Cambria Automobiles is embarking on series of cost-cutting measures which will include a "significant reduction" in employee headcount due to the impact of COVID-19 lockdown.
In a trading update published this morning the AM100 group said that trading had been ahead of management expectations post-lockdown, but has seen a slower order bank for September and is cautious about Q4.
And while June and July have been positive for Cambria, it has not been enough to fully mitigate the negative impact of the lockdown and the group is now embarking on a cost reduction programme.
This will involve a “significant reduction” in associates (employees) for the group. Cambria had already said back in May that at least 100 redundancies were being considered.
The dealer group posted its pre-close statement this morning for the 11 months to 31 July, 2020, where it said its performance has been significantly disrupted as a result of COVID-19.
New car retail sales were down 26.6%, while new vehicle sales, including fleet and commercial, were down 27.6%.
However, Cambria's change in franchise mix towards the premium segment helped enhance the profit per unit on each vehicle supplied during the period, which was up 4% year on year.
Used vehicle unit sales continued to perform well on either side of the lockdown period, with the number of unit sales down 21.6% compared with the same period in the prior year, slightly offset by the continued improvement in gross profit per unit which was up 4.3%.
As a result of the lockdown period, aftersales revenue for the eleven months was reduced by 13.6%.
Mark Lavery, Cambria chief executive, said: "Firstly, I would like to thank all of our management and associates who have worked tirelessly throughout the lockdown.
“Their dedication, flexibility and application has enabled the group to handle the most difficult trading period in its history in a robust and positive manner.”
Lavery also thanked the group’s brand and banking partners who he highlighted as being “incredibly supportive”.
He said the challenges that faced the motor retail industry before lockdown still remain, as does the uncertainty created by Brexit.
Lavery added: “The recession that is currently engulfing the UK has not yet hit motor retail.
“The group has been prudent and has operated with a much reduced associate base so that the group is prepared for most eventualities.
“At the same time, with our diversified portfolio of excellent brand partners, the group has demonstrated its resilience and we have managed our cash position well, ensuring that we keep up to date with all our obligations.
“As a result of the actions taken the group's financial position remains robust and we are well prepared for the challenges and opportunities ahead."
Concerns with consumer confidence in Q4
Lavery said that while the furlough scheme has provided a significant underpin to household incomes during the pandemic, he believes that as it comes to an end on October 31 there will be a negative impact on UK unemployment levels.
Lavery said: “Looking forward, there is little clarity around the terms of the UK's departure from the EU and whether a free trade agreement will be in place to avoid tariffs on the importation of cars and parts to the UK.
“A 10% tariff on these products would have a significant impact on sales volumes.”
Lavery also said more demanding emissions regulations will continue to impact the mix of cars that manufacturers want to sell in the UK in their attempt to avoid the fines for emissions in excess of their targets.
This will continue to drive R&D spend on technology development by the manufacturers at an “unprecedented rate”.
Lavery added: “Based on these facts, the board continues to take a prudent approach to ensure that the group is prepared for potentially challenging economic conditions from Q4 2020 onwards.
“As previously advised, we are not providing guidance relating to the coming financial year due to continued uncertainty.”
Cambria will announce its preliminary results for the year to August 31, 2020 on November 25, 2020.