The Times newspaper has slammed dealership groups which it says will post ‘record annual profits’ this year for failing to repay state support they received when COVID lockdowns closed their venues exposure.
The Business Section of The Times says its survey found auto retailers are set to record the best profits in fiscal 2021 thanks to “runaway car price inflation and reduced staffing costs”, but “refuse to comment.” return hundreds of millions of pounds in aid to taxpayers who got them through the pandemic.”
Marshall Motor Holdings chief executive Daksh Gupta responded on Twitter that his AM100 group top 10 had refunded all 2021 furlough and retail subsidies, while in 2020 he stopped dividends and management bonuses and took voluntary pay cuts.
“We halted 2019 and 2020 dividends, took no management bonuses despite hitting profit targets, took voluntary pay cuts, refunded £10.9m VAT 18 months plus early, enhanced furloughs for our employees, no COVID-related layoffs, and refunded ALL 2021 furloughs and retail subsidies,” said Gupta, who won AM Business Leader of the Year in 2021, in part in recognition of how he supported his workforce during the pandemic and his decision to repay Marshall’s furlough grants.
Robert Forrester, chief executive of Vertu Motors, has previously said the financial support was there because the UK government closed businesses “by diktat” and ensured those businesses were not significantly weakened.
During the pandemic, Forrester has at times expressed frustration with the impact of government restrictions and a lack of clarity for businesses.
AM Editor’s Comment
There is no doubt that the current dynamics of supply and demand in the new and used car markets bring certain advantages to dealer groups. These benefits were unforeseen and unprecedented.
However, automotive retailers normally operate in a very low-margin market.
For The Times to criticize a potential cumulative profit of £1billion across a segment of the retail industry which has a cumulative turnover of over £80billion may seem like a bit unfair to car retail bosses, when in other sectors such as energy a single company could slash up to £9.5billion in profit just on 1.5x sales higher than the entire segment.
Imagine how many dealer groups BP could acquire with this!