Q1: I see that you’ve just released a positive trading statement earlier today, what’s been behind the driver of what can only be called an unscheduled statement?
A1: We’re very pleased to be releasing the statement this morning particularly as it’s been a challenging market as has been well documented.
You will recall that we anticipated the possible impact of WLTP in our August interim results announcement and you will have seen the disruption of that in the September SMMT market registrations data. The main reason behind our upgraded outlook for 2018 is as a result of better than anticipated trading in October and a more outlook for the remainder of the year particularly around used cars and aftersales.
This has led to us having more confidence over the expected outcome for the full year and as a consequence, the Board now expects the continuing underlying Profit Before Tax for 2018 to be ahead of last year’s record result for Marshall Motor Holdings.
Q2: You mentioned WLTP, have you now seen the end of the supply issues that were resulting from this?
A2: We did anticipate some disruption as a result of WLTP as mentioned and we did see a material decline in the September new car market. However, if you interrogate that data, it’s very specific in terms of which brands were impacted and as a group we have a high weighting towards those affected brands.
We are starting to see supply ease a little in one of two brands, but we do anticipate the affects of this to continue through to Q2 2019 but as I said, it’s very brand specific.
Q3: So, what’s been the driver behind this strong used car performance?
A3: I’m really pleased with Marshall Motor’s used car performance, particularly it’s been a key area of focus for us in recent years and there are a number of drivers behind this.
First, you recall our interims that we talked about that our first half improved used car margins by 37 basis points to 7.4% so very pleased with that in H1 and that positive impact has flowed through into H2. Of course, there were now WLTP impact in the first half of the year, so all of this was achieved through strong management focus in this particular area.
In addition, as a result of supply issues in new cars, we have seen some customers switching from new to used rather than waiting for supply to ease, this has meant that our volumes are materially up in the quarter.
Finally, this migration from new to used has meant there is an additional tailwind on margin due to supply versus demand.
So, overall, I’m very pleased with the statement this morning particularly given some of the challenges that are out there currently.