Used automobile grocery store Motorpoint insists its strategic changes and resilient enterprise mannequin will assist it navigate the challenges confronted by all retailers within the second-hand market after posting a £6.7 million swing into the crimson.

Revealing an underlying lack of £3.7m in its interim outcomes, the enterprise mentioned it underwent a difficult first quarter, after which efficiency rallied within the subsequent quarter, leading to a diminished lack of £0.6m. The figures point out a 6.7% dip in comparison with the identical interval the earlier yr when Motorpoint posted a £3m revenue.

First-half revenues took a big hit, falling by 22.8% to £607.2m the place retail volumes noticed a 18.4% fall, and wholesale volumes dropped by 22.4%. All through the six-month interval, Motorpoint offered a complete of 39,300 vehicles: 25,800 by retail and 13,500 by wholesale.

In response to the difficult market circumstances, the corporate reported that it had instituted a number of strategic modifications, together with halting its new retailer programme after opening its Ipswich retailer taking the full quantity to twenty, decreasing capital spending and launching a big job discount initiative, measures which it termed ‘decisive motion to right-size the enterprise to face up to a probably prolonged depressed market’.

Efforts have been made to spice up retail margins throughout this difficult interval by adapting its sourcing technique by securing extra inventory straight from customers and promoting by retail channels. Motorpoint mentioned its gross margin of 6.4% was barely decrease than the earlier yr’s 6.6%. Car preparation time was additionally diminished from 8.8 days from 8.7 days in comparison with the identical time final yr regardless of the transfer to older autos.

Trying ahead, Motorpoint acknowledged the near-term problem posed by the speedy fall in used automobile values. Nonetheless, the management stays optimistic concerning the future believing its lean price base meant that it’s nicely positioned to climate the interval and that the correction in values bodes nicely for subsequent yr and past because the used automobile market begins to normalise.

Anticipating a greater market within the coming yr Mark Carpenter, CEO of Motorpoint Group, mentioned that falling used automobile values represented an indication of provide starting to enhance within the almost new market which the enterprise has historically dominated.

Carpenter pointed to the corporate’s agility and resilience, highlighting its present lack of structural debt and versatile enterprise mannequin, insisting there remained a big alternative for money era within the medium time period though warned that whereas it had taken proactive measures to restrict the influence on its inventory, the present atmosphere was prone to be unstable as new automobile provide into the used automobile market begins to extend.

He added that the influence of excessive inflation, rates of interest, and client uncertainty continues to have an effect on demand for used vehicles which is impacting the worth of used automobile, – with a discount in wholesale values of round 6% in simply the final six weeks.

“While we have now taken proactive measures to restrict the influence on our inventory, the present atmosphere is prone to be unstable as new automobile provide into the used automobile market begins to extend.

“Key components of a normalised market are already underway,” he mentioned, “together with an easing rate of interest atmosphere, continued corrections in used automobile values, and a rise in market dimension as demand grows and provide is bolstered by new automobile registrations feeding into the used section. Motorpoint is a leaner and extra agile enterprise, and is able to seize the numerous development alternative as market circumstances enhance.”

Carpenter mentioned the enterprise remained dedicated to creating a cross-channel retail method and wouldn’t embrace the wholesale disintermediation of parts of the used automobile market by promoting direct to customers by a decrease price, larger service mannequin, by shopping for direct from customers or through new on-line marketplaces.

“We’ve realized, primarily based on our buyer information, that some extent of bodily connection continues to be most popular by most clients to supply reassurance and belief within the transaction. Motorpoint, as a number one omnichannel retailer, is uniquely positioned to serve this want and is creating built-in client journeys throughout its digital, retailer, customer support and supply channels that can meet altering client wants. That is Motorpoint’s central strategic alternative.”

“Underpinning Motorpoint’s new capabilities will likely be up to date expertise and information practices. These is not going to solely create distinctive cross-channel buyer journeys however will enhance effectivity in our key processes corresponding to promoting, automobile preparation, logistics, pricing and stock turnover.”