Motorpoint job cuts, cost savings help car dealers overcome consumer weakness
- Losses narrow from £3.1m in Q1 to around £600,000
- Chief Mark Carpenter warned demand is still under severe pressure
Motorpoint narrowed its losses in the second quarter following a series of cost-cutting exercises, including job losses.
The online car dealer told investors on Thursday that underlying pre-tax losses fell to around £600,000 in the three months to September 30, from £3.1 million in the first quarter.
Motorpoint boss Mark Carpenter warned that demand is still under severe pressure but said the measures taken by the group have left it “in a position to emerge from this difficult macroeconomic cycle as a more efficient and agile business”.
Cuts: Motorpoint cut another 10% of its workforce in July
The group cut another 10 per cent of its workforce in July after 134 job losses in 2022, as part of a package of measures expected to save around £3m a year.
The normalization of the used car trade after the pandemic boom, during which dealerships such as Motorpoint performed well, and increasing consumer pressures also led to a pause in store openings and cuts to capital spending discretionary.
The company also opted to source a greater proportion of stock through direct supply channels and used data to determine the best selling prices.
Motorpoint said on Thursday: “Our right-sizing program was helpful to our performance in the second quarter as these difficult macroeconomic conditions continued.
“We anticipate used values will gradually align to historic levels as new car supply continues to improve, further improving affordability for our customers.”
It has led to an underlying operating profit of around £1.6m before interest expense of £5.3m for the first half, Motorpoint said, despite a one-off £1m charge. of pounds related to redundancy costs.
The group generated net cash from operations during the first half and ended the period with net cash of £11m, up from £2.2m on 30 June.
Motorpoint expects to announce its interim results on November 23.
Carpenter said: ‘The impacts of high inflation, interest rates and consumer uncertainty continue to impact used car demand.
‘We have responded by reducing our cost base and expanding our retail criteria to help customers find the car of their choice at a price they can afford.
“We have successfully preserved cash while advancing selective strategic initiatives, and are well positioned to emerge from this difficult macroeconomic cycle as a more efficient and agile business, ready to take advantage of the significant opportunity as market conditions improve.”