March has produced a series of interesting share price movements among the listed stocks as the market reacted to final results for 2009, a series of trading updates and continued concerns over the state of the post-scrappage market with new car volumes forecast to be depressed for a number of years.
The message from the majority of the businesses has been remarkably consistent – the first quarter has produced a good performance, there is a positive outlook for after-sales and used vehicles for the remainder of 2010, however new cars are likely to be depressed once the scrappage scheme has ended and the new showroom tax is introduced.
The net effect of all of these has been to drive the majority of share prices down, with only Lookers remaining above its value on January 1. The Lookers share price has shown steady growth since early February bolstered by record finalised results for 2009, positive management statements over trading for the first quarter and the reassurance provided by Peter Jones increasing his stake in the company.
Lookers is also benefiting from the uncertainty over vehicle sales levels having spent a number of years promoting the importance and strength of its after-sales business. As a direct result they are being favourably viewed by the market when looking at the inherent motor sector uncertainties for the remainder of 2010.
After a strong start to the year, the Pendragon share price has fallen below its December 2009 level despite positive trading updates. This pattern is mirrored by both Vertu and HR Owen, with early 2010 gains having been recently reversed. The posting of strong results for 2009 was built into share prices during the summer of last year, with the market price being currently much more concerned over an uncertain outlook for 2010.
In addition to normal trading reviews HR Owen has announced that it is to carry out a ‘fundamental strategic review’ of operations aimed at ensuring more robust cashflow and profits.
Inchcape has shown significant share price gains in recent weeks recovering the losses seen during January and February. Through regional diversity Inchcape is less linked to the specific worries afflicting the UK new car sector. This may lead it to improve new vehicle sales and profitability faster then its peers.
April is also likely to see a new entrant to the group of publicly listed motor retailers with Cambria Automobiles announcing its intention to float on AIM. The listing will enable a reduction of the percentage of the company owned by private equity business Promethean in addition to providing an alternative method of raising capital to fund future acquisitions.
As far as the overall sector is concerned it will only be once we start seeing some registration data and trading updates for the second quarter of 2010 that we are likely to see some real direction in the share price movements.
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