehicles present a downside risk.

Overall, we should therefore avoid the drastic share price falls which resulted in businesses entering 2009 with a heavy risk discount.

If you have any questions concerning the above, please contact me on 0161 493 1930.

by Mike Jones, ASE director

Click here to read more Share Watch

Related Posts

Ted Welford drives a Bugatti Baby II
Features

Honey, I shrunk the Bugatti! The ‘little’ present that will set you back up to £53,000

February 23, 2021
Aston Barclay set to host two festive digital auctions
Features

Aston Barclay set to host two festive digital auctions

December 20, 2019
Lotus blossoms – A grand design in Nottingham
Features

Lotus blossoms – A grand design in Nottingham

August 5, 2019
Lights, camera, action! A Mazda star is born…
Features

Lights, camera, action! A Mazda star is born…

April 15, 2020
Guest blog: How do you interview? by Jimi Matthews
Features

How does the automotive industry compare when it comes to gender equality?

April 15, 2020
Guy Harwood – ‘I’m a horse man first and a car man second, but I’m a businessman overall’
Features

Guy Harwood – ‘I’m a horse man first and a car man second, but I’m a businessman overall’

March 20, 2018

Want the latest news?

Sign up to Car Dealer's daily news email updates

Subscribe
How many car dealerships does each manufacturer have in the UK? Car Dealerships Locations List 2021 revealed
News

How many car dealerships does each manufacturer have in the UK? Car Dealerships Locations List 2021 revealed

February 24, 2021
Used Car Awards with Mike Brewer and James Baggott graphi
News

Who won what at the Used Car Awards 2020? Mike Brewer reveals our winning car dealers

February 11, 2021
Car Dealer issue 156 front cover and Used Car Awards
Online Magazine

Out now: Car Dealer issue 156 features our Used Car Awards, H.R. Owen CEO Ken Choo and lots more

February 23, 2021
Used car market stronger than ever as August sees sales up by nearly 50 per cent for Big Motoring World
News

Opinion: Here are 10 reasons why I think there’ll be a rapid recovery in car sales when lockdown ends

February 16, 2021
Trophy Cars forecourt
News

Investigation: Meet the hyper-specialist car dealers making their money from weird and wonderful motors

February 11, 2021
Become a Car Dealer Plus member and get more out of this website including free legal advice
News

Become a Car Dealer Plus member and get more out of this website including free legal advice

January 15, 2021
Car Dealer Top 100 – The list in full of the most profitable car dealers in the UK
Car Dealer Top 100

Car Dealer Top 100 – The list in full of the most profitable car dealers in the UK

February 10, 2021
Bitcoin ATM terminal
News

Will car dealers in the UK accept Bitcoin for payment? Dealers speak out after Tesla plans to accept cryptocurrency 

February 18, 2021
  • Latest
  • Used Cars
  • Live
  • Forum
  • Power 2020
  • Used Car Awards
  • CDX
  • Knowledge
  • Suppliers Guide
  • About Us
  • Latest Issue
  • Top 100
  • CD Plus
Call us: 020 8125 3880

© 2020 Blackball Media

No Result
View All Result
  • Car Dealer Plus
  • Latest
  • Used Cars
  • Live
  • Forum
  • Power 2020
  • Used Car Awards
  • CDX
  • Knowledge
  • Suppliers Guide
  • About Us
  • Latest Issue
  • Top 100

© 2020 Blackball Media

Log In
Register
Register
Server C