- HAWTHORNE’S ANSWER TO £28m WAGE HIKE; SELL MORE
- HENDY 2023 PROFIT FALLS – AND 2024 LOSS PREDICTED
- DCA SUPREME COURT HEARING ‘MOST SIGNIFICANT IN RECENT MEMORY’
- SILLARS BACK RUNNING IMI AS THIRD INTERIM CEO
- WEEK AHEAD: Trump tariffs ‘liberation day’
- HMRC WAIT TIMES SKYROCKET
- EVs, INSURANCE BEHIND SAXTON 4X4 LOSS
- FORD ORDERED TO PAY $18m TO US RETAILER
- CARVANA COULD BECOME ‘AMAZON OF AUTO RETAIL’
- OPINION: Sunday opening splits the market
Hawthorne’s answer to £28m wage hike; sell more
Eddie Hawthorne’s answer to a £28 million bill caused by the hikes in minimum wage and National Insurance is to “sell more”.
Speaking exclusively to sister publication Auto Market Insight a few days before he relinquished his CEO role to become a board advisor, Hawthorne said: “The NI and minimum wage changes have added £28m to our payroll.”
At this level the increase works out at £2,240 per person.
When quizzed about how the business would cover that increase, he added: “The answer to every question in Arnold Clark is to sell more. We need to sell another 24,000 to 28,000 cars to cover that. If you break it down, it’s another two cars per person per month.”
Arnold Clark currently has around 12,500 staff and, according to the latest Companies House accounts, sold just over 240,000 new and used vehicles in 2023.
Hawthorne was adamant that Arnold Clark would not go down the route of Sunday closing to reduce costs, saying that Friday, Saturday and Sunday were the busiest days for the business: “Until the public changes their buying habits, then yes, you can save lots of money by shutting on a Sunday, but you lose a lot of sales.”
* Read the full interview with Eddie Hawthorne, where he talks about his career and the future of auto retail, in April’s Auto Market Insight. If you’re not already a reader, you can subscribe here
Hendy 2023 profit falls – and 2024 loss predicted
Hendy Group, which recently appointed Daksh Gupta as chairman, saw profit before tax fall from £22.9m to £11m in the year ended December 2023. Turnover increased slightly, from £1bn to £1.16bn.
The directors said it was an “acceptable result given market turbulence in the second half of the year, and in particular the rapid depreciation in used vehicle values”. This was disproportionately severe for premium and electric vehicles.
Post year end, a challenging trading position means unaudited management accounts for the year to December 2024 show a loss, due to poor new and used vehicle performance. This led to covenants being breached and waived.
“Management have undertaken a complete review of the business and have implemented a number of trading improvement initiatives and cost reductions, and are forecasting a return to profitability for the year to 2025.”
There has been a covenants reset and new investment totalling £11.5m in the form of debt and equity by the shareholders, together with a sale of two properties and a “significant reduction in the contributions made to the defined benefit pension scheme”.
DCA Supreme Court hearing ‘most significant in recent memory’
This week’s Supreme Court hearing into last year’s Court of Appeal ruling that ‘hidden’ commission payments to retailers were illegal is “without question one of the most significant… cases in recent memory,” one London-based law firm partner told the FT.
There are two questions for the judges to consider – whether car dealerships have a fiduciary duty to act in the best interests of their customers when arranging loans, and whether lenders paying commissions to dealerships are liable for their breaches of fiduciary duty.
If the Court of Appeal judgement was upheld on both questions, “huge swathes of contracts could, quickly and easily, be written off as ‘junk debts’.”The three-day hearing begins on Tuesday. A final ruling is expected in the summer.
Sillars back running IMI as third interim CEO
Sarah Sillars OBE, will become the IMI’s third interim CEO on 1 April, after Kevin Finn steps down from the role at the end of March. Finn has been running the organisation since December 2024 and who’d taken over from Azlina Bulmer. In turn, Bulmer had taken over from long-standing permanent chief executive Steve Nash who stepped down from the role after 12 years in July 2024.
