18th Dec 2019 09:21
(Alliance News) - Marshall Motor Holdings PLC is on track to meet expectations despite a further weakening of trading conditions towards the end of the year.
The automotive retailer said the UK retail market remains tough, hit by weak consumer confidence due to Brexit uncertainty as well as tighter emissions-related regulations.
The Society of Motor Manufacturers & Traders, Marshall Motor noted, sees the UK new car market declining by 2.8% in 2019 and 4.4% in 2020.
"The group has performed well in this challenging market and despite trading conditions weakening further in fourth-quarter 2019, the board's outlook for the full year remains unchanged," said the company.
Marshall Motor also on Wednesday announced the GBP22.3 million acquisition of the Volkswagen and Skoda franchises of Jardine Motor Group UK Ltd. The purchase price includes GBP13.0 million for inventory, with the fixed assets being bought for GBP9.3 million.
The acquired assets include six Volkswagen passenger car franchises in Aylesbury, Harlow, Letchworth, Loughton, Milton Keynes, and St Albans, as well as a Volkswagen commercial vehicle franchise in Loughton and a Skoda passenger franchise in Milton Keynes.
The revenue for these business in 2018 was GBP212.8 million, Marshall Motor said, with a pretax loss of GBP2.8 million. It expects them to be loss-making in 2020 and 2021, but Marshall Motor hopes they begin to turn a profit from 2022.
"I am delighted we have further strengthened our already excellent relationship with Volkswagen Group UK with this acquisition. While the acquired businesses are currently loss making, we are confident in their future potential," said Marshall Motor Chief Executive Daksh Gupta.
"The businesses are in excellent locations that are contiguous to our existing Volkswagen and Skoda franchises and each site is fully compliant with the latest brand requirements."
Marshall Motor also said it had bought two Honda businesses from Jardine in September, in Reading and Newbury, while it was also awarded an open point for Volkswagen commercial vehicles in Lincoln.
These two new businesses will bring in GBP30 million of revenue in 2020, making a loss, but Marshall Motor expects them to deliver a profit from 2021 onwards.
Shares were 3.9% lower on Wednesday morning in London at a price of 148.00 pence each.
By George Collard; [email protected]
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