The UK’s seventh largest automotive retailer now expects continuing underlying profit before tax will be ‘not less than £40 million’, and that’s after repaying all Coronavirus Job Retention Scheme and non-essential retail sector grants received for the financial year.
POSITIVE TAILWINDS PERSIST
In late June, Marshall Motor said it expected to deliver underlying profit before tax for 2021 ‘well ahead’ of the record result achieved during Covid-disrupted 2020.
Alongside rivals Pendragon (PDG), Lookers (LOOK) and Vertu Motors (VTU:AIM), Marshall Motor is currently in an upgrade cycle driven by the positive tailwinds that have boosted the automotive retail market since April.
Specifically, these are ‘unprecedented’ used car price appreciation and favourable demand-to-supply conditions for both new and used vehicles as the economy reopens from the pandemic.
Market demand for new and used cars remains strong, yet the supply of new and high quality used cars is constrained. In combination, the effect is to boost used car wholesale prices and margins to exceptional levels.
In today’s well-received trading update, Marshall Motor said ‘those tailwinds continued in July’ and it now has ‘initial visibility on the outlook for August and September’.
However the group, steered by CEO Daksh Gupta and with a strong presence in eastern and southern England, also flagged a ‘high level of uncertainty over the second half of 2021 and into 2022 given well documented vehicle supply issues, an expected realignment of used vehicle values (the timing of which is uncertain) and the continuing impact of the Covid-19 pandemic’.