Crippling cyber attack, used car prices and a very angry car manufacturer boss
The Car Dealer headlines that matter this week – and what I made of them
Welcome to this week’s Car Dealer Briefing – the weekly digest from me, the editor-in-chief of Car Dealer Magazine.
Every Friday I’m summarising the week’s most important car dealer news for you in a quick and easy-to-read bulletin to keep you up to date – plus I’m giving you my opinion on what the stories mean along the way.
You can keep up to date with the very latest on the CarDealerMagazine.co.uk website every day, in our popular WhatsApp groups and via our weekly Podcast. However, this briefing is designed to bring you the need-to-know topics.
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What’s happening?
I listened carefully to Maria Grazia Davino’s comments this week, made at the SMMT summit (see later), especially her sentiments about reducing sales of petrol and diesel cars to avoid fines.
Speaking at the event, the Stellantis boss said the UK automotive market was currently a ‘hostile environment’.
She said the UK’s ZEV Mandate targets meant it would forego market share by cutting ICE vehicle supply by 14% to avoid ‘enormous’ fines. Some 22% of the cars firms sell this year must be EVs this year to avoid £15k fines for each car over the target they go – a tough ask.
‘I have ICE demand I cannot address because I cannot risk not to be compliant,’ she told the audience.
I have enjoyed Grazia Davino’s forthright opinions and outspoken manner after she took over at the car maker last year and am looking forward to sitting down with her next week for an exclusive Car Dealer Live video interview. It’ll be even more interesting after her comments this week…
It did get me thinking: it won’t just be Stellantis who will throttle back petrol and diesel sales in the latter part of this year to avoid fines.
Dealers from all brands are going to be forced to have interesting conversations with customers who won’t be able to take delivery of the combustion engined car they want in the last part of 2024.
Surely this isn’t the way to run the automotive industry? I can’t help thinking that consumer demand and market forces should dictate things, not government policy.
The Top 5 Need To Knows
Used car prices fall just 0.1% in June
Cap HPI has reported used car prices fell just 0.1% in June as the market stabilises. For much of the month, the trade price experts even predicted a small rise in prices, but the overall figure was dragged down by EVs.
Electric cars fell 1.7% in the month, compared to petrols which rose 0.2%. Diesels were down 0.2% and hybrids down 0.5%. One year old cars fell just 0.1% in the month while 10-year-old cars dropped 2%.
Speaking to Car Dealer Live in a video interview you can watch here, Derren Martin told us prices are likely to remain stable for the rest of 2024.
What do I think?
I was interested to see the rises and falls for different fuel types, especially the large drop by comparison for EVs. We’re constantly being told by those used car dealers who do dip their toe in the market with used electric cars that they sell quickly, but these figures from trade sales show there are still too few dealers buying them.
Of positive note was Martin's prediction that the final quarter of 2024 will not see falls anyway near like those we saw at the end of 2023. The last few months of last year saw used car prices drop a punishing 10.5% which saw some dealers forced to close their doors for good.
Sytner wins employment tribunal case
Luxury car dealer group Sytner was forced to defend itself at an employment tribunal after a salesman quit his job at Edinburgh Bentley. Kenneth Purdon resigned in 2022 following a series of disagreements with bosses after his performance was said to come under scrutiny.
This included a succession of ‘bad buying’ decisions including an ‘inappropriate’ orange Bentayga purchase that was sold for a £13,500 loss. Purdon resigned and bought a claim of unfair constructive dismissal against Sytner. This week a judge dismissed the case. He later hit back in a post on LinkedIn.
What do I think?
Selling cars in a high pressure environment can often lead to heated discussions about decision making and disagreements, but it rarely ends up in court.
Sytner will be relieved the judge came down on the group’s side in this case, but frustrated it garnered national press coverage, including from the Daily Mail.
The second most profitable car dealer group will be pleased with the comments made by the judge, though, which included:
‘It was clear from the evidence that Bentley Edinburgh had been significantly underperforming throughout 2022 in used car sales, for which the claimant was responsible.’
