In August 2021, the Group announced its expectation that full year profits for the year ending 31 December 2021 would be not less than £40 million. It also noted the uncertainties for H2 2021 and beyond surrounding well-documented vehicle supply issues, an expected realignment of used vehicle values (the timing of which was uncertain) and the continuing impact of the COVID-19 pandemic.
New vehicle supply constraints caused by the global shortage of semi-conductors have deteriorated throughout August and the important plate-change month of September and are expected to continue through 2022. Whilst consumer demand and order-take has remained strong, delivery times for new vehicles have been significantly extended. As a result, on 5 October 2021, the SMMT reported that new car registrations in September were down 34.4% from the same period last year, bringing new car registrations for Q3 2021 down 31.1% compared to growth of 5.9% in the year-to-date.
Despite a significant number of the Group’s key brands being more impacted by new vehicle supply constraints, pleasingly, the Group continued its track-record of outperforming the wider new car market in September. In Q3 2021, the Group’s like-for-like new vehicle unit sales outperformed the wider new vehicle market by 13.0% and have outperformed the wider new vehicle market in the year-to-date by 11.6%. The Group has benefited from exceptionally strong new car margins as a result of supply shortages which has offset the impact of reduced volumes.
The used car market has continued to benefit from previously reported exceptional market tailwinds as a result of new car supply shortages and so the impact of any downward price realignment in Q4 2021 is not anticipated to be significant. In Q3 2021, used vehicle values rose by an average of 12.7%*. This was the seventh month of consecutive growth in used vehicle values and over this period, used vehicle values have appreciated by 26.3%*; an unprecedented position.
Marshall Motor Holdings has capitalised on these tailwinds, continuing its investment in used vehicle procurement, pricing utilising technology and real-time market data, improved online product presentation and marketing the marshall.co.uk brand through advertising and sponsorship initiatives. This focus, together with market tailwinds, resulted in an exceptionally strong margin performance in used cars in Q3 2021, more than offsetting a decline in volumes as a consequence of used vehicle supply shortages.
Whilst there remains continued uncertainty over vehicle supply and the timing of a realignment to more usual market conditions, given the continuation of favourable market conditions and the Group’s strong operational performance throughout Q3 2021, the Board now expects that continuing underlying profit before tax for 2021 will be not less than £50m. This figure is after the commitment to repay all CJRS and non-essential retail sector grants received for this financial year.