Used car supermarket chain Motorpoint has reported a 30% annual rise in half year revenues to £785 million thanks to a richer mix of bigger ticket vehicles and price inflation.
Its network of used car dealerships has also expanded, with the 18th opened in Edinburgh at the end of September and the 19th car supermarket set to launch this month in Coventry.
Adopting a strategy to invest in gaining market share, profitability slumped versus H1 2021 due to investments in showrooms and technology plus its tactical price positioning.
Motorpoint noted that its September unit sales were down 9% in part due to “adverse news flow and political uncertainty which continue to undermine already fragile consumer confidence”.
Its statement noted: “The board strongly believes there is a significant opportunity for Motorpoint to become a highly profitable market leader, and that certain targeted strategic investments are important particularly as some of the group’s competitors are less ambitious or lack financial capacity.
“The results of the strategic investments made to date underpin this belief and the current strategy. Accordingly, as a result of the investments during H1 FY23, coupled with the costs of maintaining market leading finance rates at 8.9% (9.9% from 1 October 2022), profit before taxation (“PBT”) for the period is c.£3m.
“This PBT is significantly lower than H1 FY22 (£13.5m) and reflects the increased strategic investment (c.£4m) and interest costs (c.£1m) in H1 FY23 and compares against record margins experienced in H1 FY22.”
It predicts a tougher second half to its financial year, and said it will carefully manage its cost base, align its consumer financing rates with borrowing costs, and continue to build technology and digital capabilities which increase automation, data-led decision making and customer self-service.