CDK cyber attack halts car sales
Car dealerships across the United States and Canada were left unable to sell cars and forced to revert to pen and paper after a cyber attack took down CDK Global systems.
The DMS provider, which is used by car dealerships across the globe, was targeted by cyber criminals with the hackers demanding a ransom totalling tens of millions.
Reuters reported that the DMS firm was forced to pay the sum to get the 15,000 dealerships that use its software back on line. After a weekend of chaos, car dealers across the pond were getting back to business earlier this week. The hack did not affect dealers in other countries.
What do I think?
Cyber attacks on car manufacturers and car dealer groups – including the well publicised attack on Arnold Clark last year – are pretty common.
According to reports, the hackers usually gain access by targeting the many thousands of employees using secure systems with phishing emails. It only takes one employee to not do their basic checks to fall foul of a multi-million pound attack.
I am surprised that CDK paid out the ransom, though, if in fact that is how this case was resolved. Stumping up huge sums only serves to embolden these hackers further and knowing automotive companies are rich pickings, could this lead to more of the same?
Vertu trading update
Vertu reported on its three months to the end of May in a trading update this week. Light on financial figures, the report said the last listed franchised car dealer group was on track to meet its forecasts this year.
New car retail sales and Motability were up 6.8%, used car sales up 6.7% and fleet deals up 6.4% on the same period last year. Margins on new cars were down, though, to 7.4% from 8.1% in the same period in 2023. Service revenue has rocketed 10%. Boss Robert Forrester said he ‘remains positive’ about the year’s prospects.
What do I think?
Forrester has been particularly vocal about the ZEV Mandate and he’s got a knack of vocalising what most dealers are thinking. It helps that he isn't usually afraid to say it either. As Stellantis boss Grazia Davino mentioned would happen, Vertu also seems concerned petrol and diesel new car supply will be throttled back at the end of this year as car makers look to hit their ZEV targets.
Not only will there be some ridiculous deals on new EVs come the end of the year, consumers will also find they won’t have any other choice. Vertu thinks this could even push the price of petrol and diesel used models up again.
VW invests $5bn in Rivian
Volkswagen has said it will invest up to $5bn in Rivian – the US-based Tesla rival. An immediate injection of $1bn will be followed by a further $4bn by 2026.
Rivian has never made a profit and the investment saw shares jump by more than 50%. It follows rival EV car marker Fisker filing for bankruptcy last week. VW’s tie-up with Rivian will create a joint venture with the manufacturers said to be planning to share technology.
What do I think?
The obvious question to ask here is: why? VW Group has been busy electrifying its brands over the last few years and while some of the moves could be described as a ‘little troubled’, they have enjoyed sales success across the board. Why then do they want a slice of Rivian? The answer lies in the software. The deal will give VW immediate access to Rivian’s tech and the two firms will develop it further in a joint venture. VW’s software has been pretty poor and this could give it access to a new avenue that could boost all its brands.
Quote of the week
‘Whoever gets to the government they have to listen [sic]. In the UK, there will be consequences for sure on the production. Stellantis UK does not stop. Stellantis production in the UK could stop.’
Stellantis UK MD Maria Grazia Davino’s comments made numerous national headlines after she said the car maker could stop production in the UK if future governments don’t help the car industry out
What I’ve heard
I was out in Germany this week with 30 other journalists to see England’s ‘interesting’ performance against Slovenia. I know, tough job, someone’s got to do it etc... While the football left a lot to be desired, the conversations with many colleagues working on consumer motoring publications was far more interesting.
Over breakfast I chatted to What Car?’s editor Steve Huntingford who told me interest in the publication’s online electric car reviews has plummeted. Two years ago there were at least five electric cars in the website’s most popular car reviews list – these days it’s just one: The Tesla Model 3.
Huntingford said consumer interest in EVs had been decimated in the last few years, echoing sentiments we hear from car dealers up and down the country. The What Car? editor said he hopes a change in government in the next few weeks will see more incentives for electric car buyers.
