Bosses at Motorpoint have blamed stock headaches and the plummeting value of used EVs after the firm reported a loss for 2023.
The car supermarket group made a pre-tax loss of £0.3m in the 12 months to March 31, 2023 after a record £21.5m profit in the previous financial year.
Directors say that ‘limited stock availability’ and the ‘well-documented fall in value of electric vehicles’ are partially to blame, as well as pointing the finger at rising financing costs.
The firm also made an increased investment of £6.1m ‘relating to delivery of strategic objectives’ which contributed significantly to the overall loss.
There was some good news for the outfit, with accounts published via the London Stock Exchange showing that its revenue increased by 8.9 per cent from £1.322bn to £1.44bn.
In response to the results, CEO Mark Carpenter promised that the firm would ’emerge from the current environment in a strong position’.
He said: ‘Having recently celebrated our 25th anniversary, I have been reflecting on the group’s performance and our journey to date.
‘FY23 was marked by record revenues and further strategic investments as we endeavour to provide customers across the UK a seamless car buying experience.
‘This investment is thus far delivering good results and has positioned the group better for the future.
‘This allows us to pause the level of ongoing investment, given the current consumer and macro environment, while enjoying the efficiencies we have now built into the business and continuing to deliver on our growth strategy within the market constraints.
‘Whilst the impact of higher interest rates and inflation will continue into FY24, new car registrations have been steadily increasing, with the fleet market driving much of the growth, which will in turn benefit used vehicle supply.
‘This, coupled with continued market share gains and progress on our key initiatives, will enable Motorpoint to emerge from the current environment in a strong position to more aggressively pursue profitable market leadership.’
Fewer cars sold as online sales drop back
Figures included in the accounts revealed that Motorpoint sold around 89,700 cars in the latest financial year – a drop on the 97,700 it shifted in 2022.
Despite falling prices, the firm sold 137 per cent more EVs in 2023 than it did in 2022, following ‘substantial progress’ when it came to installing charging points to support the growing market.
Meanwhile, 37.5 per cent of all sales were made online online compared to 60 per cent last time out. Despite this, E-commerce revenue rose by 5.7 per cent to £660.5m
The year saw several improvements made to the company’s website in order to to ‘further support the customer journey’, whilst the website for its Auction4Cars brand also underwent a significant upgrade.
More good news for bosses came from the fact that Motorpoint’s market share in its targeted 0-4 year-old age range rose to 3.5 per cent, compared to 3.1 per cent in 2022.
The firm opened two sites – in Edinburgh and Coventry – in the period covered by the accounts, with both now trading in line with expectations.
It also opened a showroom in Ipswich earlier this year, taking its total number of stores to 20.
John Walden, non-executive chair of Motorpoint PLC, added: ‘I have been with Motorpoint for 17 months and am impressed by what the group has achieved against a challenging macroeconomic and industry backdrop.
‘To have delivered record revenues of £1,440.2m and increased market share to 3.5 per cent in its target market of 0-4 year old vehicles is to be commended.
‘The company faced rising financing costs, constrained stock availability and pricing shocks to electric vehicle inventory, but nevertheless was able to continue to make a number of important strategic investments.
‘Although greater yearly profitability was expected early in the year, our stated goal has been to invest in growth and new strategic capabilities to the extent possible while remaining profitable.
‘Although the company eventually made a small loss in a difficult trading environment, I am pleased with the progress made.
‘I have highlighted below my thoughts on the current landscape of the UK’s used car market, the strengths of the Motorpoint model, and why I believe there is an opportunity for Motorpoint to continue gaining market share and, as the UK economy normalises, substantially grow profit.’