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Rising costs hurt profits at used car group Motorpoint as Swansea site launches

Motorpoint Swansea

Pre-tax profits have dropped by 18.3% at the UK’s largest independent car dealer group Motorpoint.

Motorpoint, which is about to open its 13th site in Swansea, earned £9.4 million pre-tax profit in the six months to September 30, compared to £11.5m in the same period the prior year.

However revenue was up by 1% to £533.9m, and it has begun a trial of home deliveries “with encouraging early results”, it said.

It said it maintains its strategy of growing in local markets, opening more sites in new market areas and increasing nationwide sales through its central contact centre.

Its medium term aim is to expand its network to 20 sites, and in September it opened a 10-acre vehicle preparation centre at Peterborough to ready stock for its forecourts.

Motorpoint chief executive Mark Carpenter said group profit was affected by increased overheads, about £2m higher than before, partly due to one-off process changes.

“The first half of the year has seen significant growth in our market share despite ongoing market disruption, with the political situation leading to another period of lacklustre consumer confidence.

“Specifically, within the used car market, the early summer months was also a period of unusually high pressure on margins.”

Carpenter said the Peterborough preparation centre has already reduced vehicle days-in-stock and released working capital back into cashflow, and Motorpoint’s investment in IT systems has continued with the hiring of a chief technology officer to oversee progress.

“Current trading is consistent with achieving management’s full year expectations, albeit with a greater weighting towards H2, however potential outcomes from the Government’s Brexit negotiations could influence our future performance in unpredictable ways,” he said.

Motorpoint said the Swansea car dealership will open on January 31 2020 on a site formerly home to a B&Q store, creating 25 jobs, and will stock 500 used cars aged less than three years old.

Motorpoint's only existing dealership in Wales is at Newport.

Carpenter said: “We’re absolutely thrilled to be bringing the Motorpoint brand to South West Wales in the New Year and look forward to giving customers throughout Swansea and the surrounding area the opportunity to experience first hand our award-winning combination of choice, value and service.”

It will be its first expansion since opening Motorpoint Sheffield in 2017.

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