Sillars previously ran the IMI between 2002-2009 and then became executive chair until 2012 when she became vice president.
The IMI said it was continuing its search for a permanent CEO and several non-executive director vacancies. In the past three months, the IMI has seen the departure of six directors, according to Companies House.
Monday, UK mortgage approvals
Tuesday, DCA Supreme Court hearing begins
Tuesday, Pinewood Technologies full year
Tuesday, BRC Shop Price Index
Wednesday, Trump tariffs ‘liberation day’
Friday, March new car registration figures
DATA INSIGHT
HMRC wait times skyrocket
23 minutes 14 seconds: Average time on hold when calling HMRC. In 2011-12 it was 4 minutes 38 seconds.
EVs, insurance behind Saxton 4×4 loss
-£3.7m: Loss before tax at Saxton 4×4 in the year to June 2024, after a £5.1m profit last year. Revenue fell from £250m to £202m. Volatile EVs were a “large percentage” of the loss, along with rising interest rates and a spike in insurance for premium vehicles.
GLOBAL AUTO
Ford ordered to pay $18m to US retailer
A judge has ordered Ford to pay $18m to Auto Dealership Partners of Arkansas after finding “overwhelming evidence” Ford “engaged in deceit and fraud”. They ruled the OEM improperly used its right of first refusal to stop the retailer from acquiring a store. Ford plans to appeal.
Carvana could become ‘Amazon of auto retail’
Carvana shares surged last week after the US online used car retailer’s stock was upgraded by Morgan Stanley. Analysts said Carvana’s recent share price decline was “a unique opportunity” and its scale and other advantages could turn it into the “Amazon of auto retail”.
OPINION
Sunday opening splits the market
No shortage of topics this week when it comes to this leader column.
My first option was to look at the impact the Chancellor’s PIP crackdown will have on Motability and the 20% of the new car market it accounts for. It’s one I’ll watch and come back to.
The second was the dark cloud looming over the industry that is the DCA court case which kicks off this week. But I’m not about to second-guess how that will go.
Watching Trump’s tariff tantrums provides plenty of opinions, but for me, this week, it’s been the debate around Sunday opening that I’m settled on.
Sunday opening (or, indeed, closing) is one of my standard questions when chatting to execs in the auto retail right now.
In its simplest terms, those that open on Sunday say they sell more cars because of it, and this outweighs the cost of paying staff and keeping the lights on. Talking to Eddie Hawthorne last week, this is his argument (P.S. read the full interview in April’s Auto Market Insight). Arnold Clark sells most of its cars on a Friday, Saturday and Sunday. When asked what he thought of other dealer groups closing, he said he was all for it because it meant he’d have the advantage and would sell more cars to Sunday shoppers. He argued that most retail buyers only have a chance to see, or test drive, cars in person at the weekend. And he added that it would be near impossible to go back to Sunday opening once closing was the norm.
Interestingly, Arnold Clark hasn’t ever even tested Sunday closing to judge the impact it would have on sales and costs.
Those retailers that close on a Sunday all say they’ve tested the water with pilot schemes before moving over fully, but that they still sell the same number of cars – or in some cases, more – thanks to improved technology and central call centres that can handle enquiries.
Retailers that close on a Sunday also say staff appreciate the fixed day off and this improves welfare.
However, I’m pretty sure that in the harsh world of tiny margins, auto retail Sunday closure is more about cost control than customer and staff satisfaction.
With the increases in National Insurance and minimum wage coming into force this week, every employer will be grappling with solutions to overcome the costs hike.
In an ideal world, not only will any retailer reduce costs, but also improve productivity. It’s just a case of where those cuts and improvements come from and how far do they go. What should retailers do if the government needs to raise more money in future?
What are the options if car dealers have to cut more costs? At the risk of being flippant, I suspect closing on Saturdays would be a step too far.
Tristan Young
Editorial Director
Get in touch: tristan@autosunday.co.uk
ISSN 2977-6597
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