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Used car dealer Motorpoint reports £22m swing to loss-making in 2023

Car supermarket chain Motorpoint suffered a swing from £21.5m profits in its 2022 financial year to a £300,000 loss in its 2023 financial year, as it was hit by rising financing costs, stock shortages, depreciating electric vehicles and rising investment requirements.

The dealer group, which tops the ID10 independent dealers by turnover, reported that its revenues rose 8.9% in the 12 months to March 31, 2023, to £1.44bn, as it increased its network from 17 to 19 used car dealerships.

However Motorpoint’s profitability plunged by £21.8 million year-on-year to finish its FY23 with a £0.3bn pre-tax loss, and a return on sales of -0.02%

Its volume of retail units sold dropped 8.9% to 57,300 and its retail gross profit per unit declined by 10.1% from £1,446 to £1,300.

Its wholesale business, which sells stock to the trade, recorded a 6.9% drop in sales volume to 32,400 units.

Motorpoint’s EBITDA was halved from £32.3m to £16.2m. 

Its management team have highlighted positive steps from the period, including Motorpoint’s share of the 0-4 year car market rising from 3.1% to 3.5% as it continues to focus on “price leadership”, and its e-commerce revenue reached a record £660.5m share of total turnover.

Its investment programme increased from £1m in FY22 to £6.1m in FY2023, including bringing digital marketing in-house, website enhancements, technology improvements and automation, and expansion with new dealerships opened in Edinburgh and Coventry.

Motorpoint’s 20th dealership, in Ipswich, opened in May 2023.

Motorpoint CEO Mark CarpenterMotorpoint chief executive Mark Carpenter (pictured) 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.”

The car dealer group’s aim is to reach £2bn turnover in the medium term, through a strategy to grow e-commerce to more than £1bn sales and to open 12 new sales and collection stores.

Nevertheless, non-executive chairman John Walden added that the company expects the market for used cars to continue to be difficult. 

“However, we believe Motorpoint will emerge from the current depressed consumer market a more efficient and competitive business having made progress on multiple key strategic initiatives in technology, marketing, and its digital and physical channels. Over the long term we will make further investments, offset to a degree by efficiencies across the business.”

In December, Motorpoint stock and purchasing director Dean Walker told AM how new car production and inflation are adding pressure to his role at the used car supermarket PLC in the latest ‘8 Questions to…’ Q&A.

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