‘A cut in VAT on EVs would help – anything, in fact,’ he said.
Car Dealer Podcast: Ashley Passant, Greenhous Group
On this week’s Podcast we chatted to Ashley Passant, managing director of Greenhous Group. The giant automotive specialist runs a huge de-fleeting business, a successful leasing arm and operates a handful of franchised car dealerships and used car sites.
Last year the firm turned over nearly £1.5bn and made profits of £26.3m thanks to ‘market conditions aligning’ with the firm’s plans.
He said: ‘We saw a big migration back to the fleet market [in 2023] and we were prepared for it. To be honest, we've spent the last 18 months to two years scaling our business from a compound perspective in a time where others were not.’
In the podcast we talk about what it’s like working for his dad and how he finds running such a large business at the age of just 33.
He also chats about buying back the Smart Fleet Solutions sites in Livingston and Colby from Cazoo which they sold to the now-failed start-up. He said he was pleased to get the sites back under the family firm’s wing.
Speaking about Cazoo’s failure, Passant added: ‘I think the point I want to labour is that, you know, this is a small industry – it's all about relationships. And I think, unfortunately, that one thing that [Cazoo] didn't do was build relationships with any of the major players who could have been some of their greatest partners.’
It’s a great listen (as always) and you can find it on Spotify, Apple Podcasts or whatever podcast platform you prefer.
And the pick of the rest of the week’s headlines that caught my eye
Motors buys Cazoo brand
Motors plans to make the Cazoo website a marketplace with the addition of 250,000 cars after sealing a deal to buy the brand from administrators. The deal, announced today (Friday), for an undisclosed sum, will see Motors add the Cazoo brand to its network which includes eBay and Gumtree. It says it will launch a new Cazoo app soon, followed by a new website.
Motorpoint website crashes
Listed used car dealer Motorpoint has been left without a website for more than two days. Phone lines were also down at the business with the dealer forced to publish mobile phone numbers for each of its sites so customers could stay in touch. The major outage also affected the firm’s Auction4Cars.com website. The company has not commented on the failure.
Bill’s bumper pay deal approved
A fifth of Pinewood shareholders voted against a cash and shares deal that could hand Bill Berman as much as £7.8m. The general meeting held to discuss the deal was held on Wednesday and some 20% of investors voted against the remuneration package. Berman was comfortably re-elected as CEO, though, with the backing of 97.1% of shareholders.
Used car dealer fined for misleading ad
Jamie Green, director of Rhonda Valley-based car dealership M&H Cars, was fined for incorrectly claiming a car had a CD player and sat nav when in fact it had neither. When Trading Standards officers investigated he ‘declined to work with them’ and ‘refused to be interviewed’. He also told the customer the ‘deal was done’ and that there was no warranty. At Merthyr Magistrates’ Court he admitted four offences and was ordered to pay more than £2k.
Lithium battery factory death toll rises
A fire has killed 23 people at a lithium battery factory in South Korea. The cause of the blaze is not yet known, but several batteries exploded after the fire erupted on Monday. During a visit to the site, President Yoon Suk Yeol ordered officials to put in place measures to ‘effectively deal’ with battery-related fires.
Car dealer fined after doing double speed limit
A car dealer has been fined for breaking the speed limit on a test drive in Jersey. Oliver Robins was caught going twice the 15mph speed limit in St Clement as he aimed to impress a potential buyer. Police caught Robins doing a heady 37mph and when pulled over he said he ‘thought it would aid the sale of the car’. He was fined £260 and had his licence endorsed.
Cazoo Group board votes to wind up company
An EGM next week (July 2) will see Cazoo ask shareholders to approve the voluntary winding up of the failed online car dealer. In its note to investors, the board said they are unlikely to receive ‘no distributions’ from the company and that the share price will ‘bear little or no relationship to the actual value realised’.
And that’s a wrap…
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