Motorpoint Group PLC (LON:MOTR) saw its shares tumble 27% as it warned of significantly lower profits in the second half of the year and said its financial performance for 2023 was “difficult to predict.”
The group, which specialises in selling nearly new cars, said that investments made in the first half and the costs of maintaining “market leading” finance rates meant that pre-tax profits for the second half of the year would be around £3mln significantly lower than those reported in the first half of £13.5mln.
Macroeconomic conditions continue to worsen, the company warned, which is causing increasing consumer uncertainty, and it is therefore likely that this will reduce used car sales volumes in the UK for the foreseeable future.
It is these macro factors that will continue to challenge financial performance in 2023, Motorpoint cautioned, adding the extent of which is difficult to predict.
The company said it will carefully manage its cost base, align its consumer financing rates with borrowing costs, and only invest in important strategic capabilities if it remains profitable and cash generative.
Cash balances at the end of September were around £4.5mln, down from £7.8mln, at the end of March.
Analysts at AJ Bell said: “It looks like the bubble in used cars is over.”
“The scale of the drop in volumes in September is somewhat alarming, though not all that surprising.“
“When household budgets are under such acute pressure it is much harder to commit to spending on a really big-ticket item like a car, instead garages may be busy keeping older vehicles on the road for longer.”
“The market will not be reassured by the lack of any visibility from Motorpoint on what next year might look like.”