The boss of used car supermarket Motorpoint has bemoaned the “most difficult” year in the group’s history as annual losses widened after being hit by a shortage of second-hand vehicles and slumping demand.
The firm revealed pre-tax losses of £10.4 million for the year to March 31, against losses of £300,000 the previous year, as sales slumped by a quarter to £1.09 billion.
Motorpoint said it was hit by a raft of sector-wide issues, including an acute shortage of used cars and falling prices, as well as tumbling demand from car buyers as higher interest rates pushed up financing costs.
Chief executive Mark Carpenter said: “The past financial year was the most difficult in our history, with multiple negative headwinds in the macro environment such as rising borrowing costs and subdued customer demand, coupled with industry-specific issues such as lower inventory and deflation.”
But having moved early to restructure in the face of the woes, the group said it returned to profitability in the final three months of the year, while demand also recovered with retail sales by volume rebounding by 8.9%.
It added it had also seen a “positive start” to the new financial year, with double-digit growth in retail sales by volume in April and May.
The group said: “We envisage that 2023’s difficult macro conditions will continue to ease with customer sentiment improving.
“Supply should increase following new car registration growth, and used car market expansion.”
The sector has been hit by a volatile used car market, which saw prices surge due to a supply shortage, but then values slumped last autumn, putting pressure on dealership profit margins.
It stems from woes in the new car market in recent years, with chip shortages seen in the wake of the pandemic impacting supply.
This had a knock-on effect on demand for used cars, although with new car supply recovering, this is helping the second-hand motor market begin to return to more normal conditions.
